July 12, 2017 · Supplement 2016 TECHNOLOGY Source: Euromonitor Source: Ericsson Mobility Report...
Transcript of July 12, 2017 · Supplement 2016 TECHNOLOGY Source: Euromonitor Source: Ericsson Mobility Report...
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GENERAL MILLS INVESTOR DAY
July 12, 2017
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This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995that are based on management’s current expectations and assumptions. These forward-looking statements are subject to certainrisks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-lookingstatements. In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including:competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions,advertising activities, pricing actions and promotional activities of our competitors; economic conditions, including changes ininflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance ofnew products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions ordispositions of businesses or assets; changes in capital structure; changes in the legal and regulatory environment, includinglabeling and advertising regulations and litigation; impairments in the carrying value of goodwill, other intangible assets, or otherlong-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact ofsignificant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumerdemand for our products; effectiveness of advertising, marketing and promotional programs; changes in consumer behavior, trendsand preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in theretail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability ofsupply chain resources, including raw materials, packaging and energy; disruptions or inefficiencies in the supply chain;effectiveness of restructuring and cost savings initiatives; volatility in the market value of derivatives used to manage price risk forcertain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine planliabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations;and political unrest in foreign markets and economic uncertainty due to terrorism or war. The company undertakes no obligation topublicly revise any forward-looking statements to reflect any future events or circumstances.
A Reminder on Forward-looking Statements
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Jeff HarmeningChief Executive Officer
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General Mills’ Next Chapter Remains Grounded on the Consumer
OUR STRATEGYConsumer First = Deeply understand the needs and
lives of our consumers and respond quickly to
give them what they want
OUR GOALCreate market-leading growth to deliver top-tier
shareholder returns
OUR PURPOSEWe serve the world by
making food people love
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SNACKING WELLNESS
Consumer Food Trends are Changing
Source: Mintel Snacking Motivations & Attitudes, March 2017
TASTE, CONVENIENCE, & VALUE
Source: The Hartman Group, Health + Wellness 2017
65% 64% 62%
Feeling good
about myself
Being physically
fit
Leading a
balanced
lifestyle
“To me, health and wellness means…”
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SMALLER HOUSEHOLDS EMERGING MIDDLE CLASS
Consumer Demographics are Changing
Source: U.S. Census Bureau, Annual Social & Economic Supplement 2016
TECHNOLOGY
Source: Euromonitor Source: Ericsson Mobility Report November 2016
% of 1 & 2 Person
U.S. Households
Projected GDP Rankings
46%
57%
62%
1970 1995 2015
2010 2020
1 U.S. China
2 China U.S.
3 Japan India
4 India Japan
5 Germany Russia
Mobile Broadband
Subscriptions by Region
(billions)
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E-COMMERCE F&B RETAIL SALES CUSTOMERS
E-commerce is Changing the Global Channel Landscape
Source: Kantar 2016
United States
$3 Billion
U.K.
$5 Billion
France
$3 Billion
South Korea
$2 Billion
China
$13 Billion
Japan
$3 Billion
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Prioritizing Five Global Growth Platforms
Source: Euromonitor, Calendar 2016
GLOBAL CATEGORY2016
RETAIL SALESPROJECTED 5-YR. CGR
RTE Cereal $23 Billion +LSD
Ice Cream $64 Billion +MSD
Yogurt $84 Billion +HSD
Convenient Meals $89 Billion +MSD
Sweet & Savory Snacks $295 Billion +MSD
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25%75%
Growth Foundation
North America RetailCereal
Snack Bars
Natural & Organic
Totino’s
Old El Paso
Yogurt
Convenience Stores &
FoodserviceFocus 6 Platforms
Europe & Australia
Asia & Latin America
North America RetailProgresso Soup
Pillsbury Refrigerated Dough
Betty Crocker Desserts
Others
Convenience Stores &
FoodserviceNon-focus 6 Platforms
F17 NET SALES = $15.6 BILLION
Our Portfolio Segmentation
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• New Global Organization Structure
• New Leadership Team
• Global Prioritization of our Biggest Growth Platforms
• Increased Innovation and Brand Investment
• More Stability = Improved Execution
What’s Different at General Mills
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A Talented and Diverse Leadership Team
Jon Nudi
SVP; Group
President, North
America Retail
Shawn O’GradyGroup President,
Convenience Stores & Foodservice; SVP, Global Revenue Development
Bethany Quam
SVP; Group President,
Europe & Australia
Christina Law
SVP; Group President,
Asia & Latin America
Olivier Faujour
VP; President,
Dairy SBU
Ivan Pollard
SVP; Chief
Marketing Officer
Don Mulligan
EVP; Chief Financial
Officer
Jacqueline Williams-Roll
SVP; Chief HR Officer
Richard Allendorf
SVP; General Counsel
and Secretary
Kim Nelson
SVP, External
Relations
John Church
EVP; Chief Supply
Chain Officer
Peter Erickson
EVP, Innovation,
Technology & Quality11
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• Grow Cereal Globally (Including CPW)
• Improve U.S. Yogurt Through Innovation
• Invest in Differential Growth Opportunities
− Häagen-Dazs
− Snack Bars
− Old El Paso
− Natural & Organic
• Manage Foundation Brands with Appropriate Investment
Fiscal 2018 Growth Priorities
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RTE Cereal Category
Global Sales $23B
3-Yr. Projected Growth CGR +LSD
• General Mills/CPW
− #2 Global Market Share
− 3 of Top 5 U.S. Cereal Brands
− Strong Positions in Emerging Markets
1. Grow Cereal Globally
Source: Euromonitor, Nielsen and company estimates. 2016 Retail Sales and 2017-2020 Growth Projections. 13
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• Innovation is Critical to U.S. Yogurt Category Development
• F18 Focus:
− Fundamental Innovation in New and Emerging Segments
− Renovation on Core Lines
2. Improve U.S. Yogurt Through Innovation
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HÄAGEN-DAZS SNACK BARS
3. Invest in Differential Growth Opportunities
OLD EL PASONATURAL & ORGANIC
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• Häagen-Dazs
− A Leading Super-premium Ice Cream Brand
− Strong Positions in Emerging Markets
Häagen-Dazs is a Global Growth Opportunity
Source: Euromonitor, Nielsen and company estimates. 2016 Retail Sales and 2017-2020 Growth Projections.
Ice Cream Category
Sales Outside North America $49B
3-Yr. Projected Growth CGR +MSD
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• General Mills
− Leading Global Brands
− Strong Innovation Capabilities
Snack Bars Category
Global Sales $7B
3-Yr. Projected Growth CGR +LSD
Snack Bars are a Global Growth Opportunity
Source: Euromonitor, Nielsen and company estimates. 2016 Retail Sales and 2017-2020 Growth Projections. 17
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• Old El Paso
− #1 Global Mexican Foods Brand
− Over 50% of Net Sales Outside of U.S.
Old El Paso is a Global Growth Opportunity
Source: Euromonitor, Nielsen and company estimates. 2016 Retail Sales and 2017-2020 Growth Projections.
Mexican Foods Category
Global Sales $3.5B
3-Yr. Projected Growth CGR +LSD
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• General Mills
− A Leading N&O Food Manufacturer
− Broad Portfolio of 9 Brands
− 17-Year History Operating in U.S. N&O Industry
Natural & Organic is a Global Growth Opportunity
Source: SPINS and company estimates. 2016 Retail Sales and 2017-2020 Growth Projections.
Natural & Organic Food Industry
North America Sales $41B
3-Yr. Projected Growth CGR +DD
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HELPERREFRIGERATED
DOUGH
4. Manage Foundation Brands with Appropriate Investment
SOUP BAKING MIXES
OWNED WEB PROPERTIES
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$15.6 Billion Net Sales -1% to -2%¹
$3.0 Billion Total Segment Flat to +1%²Operating Profit*
18.1% Adjusted Operating HigherProfit Margin*
$3.08 Adjusted Diluted EPS* +1 to +2%²
F17 BASE F18 GROWTH
Our Fiscal 2018 Targets
*Non-GAAP measure. See appendix for reconciliation.(1) Organic growth rate. Non-GAAP measure.(2) Constant-currency growth rate. Non-GAAP measure. 21
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Opening Remarks Jeff Harmening
North America Retail Plans Jon Nudi
Convenience Stores & Foodservice Plans and
E-commerce Capability Review Shawn O’Grady
Q&A Discussion
Europe & Australia Plans Bethany Quam
Asia & Latin America Plans Christina Law
JV Plans and Financial Summary Don Mulligan
Q&A Discussion
Today’s Agenda
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Jon NudiSVP; Group President, North America Retail
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F17 NET SALES: $10.2 BILLION
North America Retail Segment
U.S. Meals
& Baking
$3.9B
U.S. Cereal
$2.3B
U.S. Yogurt
& Other
$1.1B
U.S. Snacks
$2.1B
Canada
$0.9B
F17 SEGMENT OPERATING
PROFIT: $2.3 BILLION
F17 NET SALES BY OPERATING UNIT
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U.S. FOOD AND BEVERAGE RETAIL SALES GROWTH
U.S. Food and Beverage Categories Challenging
Source: Nielsen XAOC
Units: +0.1% Flat Flat -1.3%
Price: +2.1% +1.2% +0.2% +0.7%
2.2%
1.2%
0.2%
-0.6%
F16 - 1H F16 - 2H F17 - 1H F17 - 2H
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North America Retail Fiscal 2018 Priorities
• Improve U.S. Cereal
• Reshape U.S. Yogurt Portfolio
• Differentially Grow Snack Bars, Hot Snacks and Mexican Foods
• Drive Sustainable Profit Growth on Key Foundation Brands
• Expand Our Natural & Organic Portfolio
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• Wellness News
• Taste News and Innovation
• Strong Consumer Support on Key Brands
General Mills Cereal Growth Drivers
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BIG G PORTFOLIO CAMPAIGN CHEERIOS
Investing Behind Wellness News
“Ownable” Wellness News:
Whole Grain, Gluten Free, Fiber
Celebrating Cheerios’
Ingredients, Health Benefits,
and Causes
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TOAST CRUNCH FRANCHISE LUCKY CHARMS
Bringing Taste News to More Core Brands
CHEX REESE’S PUFFS
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Increased Support on Core Cereal Brands
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• Innovation is Key to U.S. Yogurt Development
• New Segments Drive Growth
• We’re Focused on Developing Fundamental Innovation
Fundamental Innovation Drives U.S. Yogurt Growth
Source: Nielsen U.S. Food
F92 F17
Blended
Light
Kid
Adult
Health
Greek
U.S. YOGURT CATEGORY RETAIL SALES($ In Millions)
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Reshaping Our U.S. Yogurt Portfolio
MANAGE DECLINES GROW EMERGING SEGMENTSSTRENGTHEN CORE
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Strengthen Core:Increased Media Support on Yoplait Original
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Strengthen Core:Expanding Snacking Occasions
The Perfect Snack for the Whole Family
New in 1H
F18
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EASIER-TO-OPEN TUBES STAR WARS MOVIE TIE-IN
Strengthen Core: Go-GURT News
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32%
44%
Avg. New Yogurt Product Liberté
ELEVATE WHOLE MILK MESSAGING DRIVE TRIAL
Emerging Segments: Organic Yogurt
Source: Nielsen F17
REPEAT PURCHASE SCORES
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• Made with Whole Milk and Non-GMO Ingredients
• Thick Texture and Remarkable Taste
• Cultured in the Glass Jar
• In-store Sampling to Drive Trial
Emerging Segments: Oui by Yoplait
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NEW IN 1H F18
Grow Snack Bars: Nature Valley
U.S. CANADA40
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“BE A POWERFUL FORCE”
Nature Valley
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PERMISSIBLE TREATS CONSUMER SUPPORT
Improve Performance on Fiber One
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LÄRABAR U.S. RETAIL SALES($ In Millions)
NEW IN 1H F18
Driving Strong Lärabar Growth
Source: Nielsen XAOC
+41%
F15 F16 F17
CGR = +29%
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F18 INNOVATION
Continuing Growth on Totino’s
MEDIA SUPPORT
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+4%
F15 F16 F17
U.S. RETAIL SALES GROWTH($ in Millions)
F18 INNOVATION
Continuing Growth on Old El Paso
Source: Nielson XAOC
CGR = +3%
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• “In the Zone” on Merchandising in Key Season
• Targeted News to Drive Consumer Interest
Investing in Key Foundation Brands
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GENERAL MILLS NORTH AMERICA NATURAL & ORGANIC NET SALES
($ in Millions)
Expanding Our Natural & Organic Portfolio
Note: F16 pro forma includes 12 months of EPIC.
+13%
F16 Pro Forma F17 F20 Goal
$1,070
$1.5
Billion
$950
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38% 37%33% 32%
22%20%
15% 14%
Lärabar Annie's Cascadian
Farm
Muir Glen Food
Should
Taste Good
Mountain
High
Liberté Immaculate
Baking
U.S. AVERAGE % ACV PER ITEM
Distribution Opportunities for Natural & Organic Portfolio
Source: Q4 F17 Nielsen Grocery + Supercenters 49
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Natural & Organic Growth Drivers in Fiscal 2018
MEDIA SUPPORT AND INNOVATION INNOVATION
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• Improve Topline Trends Through:− Continued Growth on N&O, Old El Paso, Totino’s Hot Snacks and Canada
− Innovation Driving U.S. Yogurt Improvement
− Better Seasonal Results on Soup and Refrigerated Dough
− Improved Innovation, Consumer Support on U.S. Cereal
• F18 Goals:− Organic Net Sales*: -2 to -3%
− Segment Operating Profit Margin: Higher
North America Retail Summary
*Non-GAAP measure 51
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Shawn O’GradyGroup President, Convenience Stores &
Foodservice; SVP, Global Revenue Development
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CONVENIENCE STORES & FOODSERVICE
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Convenience Stores
Healthcare
Colleges & Universities
K–12 Schools
Restaurants
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Convenience Stores & Foodservice Advantaged Business Model
LEVERAGE GMI INVESTMENT
INNOVATE OPERATOR FIRST
CREATE DEMAND WITH DIRECT SALES
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Convenience Stores & Foodservice Business Transformation Journey
SALES
PROFIT MARGIN
F07
$1.8B
8%
F12
$2.0B
14%
F17
$1.9B
21%
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SHARE RANK
Focus Six Platforms Driving Segment Performance
SnacksYogurtCereal
BiscuitsBakingMixes
FrozenMeals
Total Foodservice
Cereal #1
Yogurt #1
Biscuits #1
Mixes #2-3
K-12 Frozen Meals #1
Convenience Stores
Snacks #2
Sources: Total US NPD SupplyTrack®, Nielsen AOD Foodservice pound share 12 months as of March 2017. C-Store dollar share 12 months as of April 2017. 57
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Focus Six Platform Net Sales
F12 F13 F14 F15 F16 F17
CGR = +4%
($ in Millions)
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Platform Innovation
CEREAL SNACKSYOGURT
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SCHOOL YEAR 2016/2017
Foodservice Innovation
Source: USDA Child Nutrition Tables 2016
PREMIUM SANDWICH BREAD
YOGURT FROZEN MEALS
15
30
Breakfast Lunch
Annual Meals Served
(millions)
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FRONT OF HOUSE BACK OF HOUSE
Convenience Stores Innovation
Leveraging Innovation & Brands from NAR Leveraging Foodservice Expertise
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HEALTHCARE COMMERCIALLODGING
Channel Growth Opportunities
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• Continued Growth on Focus Six Platforms
with Operator First Innovation & Renovation
• Channel Growth Opportunities
• Flour Index Pricing a Modest Benefit in F18
• F18 Goals:
− Organic Net Sales*: +1 to +2%
− Segment Operating Profit Margin: Higher
Today’s Convenience Stores & Foodservice Summary
*Non-GAAP measure 63
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E-COMMERCE
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PERCENTAGE OF FOOD & BEVERAGE ONLINE SALES
Global E-commerce Landscape
Source: Kantar 2016
United States
1.5%
U.K.
7%
France
5%South Korea
17%
China
4%
Japan
7%
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EUROPE U.S.ASIA
Market Landscape
Delivery
Drive
Pure Play
Brick & Mortar
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SPEARFISHING FULL BASKET
• Selling all Categories
• Big Brands Overindex
• Future Growth is Here
• Single Items
• Hard to Find
• 1 - 2 Day Delivery
General Mills Brands Play in Spearfishing and Full Basket
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CONSUMER MANUFACTURERSRETAILERS
U.S. Landscape
Online
$150
In Store
$40
Average Size of
Consumer Purchase
Source: Nielsen and Willard Bishop. 68
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E-COMMERCE PROJECTION
• Lead the Digital Shelf
• Advantaged Shopper Influence
• Comprehensive Retailer Partnerships
Winning the First Basket
(Share of General Mills U.S. Food Net Sales)
1.5%
5%
F17 F20
Goal
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IN STORE ONLINE
Lead the Digital Shelf
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IN STORE ONLINE
Advantaged Shopper Influence
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IN STORE ONLINE
Advantaged Shopper Influence
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Comprehensive Retailer Partnerships
MARKET LEADERS
LEAD THEFUTURE
MARKET SHAREINDEX
Source: Click & Collect retailers POS data
100
120
In-store Online
GENERAL MILLS DOLLAR SHARE
(Index, In-store = 100)
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• First Basket Capabilities
• Real Time Advanced Analytics
• Agile Supply Chain & Logistics
• Localized Deployment
Mission Critical Globally
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• Global Imperative
• Mission Critical
• Positioned to Win
E-commerce Summary
75