Supplier
Webinar
March
26, 2014
Agenda
•
Welcome
•
Why we’re here
•
2013 in Review
•
2014 People, Priorities and Project
K
•
Supplier Relationship Management
•
•
Supplier Measurement
Enhancements
What’s next
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Why We’re Here
•
2013-2014:
Period of significant
Change
•
•
Global Procurement Transformation
•
Project K
•
People and Leadership
Change in Supplier Engagements
•
Supplier Day shift to later in
year
•
Find a more frequent/effective
way to engage with our suppliers
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2013 in Review
Success!
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2013 in Review
•
Great Results
•
•
•
•
•
•
•
Delivered the budget – forecast accuracy
Met Direct materials savings targets
Significantly exceeded Indirect savings
targets
Supplier Diversity spend
•
Exceeded goal
•
15 consecutive years of growth
Diversity & Inclusion
Partners and relationships
Capability and leadership
All in the midst of tremendous
changes in our function and
across our business
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2013 in Review
Global Procurement Transformation
•
Year 1 of 3 year journey
•
Wave Approach – Capability
building
•
Org Effectiveness
•
Org Design
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What is Global
Procurement
Transformation?
Goals:
• Deliver 1.5X (50%) improvement in negotiated cost savings over 3 years1
• Make savings long-term sustainable
Re-imagine operating model to:
1. Best people, best process, best insights
2. Maximize global spend leverage
3. Minimize duplication of effort
4. Operationalize Procurement best practices with Kellogg Work
Systems (KWS)
5. Be Relentless in our application of Best Practice & Continuous
Improvement
6. Go Bigger, Go Bolder & Highlight Different Strategic Approaches
1 Compared to historical 09-12 average cost savings
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Key structural changes –
sustainable change and results
Key changes
Change reporting structure of
1 Regional CPOs to report
directly to Global CPO
Establish global category
2 managers that drive strategic
sourcing of key categories
globally
Rationale
▪ Drive single vision for procurement globally
▪ Deliver 1.5x savings using new procurement tools & standard
techniques globally
▪ Leverage global spend and volume to improve savings capture
▪ Ensure categories are managed at right value creation level, e.g.
global vs. regional vs. local
▪ Enable development of strategic supply base to support Kellogg
globally
Establish regional
3 procurement operations group
to segregate tactical and strategic
activities
Develop in-house analytical
4 capability
▪ Ensure category managers focus on key value added activities
▪ Identify clear roles and responsibilities and escalation paths to
manage day to day operational activities
▪ Establish an entry level position for procurement to attract talent
▪ Develop capability to conduct market analysis, spend analytics and
provide analytical horse power to support category managers
Establish Procurement
5
Knowledge Center
6
Establish Procurement
Management Office
▪ Standardize processes globally and implement advanced procurement
tools (clean sheet, fact based negotiations etc.)
▪ Invest in capability building
▪ Program management of transformation wave
activities globally
▪ Manage key procurement initiatives and special
projects
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We have designed the future Procurement
organization to be much more global in the way
strategies are developed and executed
% of total spend
% of total spend
6
Global
66
2
4
22
0
Local
Regional
Global
Regional
Local
Strategy Execution
Future strategic sourcing matrix
Strategy Execution
Current strategic sourcing matrix
Global
19
Regional
Local
Strategy Development
34
43
1
1
2
Local
Regional
Global
Strategy Development
Organizational changes to improve focus on strategic sourcing
▪ All operational activities will be transferred to a newly formed procurement operations
function to refocus 30-40% of category managers’ time
▪ Global and lead category manager structure enables strategy setting at global level and
allows procurement to pull a more holistic set of levers and capture synergies globally
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fundamentally different
approach
Approach
Outcome
• Next-generation sourcing levers
Category
transformations
(e.g., best-in-class cleansheets /
RFPs, component based pricing)
• Leverage of global purchase volume
• Assessment of demand and process
levers (e.g., spec optimization,
contractor management)
• Reinforcement of KSS 2.0 through
Capability
building
regional boot camps
• Cross functional engagement (e.g.,
with RQT and Engineering)
• Side-by-side working model to
sustain change
• Continued design and implementation
Organization
of the new Procurement
organization
• Waves 1-4 procurement savings at or
above target
• Additional impact from continuous
improvement and reformulation
opportunities
• Energized and motivated
procurement organization
• 75+ leads trained in KNA, KEU, KLA
• Responsible sourcing introduced
• Best practices introduced
• Global category management went
“live” with Cocoa and Capital
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Global Procurement
Global Leadership Team
Walter Charles
III
Global CPO & VP
Jessi Olivarri
Sr. Exec Secretary
Shelly
Van Treeck
Fernando
Martin del
Campo
KNA CPO
KLA CPO
Robert O’Connor
KEU CPO
Brenda Brenner
CoMan BP
Brian Bancroft
KAP CPO
Debasis Chanda
Procurement IT
BP
Adam Beuker
Knowledge Center
Kurt Brouwer
Procurement
Finance BP
Komal Patel
PMO
Nick Leonard
HRBP
Cathy Kutch
SRM & Diversity
Dan O’Connor
Legal BP
Global Category Manager
Contractor/ 3rd Party
Open Position
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Global Procurement
KNA Leadership Team
Shelly
Van Treeck
KNA CPO & VP
Jessi Olivarri
Sr. Exec
Secretary
Paul Steele
VP Global
Packaging
OPEN
VP Raw Materials
Tracy Joshua
VP Indirect
Brenda Minter
Direct Operations
Richard
Johnsonbaugh
Indirect
Operations
Kristen
Halverson
Christopher
Schumacher
Innovation
Manager
Senior Analyst
Global Category Manager
Contractor/ 3rd Party
Open Position
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2014 KNA
Procurement Priorities
Deliver Results
3.Support S&OP, KIMM, and DTV across
the Business Units delivering
1. Align and/or improve (as
appropriate) the 4 SC Foundations: improved supply management,
pipeline of savings and initiatives
– People Safety
through partnering and engagement.
– Food Safety and Quality
4.Align KSS 2.0 capability training,
– Customer Service
playbooks, and rollout to KWS
– Financial Performance and Cost
principles
Savings
5.Develop KNA/global Procurement
2. Deploy, Align and/or Execute
organization talent and bench
Project K initiatives:
strength through regular talent
– Network Optimization
review, PDP, PMP, coaching and
mentoring programs and cadence.
– Global Business Services
– Functional Transformations - 6.Visibly support diversity and
inclusion, and improve on D&I
Global Procurement, Regional
metrics.
CLS Initiatives, Global
Engineering
Create the Future
7. Support and enable Global Growth
Categories, deliver the day to day
business, enable Responsible
Sourcing and execute the business
growth and innovation objectives.
Strengthen the Organization
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Project K
Supply Chain Town Hall | Feb. 13, 2014
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Kellogg Confidential
Vision & Purpose
Our Vision
To enrich and delight the
world through foods and
brands that matter
Our Purpose
Nourishing families
so they can flourish
and thrive
Supply Chain Town Hall | GBS Update | Feb. 13, 2014
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Catalyst for Growth
Supply Chain Town Hall | GBS Update |Feb. 13, 2014
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Catalyst for Growth
Supply Chain Town Hall | GBS Update |Feb. 13, 2014
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Update:
Project
K Update
Global Business
ServicesInvesting in Growth
• Global Business
Services
• Global
• Regional
• Local
Supply Chain Town Hall | GBS Update |Feb. 13, 2014
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The New and Improved
Supplier Measurement
System
(SMS)
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Improving –
Team Effort
1.
Met with Focus Group of Suppliers
• 5 Suppliers - GPI, Chaucer, Kerry, Exopack and Bunge
2. Met with Statistician at WKKI
3. Met with Focus Group of Internal Surveyors
• 5 Plants - Battle Creek, Grand Rapids, Lancaster, Omaha and
Zanesville
4. Conducted 2 Pilots
• Plant Pilot - 5 Plants above
• CoMan Pilot – Entirety of Mid-Year 2013 Ratings
5. Multiple Training Webinars and Training
Documentation
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Comparison
The Old SMS
The New SMS
• Surveyor chose suppliers to
rate
• We know who should rate who
• Surveyor had to navigate to
SMS site
• We could not track
compliance
• Manual Reminders AFTER
• Numbers-based ratings
• Once submitted, survey was
not viewable/editable
• No view into historic ratings
• We PUSH the surveys to the
surveyor
• We have visibility - ALL
surveys
• Automatic reminders round
• Descriptor-based ratings
• Surveyor can view/edit
surveys until due
• Surveyor can see historic
ratings
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The New SMS:
The Survey
• Brief
Descriptors
• Rating
Buttons – no
numbers
• In Depth
Descriptors
• Comments
• Historicals
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The New SMS:
The Rating Scale
• New 7-point scale
• Focus on Color
• No Numbers – only descriptors
• HARD ANCHORS
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The New SMS:
The Descriptors
• Detailed and specific GUIDELINES
• Aids all surveyors – old and NEW
• Removes subjectivity
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The New SMS:
The Comments
• Unlimited comment length
• Ability to attach documents as evidence of
rating
• Ability to see last round’s rating for this
supplier
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What’s Next?
•
Questions?
(SupplierCommunications@kellogg.com)
•
Feedback please!
•
Engagement
•
Supplier Day/Supplier Diversity
target June 2014.
Event in November 2014.
Thank you!
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