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Strauss Maximize – Productivity Journey
People & Innovation for
Business Sustainability
April 2018
-Corporate economics confidential-2
Agenda
What have we done
Our plans for 2018
Background and Benchmark
2
3
1
-Corporate economics confidential-3
Strauss structure
Strauss Group
Strauss Israel Strauss Coffee PepsiCo-StraussDips & Spreads
Strauss Water
Mexico
Australia
50%
Israel
49 %
28%IsraelYotvata
50%
Obela
USA
Canada
Sabra
UK
China
50%
Poland
BrazilDairy
50%
Confectionery
Salty Snacks
Salads
Yad Mordechai
20%
49%
Business Partners Network
Romania
Serbia
Russia
Ukraine
Last update: 17.4.2018
Strauss Family 60.41%
Public 33.11%
Institutional 6.48%
New Zealand
Netherlands
Germany
-Corporate economics confidential-4
Analysts aiming for low growth companies structures
IMF warns world economy growing too slowlyThe “increasingly disappointing” world economy is facing
the threat of a “synchronized slowdown” and mounting risks including another bout of financial
market turmoil and a political backlash against globalization
Growth has also fallen in both advanced and emerging economies. High levels of private and public debt are
constraining spending – mainly growth-enhancing capital spending, which fell after the global financial crisis and has
not recovered to pre-crisis levels. That falloff in
investment implies slower productivity growth,
while aging populations in developed countries
* All the quotes above were written during 2016
Our economic future isn’t what it used to be. The Office for
Budget Responsibility revised down its growth estimates for each of the next five ears
Productivity growth, the long-term motor of rising
living standards, is slowing!
since the publication of the January 2016 Global Economic
Prospects, weakness in the global economy has persisted ….. the divergence in economic conditions
between commodity exporters and importers has widened. Some of the downside risks identified in January have
materialized, including softer-than-expected growth in advanced economies
-Corporate economics confidential-5
Global food industry trends driving significant difficulties
Israel F&B market left behind the credit card purchase trendDeveloped markets (Europe & NA) continuous decline in calories consumption per capita
“Best in Class” companies 2013-15 sales CAGR (reported)- difficulties to deliver top line
194
205
218
230
250
263
194 197205 202 206 210
Credit card purchases
F&B
0%-2%-3%-3%-4%-4%
-8%
Kraft Foods (pre KHCmerger)
NestleDanonePepsiCoGenerall Mills*Strauss GroupMondelez (pre coffeedivestiture)
-Corporate economics confidential-6
F&B companies seeking for global growth
• 4Pepsico 2013-2015 sales CAGR by regionsMondelez 2013-2015 sales CAGR by regions
-7%
-9%
-8%
Emerging marketsDeveloped marketsTotal Mondelez
-2%
-4%
-3%
Emerging marketsDeveloped marketsTotal PepsiCo
- F&B market significant slowdown at the developed markets (Europe / North America) with slow population growth
- Emerging Markets (Asia, Africa & SA) uncertainty environment effecting FX devaluations
Global F&B volume growth facing a slow down to almost zero in recent years
-Corporate economics confidential-7
TSR impacted mainly by growth but F&B market not growing…
*BCG analysis
-Corporate economics confidential-8
Since 2011-2012 “best in class” F&B companies put their focus on productivity as high priority KPI
to deliver return to stakeholders & sustainability
Companies Productivity journey starting point..
-Corporate economics confidential-9
Significant productivity initiatives around the world
• Nestlé has strengthened its global capabilities in e-commerce by signing a partnership with Alibaba in China, to grow online sales,
• Key brands strengthen and sales full control
• Lower cost structure with better data, planning, lower waste and disposal, selling exp…
• After global business slowdown, P&G launched three-year effort to trim its office workforce by about 10,000 employees in a year ahead of schedule, and up to 6,000 additional non-manufacturing jobs could be eliminated over the next two years
P&G employees elimination
• Closing 7 plants in US
• 2,600 positions elimination
• Significant investment and post new structure re-consideration of capacity needs and modernizing facilities
Kraft Heinz merger
• Closing 3 dairy plants in Italy, Germany & Hungary
• This step should allow Europe division be more competitive after 4Y of economy issues and consumer lower spending on food
Danone- Production restructure
Nov 15’June 14’
Nestle- E-commerce
Jan 15’ Apr 15’
-Corporate economics confidential-10
Companies productivity measurement - How and What ?
Long term goal of 5% of total cost structure YOY
2015 2016
% From Cost Structure XX% XX%
…
-Corporate economics confidential-12
Supported By:
01 02
03
Management focus• On-going control with steering
committee, transparency and data sharing
• “Out of the box thinking”
Technology/innovation• Implementing cutting edge new
technologies
People• Maximize current capabilities & new generation
Cultural and perception change to support SG sustainability
On going structured processes to maximize companies capabilities while routing new investments in future growth
Productivity primary task and main objectives
-Corporate economics confidential-13
SG adopting new
organizational state of mind
Common productivity definition & methodology
among Strauss Group companies
Connection to Strauss
Group strategy
Productivity
Project
Full commitment of SG and company’s
management to productivity process
2016 Phase I - Project goals
-Corporate economics confidential-14
The processKey functions across all value chain supported the project
-Corporate economics confidential-15
Setting the operational tools
Project framework
Productivity KPIsProductivity definition
Project filter
-Corporate economics confidential-16
We faced significant challenges during the project
Define Productivity, lack of
information and best practice
Different productivity
business stage in each SG
companies
One accepted methodology
and KPI by all companies and
SG management
Implementation – cooperation,
responsibility, no “early wins”
HQ added value and involvement
-Corporate economics confidential-17
SG Productivity development Timeline
1st Generation
• 3Y cost reduction in S. Israel• VIC project• New Cellular and Vehicles agreement • SG HQ cost reduction• S. Water re-organization• Automation of processes and
infrastructure
…201720162012… 2012
Efficiency projects
2nd Generation
Efficiency & cost reduction projects
Next Generation
• BOM improvements • Substitute RM• Substitute suppliers• Alternative packaging materials• Production line optimization• SKU efficiency • Products re-sizing
Managing productivity performance across the entire
value chain
• Cutting edge innovation & technology• New infrastructure and platform• Personalization marketing• B2C and E-commerce • Organization restructure• Plants consolidations• Managerial culture• Decision making measurement• Organizational connection with new generation
-Corporate economics confidential-18
AOP main productivity objectives - Sample
S. Israel
*Productivity managerial tool
S. Water S. Coffee BV Sabra + Obela
-Corporate economics confidential-19
2017-2020 productivity mission implementation
Productivity cultural change
Delivering process rationale to partners &
stakeholders
Full project Implementation &
Communication through the organization
Project implementing as integral part of partners
work plans
Main KPI approvalAOP
implementation
On going KPI control and BOD updates across companies
Phase 1 Phase 2
-Corporate economics confidential-21
Thank you