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PepsiCo Introduction
page 2PepsiCo Introduction (27-Feb-10)
Agenda
PepsiCo State of the Business
Strategic Supply Management Overview
Rules of Engagement
PepsiCo Code of Conduct
Confidentiality Agreement
Request for Information
Our Expectations
Next Steps
page 3PepsiCo Introduction (27-Feb-10)
PepsiCo PepsiCo
State of the BusinessState of the Business
page 4PepsiCo Introduction (27-Feb-10)
World’s Second Largest Food & Beverage CompanyPresence in 200 countries with 198,000+ total employees
Historical data based on 2008 results
PepsiCo Americas Foods (PAF)
PepsiCo Americas Beverages (PAB)
PepsiCo International (PI)
48% Revenues56% Division Op. Profit
23% Revenues25% Division Op. Profit
29% Revenues19% Division Op. Profit
• Frito-Lay N.A.
• Quaker Foods N.A.
• Latin America Foods
• UK / Europe
• MEA / Asia
page 5PepsiCo Introduction (27-Feb-10)
05 06 07 08 09 05 06 07 08 09
Strong “NEW” Track Record of Performance (PEP+PBG+PAS)
PepsiCo Strengths
• Large and Vibrant Categories
• Broad Geographical Footprint
• Developing Market Focus in Beverages
• Global Leader in Snacks
• Strong Brands That Are a Part of the Local Culture
• Advantaged Supply Chain and Powerful Go-To-Market Systems
China
India
Russia
Egypt
Thailand
Turkey
129
8
65
6
9Vietnam
2007 % GDP Growth
Footprint in High Growth, Populous Markets
7
Brazil
Argentina
Venezuela
Colombia
Poland
Pakistan
Romania
So. Africa
9
88
7
55
5
Population (MM)
1,3211,110
398627
142477638
16422
189486775
Every Penny a Prisoner
Cash is King!Every Penny a Prisoner
Cash is King!
$62.0PBG+PAS
“The Acquisition of PBG, PAS will change the Landscape”
$61.0
$6.9
$8.0
PBG+PAS
$9.5
$8.1
Revenue ($B) OperatingProfit ($B)
PBG+PAS
$43.2$43.3
page 6PepsiCo Introduction (27-Feb-10)
PepsiCo Products
page 7PepsiCo Introduction (27-Feb-10)
PepsiCo PepsiCo
Strategic Supply Management Strategic Supply Management
OverviewOverview
page 8PepsiCo Introduction (27-Feb-10)
Indra’s Key Priorities (Feb 16, 2009 PepsiCo Forum)
• 20% reduction in capital in ‘09. Every penny a prisoner!
• 8,300 associates let go on 2008, ‘09.
• Deliver 2010 Annual Operating Plans, both Share and Profit
• Radically improve the competitiveness of our North America Beverages business.
• Relentless Focus on Value, keep our eye on the value equation for all our products.
• Build the foundations for our Future Growth • This must be in a way consistent with Performance with Purpose• But also in a fashion that recognizes that tomorrow will not be like yesterday
• Watch the cash very carefully. Cash is king, and we've got to Make every penny a prisoner as if it were in our own pocketbook.
• Watch DSO, DPO, and inventory levels carefully; • Re-look at all your capex needs; and, • Be extra judicious in all of your spending.
page 9PepsiCo Introduction (27-Feb-10)
Our Priorities• Price is important; however, “Best Value” is our goal
– “Best Value” procurement process balances pricing, performance, and lifecycle cost for critical equipment based on our long-term interests and needs
– “Best Value” procurement process is optimized via comprehensive, holistic scrutiny of our joint (Customer and Supplier) supply chains – goal is to take costs out without impacting margins
• Innovation must provide PepsiCo a sustainable competitive advantage in the market– Suppliers are viewed as “Subject Matter Experts” and provide us with access to leading edge innovation – it’s imperative
our partners provide us with “First Look” at innovation
– Innovation is optimized via alignment on R&D agendas and priorities – our suppliers need to have insight into our long-term direction and channel their own resources appropriately to foster innovation that provides us with a sustainable competitive advantage
• Quality is key and a fundamental principle of “Best Value”– Quality goes beyond equipment and performance – must ultimately ensure consistency and integrity of product in the
market
– Our suppliers must share in our vehement defense, maintenance, preservation, enhancement, and growth of PepsiCo’s brands and its image
• Performance with a Purpose is fundamental to every aspect of our business– We believe our financial success - Performance - must go hand-in-hand with our social and environmental
responsibilities - Purpose. We bring that Purpose to every aspect of our business
– Our suppliers must embrace our vision as well as have their own vision, strategies, and tactics to ensure optimization of the total supply chain – Tomorrow > Today
– Safety is paramount and not a given, demonstrate, improve, process, and provide documentation, “our most precious resource, our people”
• “Every penny a prisoner!”
• “Cash is King.”
page 10PepsiCo Introduction (27-Feb-10)
Enable the continued growth of PepsiCo’s businesses through competitive,
predictable costs, assured supply and supplier sourced innovation, all
generated in an environmentally sustainable manner.
Strategic Supply ManagementStrategic Supply ManagementVisionVision
Strategic Supply ManagementWhat we Are..?
Enable the continued growth of PepsiCo by:Providing world class procurement leadership in collaboration with key business
partners
Delivering the lowest total cost of ownership
Delivering the highest quality outcome at the best value
Partnering with our key constituents and suppliers to drive innovation
Driving sustainability
SSM IndirectsSSM IndirectsVisionVision
SSM Capital MROSSM Capital MROVision, MissionVision, Mission
Drive PepsiCo shareholder value by optimizing the total current and future
asset base – management, enhancement, preservation, and optimization of
the existing and future asset base.• Lower the total system cost – focus on total lifecycle, from
acquisition to disposal!• Leverage Strat Plans to anticipate supply and focus
resources to “maximize” value areas, categories.• Partner with key suppliers to forge Strategic Alliances that
enable growth, innovation, and competitive advantage.• Link Strategies with Sustainability Index – achieve line-
over-line improvements in economic, environmental, and
social impacts.• Recruit the very best and make them better – build strong,
diverse, and nimble teams while providing people with
rewarding and challenging jobs.
Global Access, PepsiCo Visibility, SSM Support, Formalized Process,Global Access, PepsiCo Visibility, SSM Support, Formalized Process,Opportunity of Scale, Issue Resolution, etc…Opportunity of Scale, Issue Resolution, etc…
Spend Managed USD$31B
Spend Managed USD$11B
Spend Managed USD$3.8B
2010 CapEx US$2.8B4900 Capital Suppliers
page 11PepsiCo Introduction (27-Feb-10)
Four major programs form the core of PepsiCo’s Responsible & Sustainable Sourcing activity:
I. Supplier Corporate Social Responsibility
Partnering with our suppliers to operate in a way that respects PepsiCo’s values, brands and the communities in which we operate
II. Sustainable Packaging Optimizing our use of materials and driving to continuously improve the environmental footprint of our packaging
III. Environmental Supplier Outreach
Setting clear, measurable goals for energy, GHG, water, agriculture and forestry resource conservation within the extended supply chain
IV. Sustainable Agriculture
Ensuring PepsiCo has continued access to the key agricultural raw materials necessary to supply growing consumer needs, while respecting the environment and communities involved in producing those raw materials
Responsible & Sustainable Procurement Planks
These strategic planks are flexible to meet the needs of different markets, but are bound together as a global strategy.
• As a Supplier, What do you Bring, Have done, Can do?As a Supplier, What do you Bring, Have done, Can do?
page 12PepsiCo Introduction (27-Feb-10)
PepsiCo PepsiCo
Rules of EngagementRules of Engagement
page 13PepsiCo Introduction (27-Feb-10)
•
Out of Bounds
• Inconsistent Behavior• Negative Energy & Actions• Ignorance to Supplier Issues• Information Balancing• Changing Rules of the Game
Out of Bounds
•Proprietary Information Released•Insecurity & Process Breakdown•Circumventing the System•Corporate Ignorance•Negatively Influential
Ethical Behavior
Confidentiality
Commitment to Partnership
Innovational & Challenging
Willingness to Invest
Trust & Respect
Sustainability (Economic,
Environmental, and Social)
Strategic Partners
Quality & Service
Cost Effective Operations
Effective Technology Development
MWBE Driven
Acceptable ROI Requirement
PepsiCo
Program Development
Systems Criteria for Sustainability
Clear & Unrelenting Expectations
Unified Voice of PepsiCo
Tough but Fair
Good Listeners
“We All Need to Know How to Behave, Play, Work Together”
Rules of Engagement Overview
page 14PepsiCo Introduction (27-Feb-10)
Rationalization Strategy
Stratify Mix
Drop Non-Players
Identify Players
Develop Position
Broad MasterAgreements
Supplier Homework
Spend Map Data
Annual Report
Product Mix
Industry Ranking
Product Line Partnership Realized
Criteria In Place
P01 Discussion
Issue Mitigation
Cost Model
Multi-YearAgreements
Price List
Rules of Engagement
page 15PepsiCo Introduction (27-Feb-10)
PepsiCo PepsiCo
Code of ConductCode of Conduct
page 16PepsiCo Introduction (27-Feb-10)
PepsiCo Code of Conduct
For more information go to: Worldwide Code of Conduct
page 17PepsiCo Introduction (27-Feb-10)
PepsiCo is committed to conducting its business in an ethical, legal, and socially responsible manner. PepsiCo strongly believes that those Suppliers who are approved to do business with the PepsiCo system must follow the same philosophy. For this reason, PepsiCo has established the following policy. Compliance with this policy is required of all Suppliers and their subcontractors if they desire to do business with PepsiCo. Failure to comply with this policy will be sufficient cause for PepsiCo to exercise its right to revoke a Supplier’s approved status.
1) Compliance with Laws and Regulations- Suppliers are required to abide by all applicable laws, codes or regulations including, but not limited to, any local, state or federal laws regarding wages and
benefits, workmen’s compensation, working hours, equal opportunity, worker and product safety. PepsiCo also expects that Suppliers will conform their practices to the published standards for their industry.
2) Employment Practices- Working Hours & Conditions: In compliance with applicable laws, regulations, codes and industry standards, Suppliers are expected to ensure that their
employees have safe and healthy working conditions and reasonable daily and weekly work schedules. Employees should not be required to work more than the number of hours allowed for regular and overtime work periods under applicable local, state and federal law.
- Non-Discrimination: Suppliers should implement a policy to effectuate all applicable local and federal laws prohibiting discrimination in hiring and employment on the grounds of race, color, religion, sex, age, physical disability, national origin, creed or any other basis prohibited by law.
- Child Labor: Suppliers should not use workers under the legal age for employment for the type of work being performed in any facility in which the Supplier is doing work for PepsiCo. In no event should Suppliers use employees younger than 14 years of age.
- Forced and Indentured Labor: In accordance with applicable law, no Supplier should perform work or produce goods for PepsiCo using labor under any form of indentured servitude, nor should threats of violence, physical punishment, confinement, or other form of physical, sexual, psychological, or verbal harassment or abuse be used as a method of discipline or control.
- Notification to Employees: To the extent required by law, Suppliers should establish company-wide policies implementing the standards outlined in this Code and post notices of those policies for their employees. The notices should be in all languages necessary to fully communicate the policy to its employees.
3) Audits and Inspections- Each Supplier should conduct audits and inspections to ensure their compliance with this Code and applicable legal and contractual standards. In addition to
any contractual rights of PepsiCo, the Supplier’s failure to observe the Code may subject them to disciplinary action, which could include termination of the Supplier relationship. The business relationship with PepsiCo is strengthened upon full and complete compliance with the Code and the Supplier’s agreements with PepsiCo.
4) Application- The Code is a general statement of PepsiCo’s expectations with respect to its Suppliers. The Code should not be read in lieu of but in addition to the
Supplier’s obligations as set out in any agreements between PepsiCo and the Supplier. In the event of a conflict between the Code and an applicable agreement, the agreement shall control.
PepsiCo Supplier Code of Conduct
page 18PepsiCo Introduction (27-Feb-10)
PepsiCo PepsiCo
Confidentiality AgreementConfidentiality Agreement
page 19PepsiCo Introduction (27-Feb-10)
PepsiCo Confidentiality AgreementPEPSICO CONFIDENTIALITY AND NON-USE AGREEMENT
THIS AGREEMENT, effective as of the last date shown below, is between PepsiCo, Inc., its affiliates, subsidiaries and related companies, hereinafter referred to as "PepsiCo," and the below named company, its affiliates, subsidiaries and related companies, hereinafter referred to as "Supplier." A Company address for each of PepsiCo and Supplier is listed beneath the signature lines below. WHEREAS, PepsiCo and Supplier wish to explore the possibility of a business arrangement for items listed below as the subject matter of this agreement (“Items”) and provide such Items if requested to do so in writing by PepsiCo; and WHEREAS, PepsiCo and Supplier anticipate and recognize that for the above-stated purposes Supplier may receive, be exposed to and/or assist in the development of confidential information, proprietary data and trade secrets belonging to PepsiCo, and PepsiCo may receive confidential information, proprietary data and trade secrets belonging to Supplier; and WHEREAS, each party desires to ensure that all confidential, proprietary and trade secret information will remain confidential during and after the period of this Agreement; NOW, THEREFORE, in consideration of the covenants and obligations assumed by the parties and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows: 1. PepsiCo, at its sole discretion, will disclose and provide to Supplier certain confidential, proprietary and trade secret
information and samples pertaining to PepsiCo's business and financial information as well as technical information pertaining to its products, processes, packaging and delivery methods that could have a bearing on its use and purchases of Items ("PepsiCo's Confidential Information"). If Supplier is unsure about the confidential nature of any information, Supplier will obtain PepsiCo's approval before using or disclosing the information in violation of the terms below.
2. Supplier will (a) hold all of PepsiCo's Confidential Information in confidence and not disclose it to others without
PepsiCo's prior written consent; (b) limit its use of PepsiCo's Confidential Information solely to supplying Items to PepsiCo; (c) limit the dissemination of PepsiCo's Confidential Information to those members of Supplier's team with a need-to-know the Information, advise such members of the confidential nature of the Information and the obligations attached thereto, and, if requested by PepsiCo, have such members execute individual confidentiality agreement suitable to PepsiCo; and (d) physically secure PepsiCo's Confidential Information in a manner to prevent its unauthorized disclosure or use.
3. Supplier's foregoing obligations of confidentiality and non-use do not apply to information Supplier can show (i) was in
the public domain at the time of disclosure or subsequently became available to the public from sources other than Supplier; (ii) by written record was in Supplier's possession prior to its receipt from PepsiCo and was not acquired directly or indirectly from PepsiCo; or (iii) was disclosed to Supplier by a third party with no obligation of confidentiality to PepsiCo with respect to such information.
4. Without PepsiCo's prior written consent, Supplier will not disclose to the public or to any third party this Agreement, or
any documents, worksheets, drawings, work product, correspondence or other tangible or intangible matters relating to its supply arrangement with PepsiCo, except as necessary to comply with laws, rules and regulations applicable to such supply.
5. All documents, reports, memoranda, drawings, specifications, photographs and other tangible and intangible
information, as well as all intellectual property, including, without limitation, ideas, concepts, compositions, and inventions provided by PepsiCo will remain PepsiCo's property and will be returned to PepsiCo upon completion or termination of the discussions or a supply arrangement, or upon PepsiCo's request.
6. Upon termination of any member of Supplier’s team who was afforded access to any of PepsiCo’s Confidential
Information, Supplier will obtain any of PepsiCo’s Confidential Information retained by the individual and will expressly remind the individual of his or her continuing obligation to maintain the Information as secret and to not use the Information. Supplier will take all measures necessary against any individual and/or entity to whom Supplier made available PepsiCo’s Confidential Information to prevent the intentional or inadvertent disclosure or unauthorized use of the Information.
7. In the course of performing Services, Supplier may disclose to PepsiCo certain information that Supplier considers
confidential. PepsiCo expressly wishes to receive only confidential information from Supplier that is necessary to accomplish the purposes of this Agreement, and Supplier will take reasonable steps to limit its disclosure of confidential information to only that information required to achieve the purposes of this Agreement. "Supplier's Confidential Information" will include information disclosed to PepsiCo by Supplier (a) that is marked "Confidential"; and/or (b) that is orally disclosed and identified as "Confidential" at the time of disclosure and clearly described in a writing designating the information as "Confidential" delivered to PepsiCo within thirty (30) calendar days following the initial disclosure.
1. PepsiCo agrees to (a) maintain the confidentiality of Supplier's Confidential Information; (b) limit the dissemination of
Supplier's Confidential Information only to those of its employees and agents with a need-to-know the Information; and (c) prevent the unauthorized dissemination of Supplier's Confidential Information. PepsiCo agrees that its employees and agents will protect Supplier's Confidential Information with the same degree of care, but no less than a reasonable degree of care, as PepsiCo uses to protect PepsiCo's Confidential Information. PepsiCo's foregoing obligations of confidentiality do not apply to information PepsiCo can show (i) was in the public domain at the time of disclosure or subsequently became available to the public from sources other than PepsiCo; (ii) was in PepsiCo's possession at the time of disclosure; (iii) was disclosed to PepsiCo by third parties who were not in violation of a confidentiality agreement with Supplier; (iv) became known to PepsiCo by inspection or analysis of products available in the market place; or (v) was developed independently by PepsiCo without the use of Supplier's Confidential Information.
2. An obligation accepted by either party above shall not apply in the event that party is required to disclose Confidential
Information due to a legal process, order, or like demand; provided that the party so compelled has given adequate prior notice to the other of the process, order, or demand to provide the other party with a reasonable opportunity to oppose the same.
3. Each party expressly recognizes that any breach of this Agreement by either party will result in the irreparable injury to
the other party and each agrees that the other shall, in the event of such a breach, be entitled to seek injunctive relief, specific performance and other equitable relief in addition to, and not in limitation of, its rights to damages. The prevailing party, in any legal action to enforce the terms of this Agreement, shall recover from the non-prevailing party and the non-prevailing party agrees to pay the prevailing party's reasonable attorney's fees, court costs and expert witness fees incurred.
11. This Agreement will inure to the benefit of and be binding upon the successors and permitted assigns of each party,
including, but not limited to, affiliates thereof. 12. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS AND THE PARTIES AGREE TO THE JURISDICTION AND VENUE OF THE U.S. DISTRICT COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE NEW YORK STATE COURTS.
13. In case any one or more of the provisions contained in this Agreement are for any reason held to be excessively broad
with regard to time, duration, geographic scope, or activity, such provisions will be construed in the manner to enable it to be enforced to the extent compatible with the applicable law.
Agreement Subject Matter (Items): IN WITNESS WHEREOF, each party's acceptance of these terms is indicated by the authorized signature of a representative of each party in the space provided below. Company Name: ________________________________________
Company Name: PEPSICO, INC.
By:
By:
Signature: ______________________________
Signature: ______________________________
Title: Date: ____________________
Title: PepsiCo Strategic Supply Management Date: ________________________
Address:
*Address: 700 Anderson Hill Road Purchase, NY 10577
Facsimile No.: Facsimile No: *Mailing Address: 1 Pepsi Way
Somers, NY 10589
page 20PepsiCo Introduction (27-Feb-10)
Request for Information
Web page link
Company nameBusiness started on:Company founded on:Headquaters locationAddressPhoneEmailManufacturing facilities located in:Brief company history
Ownership
Key Executives and positions:(brief background)
Number of employees2004 a2005 a2006 a2007 a2008 a
Net Sales2004 a2005 a2006 a2007 a2008 f
Global Logistics and Network / Branches
Core Products / Equipment
Years doing Business with PepsiCo (If any)
PepsiCo Revenue (if any)2004 a2005 a2006 a2007 a2008 f
Business Snap Shoot - Data File
Please fill in the blanks as requested:
Company Capabilities Questionnaire I. Company Information * History * Mission Statement * Assets/Employees * Address * Offices and email contact for US Team and International Team II. Business Operations * Business Description: Product & Services * Sales Revenue for the past three (3) years * List three (3) company references * Client Listing if available both domestic and International III. National Certification * Minority Certifications (i.e. NMSDC, State, City and/or Federal) * Awards and Recognition * ISO 9002 etc. IV. Additional Business Information
“Create a Compelling Reason”
page 21PepsiCo Introduction (27-Feb-10)
• Meeting Objectives:
– Supply capabilities
– Standardization
– Modular equipment
– Center line
– MPA?
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