Coca cola presentation asug ga march 1

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Coca cola presentation asug ga march 1

  1. 1. …and the systems required to do it…
  2. 2. Forward-Looking Statements This presentation may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company’s historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; risks related to the assets acquired and liabilities assumed in the acquisition, as well as the integration, of Coca-Cola Enterprises Inc.'s former North American business; continuing uncertainty in the credit and equity market conditions; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in indirect taxes or new indirect taxes; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms and avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in the cost, disruption of supply or shortage of ingredients or packaging materials; changes in laws and regulations relating to beverage containers and packaging, including container deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or other major markets; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and corporate reputation as well as other product issues such as product recalls; changes in, or our failure to comply with, laws and regulations applicable to our products or our business operations; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information technology infrastructure; additional impairment charges; our ability to successfully manage Company- owned or controlled bottling operations; the impact of climate change on our business; global or regional catastrophic events; and other risks discussed in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2011 and our subsequently filed Quarterly Reports on Form 10-Q, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the dates they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements. Reconciliation to US GAAP Financial Information The following presentation includes certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company's website at TheCoca-ColaCompany.com (in the “Investors" section) which reconciles our results as reported under General Accepted Accounting Principles and the non-GAAP financial measures included in the following presentation. 2
  3. 3. 2020 Vision: Our Roadmap for Winning Together • Profit: More Than Double System Revenue • People: Be a Great Place to Work • Portfolio: More Than Double Our Servings Per Day • Partners: Be the Most Preferred Beverage Partner • Productivity: Manage for Greatest Effectiveness • Planet: Global Industry Leadership in Sustainability 3
  4. 4. Coca-Cola Refreshments 19% Coca-Cola FEMSA 11% BIG 10% Coca-Cola Hellenic 8% Arca Continental 5% CCE 5% Swire 4% Coca-Cola Icecek 3% COFCO 2% SABMiller 2% All Other 31% Nearly 275 Bottling Partners creates a highly complex technical eco-system CCR + BIG = 29% of 2011 KO System Volume Top 10 = ~70% of Global Volume 4
  5. 5. One Shared Destination: 2X System Revenues…not 2x cost basis • Profit: More than double system revenue, while increasing system margins • People: Be a great place to work • Portfolio: More than double our servings per day • Partners: Be the most preferred beverage partner • Productivity: Manage for greatest effectiveness • Planet: Global industry leadership in sustainability 2010 2020 $100 >$200 Our GoalsKO System Est. Net Revenue (US$ Billion c/n) 5
  6. 6. How Big is $200 Billion? 6
  7. 7. The Business that We Will Double: Sales into 200+ Countries, with operational footprint in 107…massive breadth without depth creates a challenge to standardize 29% 22% 18% 16% 15% 26.7 Billion Unit Cases Sold in 2011 1.2 Billion Incremental Unit Cases in 2011 (equivalent to 1 Japan, 2 Indias or 3 Russias) 2011 KO System Volume 7 Pacific North America Europe Eurasia/ Africa Latin America
  8. 8. 27% 29% 9% 9% 3% 7% 11% Rest of World 3% $40 Trillion China US Europe India Japan Latin America ASEAN Middle East & N. Africa Sub-Saharan Africa 2% 1% 21% 25% 14% 10% 6% 6% 4% 2% 1% 10% $71 Trillion India Latin America US Europe ASEAN Middle East & N. Africa Rest of World Japan ASEAN China Sub-Saharan Africa Personal Consumption will Increase by 80% by 2020 – systems must accommodate “shift” to edge 2011 Global Personal Consumption 2020 Global Personal Consumption 8 Note: Figures do not sum to 100% due to rounding.
  9. 9. Roadmap To New Application Architecture Foundation Finance & Logistics Out of Standard Support Since 2010 High Customized – 25X Complex Infrastructure > 100 Servers Tightly Coupled Non-Standard Interfaces Financial Roadmap Options to stabilization & simplification 2012 2013 2014+20112010 2012 Classified - Internal use 9 Enterprise Performance Management Out of Standard Support Since 2012 Complex Solution – BPC/BOFC/FIM Complex Infrastructure > 175 Servers Tightly Coupled Non-Standard Interfaces Treasury Roadmap in process for Wall Street and Reval cloud solutions Simplified Business Increased Capabilities Higher Performance Speed to Deliver Reduced Lost Work Time Reduced Costs
  10. 10. Why are we today and where do we want to be? The current SAP solution does not meet business needs, is complex and expensive to maintain: a new Enterprise Platform would … 10 Traditional Concentrate Business Financial Accounting Order Management Sourcing&Procurement Manufacturing&Fulfillment Geography X Geography 1 Geography 2 Geography 3 Manufacturing&Fulfillment Manufacturing&Fulfillment Manufacturing&Fulfillment From a platform that is challenged to meets Business needs… • Fragmented business processes that are highly localized • Highly customized and outdated back-office platform designed for a concentrate business • Unstable platform driving operational disruptions and negative user experience • Inflexible and inability to rapidly deliver new capabilities and adapt to new business models Concentrate Global Juice Coffee Energy DPS Water Freestyle Globalized Region Finance Centers Dairy GlobalizedCPSFunction GlobalSustainableProcurement Collaborative/Integrated Supply Chain Global, Common, Standardized SAP for TCCC* To a platform that enables 2020 Vision and drives a competitive advantage… Sports Drinks • Integrated and sustainable global processes, master data and process governance • Standardized and simplified processes across core operational routines • Increased system stability that results in lower run costs • Flexible infrastructure that is better able to support and provide new capabilities * Excludes CCR & BIG Globalized Shared Services Supplier Collaboration Classified - Internal use
  11. 11. Finance & Logistics Complexity Customization is expensive !!! Benchmark Profile • Represents implementations occurring within the last 5 years • Top quartile of “Very High” and “High” benchmark • $25B+ revenue • >18,000 users • Global profile (>50 countries) • 9+ core SAP modules (i.e., FI, CO, HCM, MM, PP, SD, WM, QM, PM, etc.) Classified - Internal use Benchmark “Average” SAP ACN Benchmark “High” SAP ACN Benchmark “Very high” SAP ACN 300 725 1,250 1,285 2,550 2,100 1X Customization Cost 2X Customization Cost 3X Customization Cost Current TCCC Customization If Reduce TCCC Customization by 80% 50,907 10,000 25X 7X Customization Cost Not a Sustainable Design Decision Point How aggressive can we be in removing customization?
  12. 12. Both the volume of incidents and unplanned FILO downtime continue to increase. Classified - Internal use 12 •FILO incidents continue to rise month over month with volumes increasing by approximately 10% since 2011 •Incident distribution : •2011 - FI: 50%, LO: 50% •2012 - FI: 60%, LO: 40% •While resolution time has be cut in a half, total time to resolve incidents accounts for over 250,000 hour per month on average in 2012 Unplanned FILO system downtime has increased by almost 4 times since 2011 to an average of approximately 6.5 hours per month The Hidden Cost of Complexity SAP PLATFORM 0 100 200 300 400 500 600 700 800 900 Uplanned FILO System Outage (minutes) 0 500 1000 1500 2000 2500 Total Number of FILO Incidents
  13. 13. Finance & Logistics Decisions Customization Impacts Classified - Internal use 13 Traditional Approach • Customizations will be difficult to rationalize out • Tendency to always need enhancements to gain capability as upgrading is difficult • On-going costs tending upward with increased customization 10k 20k 30k 40k 50k Yr 1 Yr 2 Yr 3 Yr 4 Traditional Greenfield Customizations Traditional Greenfield Greenfield Approach • Facilitates a return to standard utilizing Industry templates and process best practices • Managing to a very low amount of re-customization is the key cost driver • Transition to Life Cycle Management 10M 20M 30M Yr 1 Yr 2 Yr 3 Yr 4 Traditional Greenfield AnnualOn-GoingSpend Customization or Vendor Delivered Capability? Vendor Delivered Capability is Lowest On-Going Cost Limited Customizations X86/Cloud Architecture
  14. 14. The Greenfield approach enables 2020 Vision through a sustainable and scalable business model ... Greenfield Approach Building Business Capabilities 14 2013 2014 2015 20172016 Business As Usual Minor Updates Increased risk of major failure Upgrade Project 1 Project 2 Project … New Capabilities Limit Reached X Y Z Upgrade Approach • Does not enable 2020 Vision • Iterative capabilities and solution simplification (projects) • Higher time / cost and lower benefit • Business risk as each project is a silo • Requires on-going coordination and interdependency with CCR Do Nothing – Business As Usual • Does not enable 2020 Vision • Solution is not sustainable • Significantly increased impact on business continuity • Requires on-going coordination and interdependency with CCR BusinessCapability Greenfield Approach • Enables 2020 Vision • Faster to end state • Sustainable and scalable business model • One-off organizational impact (end to end process design and test) • Flexible foundation for more efficient capability improvements Classified - Internal use
  15. 15. Help to Sell Sell Coke Standardized Processes for core financial processes & US GAAP reporting Business Intelligence to provide Value chain economics to drive Profitable growth Good Complexity that provides BI to sell product Design Orientation ValueOrientation High Low Corp - GBS A/P,AR, GL,SD – P2P - CPS Groups BU’s – Bottlers Tax & Treasury Business Systems Landscape/Architecture Towards 2020 Classified - Internal use
  16. 16. Private Cloud or Hana Decision  Currently Finance & Logistics and Enterprise Performance Management run on proprietary hardware which will be ready for Life Cycle Upgrades in 2017.  Hana is SAP’s in-memory computing solution to enable increased performance and speed  Recommended Decision  Architect for HANA  Deploy on private cloud. Note – Cannot go to private cloud with FILO upgrade due to highly customized state  Move to Hana as performance requires Classified - Internal use 16
  17. 17. Governance Key Drivers Classified - Internal use 17 Key Driver Description 1. Governance and Sponsorship • Strong “Top Down” governance and sponsorship is critical to delivering a greenfield implementation successfully simplification, standardization and automation • This includes setting clear program direction and driving alignment & decisions 2. Planning and Preparation • Executing a formal and rigorous planning phase is also essential • A small core team that develops the up-front detailed deliverables (approach, scope, costs, team structure etc.. ) will allow for an accelerated timeline 3. Adoption Level of Industry Solution • Rapid, time-box driven design with “the right SME” – Why Not Approach • Level of commitment to limit customizations • A team that is familiar/experienced in delivering the industry template 4. Change Management • Strong training and communication program • Standardization and reengineering of supporting business processes 5. Team Delivery Capability • A team familiar/experienced in delivering in this model combined functional and technical expertise 6. Stop At Anytime • Unless “playing by rules” to achieve success – STOP PROJECT Six key drivers will have a significant impact on the time required to deliver a successful implementation
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