Zero Based Budgeting (ZBB) ~ Procurement’s New Best Friend ~ Mark Dady: SVP & CPO Mondelēz International Andrea Sordi: Snr Dir Global Procurement Mondelēz International All intellectual property rights on this material belong to Mondelēz International, it should not be copied, distributed and used further without Mondelēz International’s prior written consent.
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Zero Based Budgeting (ZBB)
~ Procurement’s New Best Friend ~
Mark Dady: SVP & CPO Mondelēz International
Andrea Sordi: Snr Dir Global Procurement Mondelēz International
All intellectual property rights on this material belong to Mondelēz International, it should not be copied, distributed and
used further without Mondelēz International’s prior written consent.
ZBB: Procurement’s New Best Friend
Objectives
• Share our function’s experience and best practice gained as
we’ve worked to lead this process for our company
• Start a dialogue
Mondelēz International: A Global Snacking Power house.
#1 #1 #2 #1
• Created in October 2012 ( from Kraft Foods spin off).
• One Dream: “Creating Delicious Moments of Joy”.
• ~ 85% Revenue from fast-growing snacks categories.
• ~ $30BN Net Revenues in 2015.
• ~100,000 employees across 165 countries.
• Major enterprise-wide Transformation underway.
• ~5% Gross ‘Procurement’ Productivity 3 years in a row.
A confluence of events makes Procurement a great place to be.
World slowdown is making top-line growth
harder to generate.
Increased pressure to become leaner, more
agile and expand margins
3G, has set an industry standard
for aggressive cost management.
Many companies increasingly follow a ZBB
approach in Indirects
“Every cost, no matter how minor, is
attacked and reduced or eradicated,” Heinz.
Indirect costs represent a significant
opportunity - historically not a key focus.
INDIRECTS
~20 -40% of Revenue
(Overheads, Services, IT)
GDP SLOWS… …esp. in BRICs
OPPORTUNITYDirect
Costs
>30% EBIT:
PROOF POINT
Opportunity for Procurement to lead the Enterprise:
Expand Margins and Fuel Growth.
• Set Bold Goals & be clear on what you need.
• Who’s the Best ? – why aren’t you the Best ?
• Can you achieve MORE ($) with LESS (OVH) ?
• Get organized.
• Lead the Enterprise.
• Embed Procurement at local, regional
& global levels.
BUILD YOUR BUSINESS CASE… …AND ENGAGE THE C-SUITE
Indirect costs are being addressed aggressively and
the results are showing in the P&L.
“I think ZBB is probably the thing I would single out that caused us to raise our margin guidance this year….” –CFO Mondelez; FQ3 2014 Earnings Call 05/11/2014
INDIRECT COST REDUCTIONS… …DRIVE MARGIN EXPANSION
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Adopting a closed loop process: Procurement’s New Best Friend.