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PepsiCo Introduction

PepsiCo Introduction. 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. PepsiCo State of the Business.

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PepsiCo Introduction

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  1. PepsiCo Introduction

  2. 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

  3. PepsiCo State of the Business

  4. World’s Second Largest Food & Beverage Company Presence in 200 countries with 198,000+ total employees PepsiCo Americas Foods (PAF) PepsiCo Americas Beverages (PAB) PepsiCo International (PI) 48%Revenues 56%Division Op. Profit 23%Revenues 25%Division Op. Profit 29%Revenues 19%Division Op. Profit • Frito-Lay N.A. • Quaker Foods N.A. • Latin America Foods • UK / Europe • MEA / Asia Historical data based on 2008 results

  5. Strong “NEW” Track Record of Performance (PEP+PBG+PAS) $62.0 $9.5 $61.0 PBG+PAS PBG+PAS PBG+PAS $8.1 $8.0 $6.9 $43.3 $43.2 Every Penny a Prisoner Cash is King! Operating Profit ($B) Revenue ($B) “The Acquisition of PBG, PAS will change the Landscape”

  6. PepsiCo Products

  7. PepsiCo Strategic Supply Management Overview

  8. Indra’s Key Priorities(Feb 16, 2009 PepsiCo Forum) • 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. • 20% reduction in capital in ‘09. Every penny a prisoner! • 8,300 associates let go on 2008, ‘09.

  9. 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 Purposeis 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.”

  10. Strategic Supply ManagementWhat we Are..? 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 Management Vision Spend Managed USD$31B • 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 Indirects Vision Spend Managed USD$11B 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. SSM Capital MRO Vision, Mission • 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. 2010 CapEx US$2.8B 4900 Capital Suppliers Spend Managed USD$3.8B Global Access, PepsiCo Visibility, SSM Support, Formalized Process, Opportunity of Scale, Issue Resolution, etc…

  11. Responsible & Sustainable Procurement Planks Four major programs form the core of PepsiCo’s Responsible & Sustainable Sourcing activity: 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?

  12. PepsiCo Rules of Engagement

  13. Good Listeners Clear & Unrelenting Expectations Unified Voice of PepsiCo Tough but Fair Systems Criteria for Sustainability Program Development Rules of Engagement Overview Out of Bounds PepsiCo • Inconsistent Behavior • Negative Energy & Actions • Ignorance to Supplier Issues • Information Balancing • Changing Rules of the Game • Ethical Behavior • Confidentiality • Commitment to Partnership • Innovational & Challenging • Willingness to Invest • Trust & Respect • Sustainability (Economic, Environmental, and Social) StrategicPartners Quality & Service Out of Bounds Cost Effective Operations • Proprietary Information Released • Insecurity & Process Breakdown • Circumventing the System • Corporate Ignorance • Negatively Influential Effective Technology Development Acceptable ROI Requirement MWBE Driven “We All Need to Know How to Behave, Play, Work Together”

  14. Rationalization Strategy Stratify Mix Partnership Realized Drop Non-Players Identify Players Criteria In Place Develop Position P01 Discussion Broad Master Agreements Issue Mitigation Cost Model Multi-Year Agreements Rules of Engagement Supplier Homework Spend Map Data Annual Report Product Mix Industry Ranking Product Line Price List

  15. PepsiCo Code of Conduct

  16. PepsiCo Code of Conduct For more information go to: Worldwide Code of Conduct

  17. 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

  18. PepsiCo Confidentiality Agreement

  19. PepsiCo Confidentiality Agreement

  20. Request for Information “Create a Compelling Reason”

  21. Meeting Objectives: • Supply capabilities • Standardization • Modular equipment • Center line • MPA?

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