PepsiCo Introduction

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PepsiCo Introduction
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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

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PepsiCo State of the Business
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Worlds 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
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Strong NEW Track Record of Performance
(PEPPBGPAS)
62.0
61.0
9.5
PBGPAS
PBGPAS
PBGPAS
8.1
8.0
6.9
43.2
43.3
Every Penny a Prisoner Cash is King!
Operating Profit (B)
Revenue (B)
The Acquisition of PBG, PAS will change the
Landscape
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PepsiCo Products
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PepsiCo Strategic Supply Management Overview
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Indras 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.

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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 its imperative our partners provide
  us with First Look at innovation
• Innovation is optimized via alignment on RD
  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 PepsiCos 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 gt 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.

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Strategic Supply ManagementWhat we Are..?
Enable the continued growth of PepsiCos
businesses through competitive, predictable
costs, assured supply and supplier sourced
innovation, all generated in an environmentally
sustainable manner.
Strategic Supply Management Vision
Spend Managed USD31B
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 USD11B
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 US2.8B 4900 Capital Suppliers
Spend Managed USD3.8B
Global Access, PepsiCo Visibility, SSM Support,
Formalized Process, Opportunity of Scale, Issue
Resolution, etc
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Responsible Sustainable Procurement Planks

• Four major programs form the core of PepsiCos
  Responsible Sustainable Sourcing activity

I. Supplier Corporate Social Responsibility Partnering with our suppliers to operate in a way that respects PepsiCos 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

• 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?

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PepsiCo Rules of Engagement
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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)

Strategic Partners
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
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Rules of Engagement
Supplier Homework
Spend Map Data
Annual Report
Product Mix
Industry Ranking
Product Line
Price List
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PepsiCo Code of Conduct
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PepsiCo Code of Conduct
For more information go to Worldwide Code of
Conduct
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PepsiCo Supplier Code of Conduct

• 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 Suppliers
  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, workmens
  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 Suppliers 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 Suppliers
  agreements with PepsiCo.
• 4) Application
• - The Code is a general statement of PepsiCos
  expectations with respect to its Suppliers. The
  Code should not be read in lieu of but in
  addition to the Suppliers 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.

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PepsiCo Confidentiality Agreement
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PepsiCo Confidentiality Agreement
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Request for Information
Create a Compelling Reason
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• Meeting Objectives
• Supply capabilities
• Standardization
• Modular equipment
• Center line
• MPA?