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Global Sourcing Strategies in a Volatile Environment Leonardo DeCandia, P.E.
October 12, 2010
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Presentation Agenda Presentation Agenda
Quality• About the Estee Lauder Companies
• About the Presenter
• Sourcing Practices at ELC
• Current & Evolving Challenges
• Tactics & Strategies
• Q & A
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The Estee Lauder Companies IncThe Estee Lauder Companies Inc
Quality• Founded in 1946
• $8 Billion in Sales
• Over 25 Brands/Over 40 Global Affiliates
• Prestige Beauty Segment
• A Culture of “High Touch” – Unique Connection to the Consumer
• Building & Investing on a Tradition of Excellence
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Leonardo DeCandiaLeonardo DeCandia
Quality• 15 Years @ J&J; Last Role – Head of Supply
Management Consumer Companies
• 8 Years @ Roche; Last Role – Chief Supply Officer Pharma NA
• 4 Years @ AmerisourceBergen; Last Role – SVP/CPO Supply Chain Management
• Part Time Lecturer – Rutgers University Graduate School of Business
• Chair Emeritus – Rutgers University Supply Chain Center
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Global Indirect Procurement •Wednesday February 10th, 2010
ELC Procurement
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ELC Procurement Balanced Approach to Supply Base Management
• Adherence to ELC Standards & Expectations• Robust & Reliable Quality Systems• Consistent & Repeatable Global Execution
• Adherence to Promise Date• Responsive & Flexible to Change• Clear Understanding of Priorities
• Marketplace Leadership• Continuous Improvement Mindset• Optimal Asset Utilization
• Global Systems & Tools• Organizational Training & Development• Investment in Innovative Practices & Technologies
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Current & Evolving ChallengesCurrent & Evolving Challenges
Quality
• A Cautious Supplier Base – Is this recovery sustainable?
• A Dynamic Geopolitical Environment – The changing of the guard in Asia & the re-industrialization of the US & Europe?
• An Overleveraged Consumer in the Major Markets – Can the growth of emerging markets off-set the revenue loss?
• The Constant Need to be Quicker & More Efficient – Procurement’s role in facilitating access to innovation and expansion of profit margins?
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ELC Procurement Priorities & FocusELC Procurement Priorities & Focus
Quality
1. Direct Material Sourcing• Global Brand Leads (Experienced & Integrated
Resources)• Global Category Leads (Leadership @ Source
Supplier)• Global Innovation Lead (Integrated w/R&D
Colleagues)
2. Third Party Manufacturing• Global Strategy & Supply Management• Consolidate Suppliers Based Upon Core
Competencies• Formal Innovation Management Practices
3. Indirect Procurement• Global Buyer’s Network w/Regional Hubs• Global/Regional/Local Category Management
Processes• Global Roll Out of SAP with Common Data & Policy
4. Organizational Development & Investment• Common Category Practices for All Procurement• Rotation Programs – Cross Brands, Regions &
Procurement • Training in Performance Management
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Tactics & Strategies for the Current EnvironmentTactics & Strategies for the Current Environment
Quality• Full Understanding of Global
Regulatory Environment• Dynamic Measures &
Supplier Reward Systems• Early Supplier Engagement in
Design for Execution• Metrics: Quality @ receipt; %
suppliers @ highest level; etc
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• Global Center-Led Policy & Processes with Regional Execution
• Lead Time Reduction Programs & Capacity Planning
• Innovation in Common Platforms with Brand Customization
• Metrics: On time delivery; flexibility to change; lead time average; etc
• Brand Driven COGS Targets with Procurement Programs
• Category Life Cycle Management & 5 Year Pipeline Plans
• Global Market Expertise & Dynamic Supplier Management
• Metrics: COGS; year to year savings; supply base consolidation; etc
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• Organizational Design Aligned with ELC Strategy
• Core Competency Focus Integrated & Complementary to Business Partner Needs
• Procurement Professional Development @ Global Level
• Metrics: Training hours; retention levels; high potentials %; etc
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Q & AQ & A
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Thank you