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June, 2018

Strategic Cost Transformation

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2

Market Trends

3

Corporate Profits

%ch

an

ge

Yo

Y

CHANGE IN CORPORATE PROFITS AND MARGIN SINCE 2012

Digital disruption allows for the rapid ascension of new competition and the convergence of industries

Corporate profit growth has stagnated since 2012

US ECONOMIC POLICY UNCERTAINTY INDEX

JULY 2008US Financial Crisis

AUGUST 2011

U.S. Debt Downgraded

NOVEMBER 2016Presidential Election

58%of companiesfailto meet theircost reductiongoals

33%of companiespursuingcost reduction inexcess of 20%

AND YET

Increasing volatility makes it nearly impossible to confidentlydeploy even short-term growth initiatives

Today’s environment is making it harder for companies to thrive as volatility has been higher than at any point over the past 5 years due to macroeconomic factors

Typical margin improvement programs are not as effective as they used to be

JUNE 2016

Brexit

P r ofi t Marg ins

4

2

6

8

12

14

16

18

10

20

Company + Founding Year

TIME TO A BILLION DOLLAR VALUATION

Tim

e in

Years

Typical Fortune

500 Company

Google

(1998)

Facebook

(2004)

Tesla

(2003)

Uber

(2009)

WhatsApp

(2009)

Snapchat

(2011)

Oculus

(2012)

Our clients are being forced to rethink how they approach cost management and margin improvement



4

Traditionally, companies would position their cost management approach based on based on one of three categories

Traditional cost management scenarios

Gro

wth

Competitive situation

1Priority

balance

2

Primary objectives

3

Low focus

High focus

LCG T

Growing

Steadily

Positioned for

Growth

Distressed

L CGT

L C G T

• These companies have healthy balance sheets with excess cash flow / reserves, displaying high growth potential with unconstrained options

• Optimize and align customer and product portfolios with enhanced focus on M&A and delivery management

• These companies are recovering from recession and adjusting to new demand levels with conditional options for growth

• Completely transform the financial model to optimizebusiness processes, FTE structure and fuel growth through savings

• These companies are grappling with major concerns regarding their liquidity, market share and operating flaws

• Completely transform the financial model to restructure leverage, renegotiate costs and conserve cash

Low focus

Low focus

High focus

High focus

G T LCGrowth Talent Cost Liquidity



5

However, a new competitive situation may be arising that sits between “distressed” and “positioned for growth”

1. Distressed 2. Positioned for Growth 3. Growing Steadily

Thriving in Uncertainty

Focus:

• Cost and liquidity

improvements to

stabilize balance sheet

Focus:

• Operating model

improvements to

fund growth

“Organizations simultaneously pursuing the seemingly conflicting goals of growth,

cost improvement, and balance sheet management.”

If we continue to see global economic volatility in the short

term, but stable, slow growth in the long term, organizations

could stay in this new mode of “thriving in uncertainty”

?

If we observe a reversal of the recent global

macroeconomic slowdown, and sustained global growth

emerges, organizations could end up in “positioned for

growth” or “growing steadily”

If the global

macroeconomic

environment continues to

worsen, organizations

could end up in

“distressed”

??

Focus:

• Structural cost

efficiencies and

improvements

Growth-oriented Defensive-oriented

6

Faced with this new reality, common themes are emerging from what we are hearing from our clients

Digital Disruption

Speed to Value

Leadership Alignment

Actionable Results

Strategic Capabilities

How do I enable digital

across the enterprise?

How do I stay ahead of

digital innovation?

I need to see results in

quarters, not years

I need a partner who’s

willing to share in

benefits / risks

C-Suite level is not

aligned on margin

improvement initiatives

Help me define

strategic and core

capabilities

I need to find quick

wins to self-fund the

programWe need to find

savings beyond

external spend and

labor arbitrage How do I prioritize the

improvement initiatives

to thrive in uncertainty

Help me identify the

owners of these

capabilities

To “THRIVE” in the midst of broad disruption, companies require a continuum of cost transformation strategies



7

Our Perspective

8Maturity

Low High

Leveraging analytics for real-time insights, issue and exception management

Summary: Visualization tools coupled with operating model advancement provide robust analytics while reducing key turnaround times:

• Exception management, error prevention• Trending and variance analysis • Risk identification

Maximizing Traditional Cost Levers

Continuous emphasis on operating model, business process and org efficiencies

Summary: Cost levers span four categories:

• Organization Simplification• Business Process Optimization• Infrastructure Rationalization • Outsourcing / Managed Services

Evolving Responsibility Models

Optimizing split of accountability between Corporate and BU

Summary: Better and more efficiently align reporting, responsibility & accountability for key activities:

• Corporate / Regional / Local• Differentiated Service Levels

Service Delivery Models 2.0

Continuing to drive operating model innovation

Summary: Increase operating model

• Commercial Market hubs• Footprint rationalization (i.e., Regional

operating models, HQ location changes)• Virtual workforce

Traditional External Spend Reduction Levers

Identify opportunities to reduce overall non-labor spend and improve compliance

Summary: Continue to assess the following: • Demand Mgmt – Do we need the spend?• Compliance – Is spend within policy?• Sourcing – Negotiate better terms? • Cost Ownership – Who should be responsible?

Analytics as an Efficiency Solution

Automation

Disrupting business processes utilizing Robotic Process Automation & Cognitive

Summary: RPA and Cognitive automation:• RPA: behave like a person; rule-based, front-

end, multi-systems, structured• Cognitive: think like a person; self-learning

ability, algorithm-base, SME

Successful Strategic Cost Transformation programs now combine traditional levers with Next Generation operating models and emerging digital technologies, however…

Traditional Spend Reduction Levers Next Generation Operating Model Digital Optimization



9

Operating models choices are typically indicative of a continuum of integration. Most companies do not make an explicit choice, and eventually “accidentally fall” on a hybrid option

…focusing on the Operating Model is the key to unlocking maximum value

Operating model Holding company Strategic guidance Strategic controlIntegrated operating

company

Operatingstructure

Exec. leadership strategic role

• Sets and monitors financial targets and defines fundamental objectives

• Coordinates business strategies, sets and monitors financial / business objectives

• Participates in development of business strategies and their implementation

• Develops plans, policies, and guidelines, and monitors operations

Exec. leadership decision role

• Delegates operating decisions • Provides input into some decisions

• Participates in all major operating decisions

• Makes major operating decisions

Operational model• Stand-alone business units • General management team • General management team • Operating units

SG&A model• Central services typically not

provided• Some central services provided

on as-needed basis• Significant portion of services

provided centrally• Vast majority of services

provided centrally

Corporate

Business unit

Corporate

Core function

Staff function

Business unit

Corporate

Business unit

Core function

Corporate

Business unit

Core function

Staff function

Staff function



10

Note: Changes took place between 2005 and 2016 *G&A functions only

To capture efficiencies, gain cost synergies and develop a scalable platform for growth, many companies are moving to more integrated operating models

Operating Model — Market trend

Companies whose strategy is aligned with their operating models may gain benefits:

• Greater strategic alignment and focus on core capabilities

• Reduced costs through consolidation and scalable platform

• Synergies to improve earnings and overall performance

Companies whose strategy is not aligned with their operating models may face challenges:

• Lack of performance management across units

• Lack of transparency/visibility

• Lack go-to-market alignment

• Ineffective focus on and dilution of core capabilities



11

A Tactical Bottoms-Up Approach—Option AA tactical bottoms-up approach can provide short-term results but will have lower cross functional synergies to provide operating and strategic advantage

Tactical improvements are quick to implement, and require the least amount of management effort but

may be viewed as silo-ed, repetitive, non-value adding and service constraining

Scope Typical Lever or Area Efficiency/SavingEase of

Implementation

Short vs. Long Term

Impact

Applicability

to E&C Clients?

SG&A

• Service Delivery

• Spans & Layers

• Robotics

Ind. Spend• Indirect Sourcing / Demand

Management

COGS & Supply Chain

• Direct Spend

• Logistics

• Distribution

Sales / Marketing • TPM

• Marketing & Branding Spend

GTM• DSD

• GTM Strategy

Working Capital• Inventory

• Working Capital

Capabilities • Strategic Capability Development



12

Key requirements addressedHigh-level view of

outputs for E&C Clients

Defining the operating model, governance, and service delivery model helps to provide strategic grounding for a sustainable cost transformation program

Top Down Operating Model Approach- Option B

Alignment on the operating model choices, governance and service delivery model enables not only

synergies, but also sustainability of performance

Sales

Delivery

Model

Ops

Delivery

Model

G&A

Delivery

Model

Go to Market Units

Operating

Model▪ Defines how the company is currently organized and goes

to market, as well as future state

▪ A high-level definition of how a function should

be organized and how resources should be

deployed (i.e. location, organization, etc.)

▪ Governance decides what decisions are made at the

executive level. Organizational governances defines roles

and responsibilities and non-organizational governance

defines forums and policies

Identify high-level strategic

differentiators, competencies and

capabilities

Align on strategic control model or

integrated model and its design principles

Define decision rights for key processes,

functional roles and responsibilities, KPIs

and forums to support strategic control or

integrated operated model

▪ Focus on high-impact SDM areas – i.e., G&A and operations

▪ Identify implications in high-level business case for SDM changes

▪ Conduct targeted span of control analysis

▪ Create high-level roadmap



13

Limited Strong

Indirect Direct

Limited Company-wide

Specific Common

High

Low High

Variables

Governance

Operational Independence

Service Delivery Model

Culture

Core Skills

Infrastructureand technology

Digital enterprise enablement

Low High

Faster

Decision Control

Relationship to corporate

Shared service delivery

Core Values

Need for standard skill sets

Level of standardization

Speed to gain efficiency

Operating model choices help to determine the degree of structural change an organization can pursue and sustain

Holding Company Strategic Guidance Strategic ControlIntegrated Operating

Company

Operating Model

Business Model—Choices and Variables



14

Capturing long-term value through operating model changes

Option B: Top down transformation is sustainable to the

changing business and market cycles

10%

20%

30%

40%

Bottom up Transactional approach

Structured/Operating model driven Cost Mgt Program

Timeline

A top down approach with transformational / structural changes that aligns with operating model choices has a higher chance of being sustainable through market cycle changes

Option A: Bottom-up transformation loose

momentum for limited scope and efficiency

Deloitte experience has shown that organizations can address complex cost issues by adopting a

approach that focus on operating model/governance and service delivery model changes

Illustrative

Potential Savings

(%)

Top down structural approach is driven by operating model, governance and service model changes

Bottom-up is driven by limited scope and far less complexity

.



15

Top Down Operating Model Approach (B)

Capture Early Savings and Design Detailed Solutions

for Transformation

Implement Solutions and Realize Benefits

Proposed Approach

Phase 1 Phase 2 Phase 3

A. Define Operating Model and Blueprint

B. Rapid Transformation Diagnostic

Baseline Models Spend Profiles

Op. Model Configuration Service Delivery Spans & Layers Portfolio Complexity Infrastructure

Opportunity PrioritizationOpportunity Summaries Program Roadmap

Op. Model Alignment

Establish

Hypotheses and

Baseline

Assess and

Identify

Opportunities

Prioritize

Opportunities and

Develop Roadmap

1

2

3

An initial phase will allow a client to define its Operating Model and assess benefits for opportunity areas

Illustrative



16

Case Study #1



17

Today’s Discussion – A Briefing to the CEO

Executive summary and

improvement opportunities

Baseline and analysis

Opportunities summary and potential

next steps

▪ High-level findings

▪ Overview of savings potential and other improvement opportunities

▪ Cost baseline

▪ High-level benchmarking

▪ Summary of analysis

▪ Size of the prize and potential impact

▪ Potential next steps



18

ACME can pull various levers to improve organizational alignment, reduce cost by at

least $50M and drive performance execution across the enterprise



19

$604.1

$53.7 $657.8 $17.5 $5.8

$117.6

$91.0

$425.9

0

100

200

300

400

500

600

700

SG&A (10K) Interco. alloc. &transfers

Total functionalcost excl.

allocations &transfers

ERP (capitalized)(excl. legal fees)

ERP (expensed)(excl.legal fees)

Engineering(excl.legal fees)

Admin & Other(excl. Legal

functional cost &fees, part of labor

cost*)

In-scopeFunctional Cost

$(M

)

ACME’s total annual SG&A spend (incl. allocations) ~$604M – this assessment covered ~$425M of addressable Sales & Marketing, Finance, HR, IT and Legal costs

From SG&A to Functional Cost in-scope



20

High level cost benchmarking indicates at least $50M in savings to achieve median performance



21

Insights from ACME stakeholder interviews supported the high level leading practice comparison and helped validate improvement hypotheses



22

Depending on ACME’s appetite for change the enterprise can achieve at least $50M in savings by pulling key transformation levers



23

To maximize value, a range of tactical, functional and structural opportunities are needed; prioritizing them is key to meeting short and long-term objectives



24

ACME can jump start the effort by implementing a few quick wins while planning for some of the transformational opportunities



25

ACME has considered SG&A optimization in the past. It is important to give this initiative the right focus to shift from strategy development to execution



26

Case Study #2



27

Deloitte conducted a holistic assessment of client’s operating model, business

process and enabling technology…



28

…leveraging quantitative and qualitative analysis to inform the future state

High-Level Analytical Framework

Fit for Growth

assessment

Organization* Technology*

Structure StaffingGaps

and Risks

Business Processes

OperatingModel

Location and Cost

Capability improvement opportunities

High-level benefits case

Implementation roadmap

Future Vision

Maturity Level

Current State

Dependencies &

Connectivity

Root Cause

Leading Practice

Tech Maturity

Pros / Cons

Must Haves

Stakeholder Interviews

- Interviewed over 150

stakeholders to identify

themes

Site Visits

- Gathered processes, pain

points, and employee

perspectives

Benchmark Analysis

- Evaluated in-scope

processes against a set of

industry leading efficiency

benchmarks

Capabilities Pain Points

FunctionalStructure

ServiceDelivery

Signature

Capabilities



29

We identified key improvement levers to enable Client to be “Fit for Growth”

by driving enterprise efficiency & effectiveness…



30

…adding up to a $50~$90+ M opportunity for the enterprise



31

Organizational Design

Process Execution

Operating Model

Technology Blueprinting

How will work be delivered in

the future state?

Activities / processes which

can be centrally executed

Processes which can be

standardized based on

technology platforms

How different functions can

be organized?

Service delivery model

and associated org

structure for each function

How key processes must

be executed?

Playbooks for key process

execution including tools

and execution steps

How can technology support

business meet its objectives?

Technology blueprint which

accommodates / propagates

standardization of processes

and ease of execution

We recommended a simultaneous execution of improvements in process, operating

model and technology to enable a continuous loop of feedback and inputs from

business



32

Case Study #3



33

• Completed an assessment of ""Large Dairy Company""’ cost structure and identified potential savings of

$257 – 355M

• The program was conducted through 10 initiatives organized into two sprints, Sprint-1 focused on short-term

results and Sprint-2 focused on mid- to long-term results

• Sprint 1: Yearly run rate savings of $75 - 97M

• Sprint 2: Yearly run rate savings of $182 - 258M

• Currently helping client to be on-target to achieve 2018 savings of $55M and 2019 $165M by focusing on

three key areas

1. Operating Model 2. Operations 3. External Spend

Mitigating Market Pressure Through Strategic Cost Transformation

Client Situation

Our Accomplishments to date

• US milk industry overproduction continues to drive commodity pricing. USDA forecasts year-

over-year total volume increases between 1.6-1.8%

• Majority of major US food retailers have transitioned to operating their own private label

dairy processing, driving additional price and volume pressure

• ""Large Dairy Company"" has missed earning targets and is facing pressure from investors to

make dramatic changes to the business to remain competitive

• ""Large Dairy Company"" Management needed to develop a plan that shows investors and

employees they are aware of the headwinds facing the company and are ready to take the

necessary actions to achieve profitability targets



34

Issues the Executive Team needed to address quickly…

Execute with Speed and CapacityAnnounce and launch a robust turnaround plan with business case within 60 days. Team with a consulting partner that will increase the probability of achieving sustainable results, including having explicit experience in the dairy sector

Engage, Align and Inspire EmployeesBuild and execute the plan with executive alignment, maintaining employee communication about how and why the changes are occurring, with the end state in mind

Restore Market ConfidenceAcknowledge key issues that are impacting the company/industry and define what will be done to restore stakeholder and investor confidence

Define New Operating Model and Business Changes Assess and make changes to the business and operating model that will allow the company to survive the continued pressure on revenue and margins



35

Efficiency and cost reduction opportunities were higher or much higher than current "Large Dairy Company" management believed were possible – an activist investor would quickly prove this point

Initial Rapid Diagnostic: "Large Dairy Company"

▪ "Large Dairy Company" performance made it a potential target for activist investor focus

▪ An aggressive program, similar to the ones conducted by 3G Capital, would likely not succeed at "Large Dairy Company"

▪ Outside-in financial view indicated potential opportunities of $100M - $200M/year

▪ A closer operational review indicated potential opportunities of $205M - $324M/year

— G&A Optimization and Overall Company Labor opportunities were $45M - $84M/year

— Commercial opportunities were $29M - $45M/year

— Supply Chain opportunities were $131M - $195M/year

▪ The portfolio of opportunities needed to be architected into a comprehensive program based on time to value and ease of implementation

We recommended a broad diagnostic, with implementation divided into two Sprints:

Sprint 1: Optimize Spans and Layers, Indirect Sourcing, Prioritize Trade Promotions, Transform Service Delivery

Model, and Sourcing and Demand Management – and Sprint 2: Logistics, Conversion, Deploy Automation, and

Review Marketing and Selling



36

High-level operational review identified savings opportunities between $205-324M, exceeding

those from an outside-in perspective

Through a high-level operational review using actual "Large Dairy Company" data, potential savings exceed those from a financial outside-in perspective of $100-$200M

"Large Dairy Company" – Potential Cost Saving and Efficiency Opportunities

AreaOpportunity

Areas Estimated

Benefits ($M)Speed to Value Ease of Implementation

SG&A Optimization/

Overall Labor

Spans and layers $25 – $45

Service Delivery $14 – $19

Automation $2 – $3

Indirect Sourcing $4 – $17

Commercial

Trade Promotions

$29 - $43Customer GM Performance

Marketing/Selling $0-$2

Operations1

Sourcing $46 - $69

Logistics $46 - $68

Conversion $39 - $58

Total $205-$324M

1. Includes savings estimates from existing operations/supply chain initiatives



37

Approach



38

The approach was organized into two Sprints, the first focused on short term results and the second on mid-to-long term results

Our Engagement Approach

Implementation

(3 months)

Planned Workshop Content

Ramp Up Executive Workshop Sprint 1 Results Review Sprint 2 Results Review

• Cleansed data

• Executive interviews

• Ramp-up logistics

• Operating Model and Service Delivery Model alignment

• Sprint 1 results review workshop to agree on go/no-go decisions for rapid implementation (three months)

• Sprint 2 results review workshop to agree on go/no-go decisions for rapid implementation for mid to long-term opportunities

Executive Workshop

Sprint 1 Results Review

Sprint 2 Results Review

Sprint 2 Mid- to Long-Term Results

(8 weeks)

Sprint 1 – Short-Term Results

(4 weeks)

Ramp-up and Pre-Start

(~1-2 weeks before project

start)

Implementation

(6-12 months)



39

Four Improvement Themes emerged from initial assessment to guide the development of our final recommendations

Restructure and integrate the operating model

Improve spend management to drive accountability and control

1

Size operations to capacityFocus on region, brand, product, and

customer profitability

2

3 4



40

We organized our Sprint 1 and 2 initiatives into these four Improvement Themes

Improvement Themes Sprint 1 Initiatives Sprint 2 Initiatives

1. Restructure and integrate the operating model

• Spans and Layers 1 and Capability Assessment

• Operating Model:

- Operating Model/Service Delivery Model

- Spans and Layers 2

- Sales Force Optimization

• Technology & Infrastructure

2. Improve spend management to drive accountability and control

• Indirect Spend & Initial Enablement

• Direct Spend & Prioritized Roadmap

3. Size operations to capacity • Optimize Mfg./Logistics Footprint 1 • Optimize Mfg./Logistics Footprint 2

4. Focus on region, brand, product, and customer profitability

• N/A• Regional / Brand / Product

Profitability



41

Restructure and Integrate the Operating Model



42

What are some of the things that we just take as given?

Why do we take them as given? Can we challenge that?

Where do these orthodoxies exist?

What might happen if we flipped that orthodoxy?

Orthodoxies are widely-accepted organizational beliefs that shape strategy, create blind spots, and impede

breakthroughs

• We must maintain a national footprint

• We must maintain current volume and customers

• Local P&Ls drive the best coordination and focus

• Local customer service is the way we differentiate in a commodity business

• We lose our shirts on national accounts and make all our money on the DSD business

Questions to ask: Some orthodoxies we heard:

Transforming an operating model requires a willingness to challenge orthodoxies




43

Holding Company Strategic Guidance Strategic ControlIntegrated Operating

Company

• Profitable Footprint. Operations footprint focused on profitable volume while balancing revenue erosion and national account coverage

• One P&L. P&L moves from divisions to corporate; divisions/field focus shift to sales and execution metrics

• Decisions at Corporate. Corporate center makes all major decisions while field executes and provides input

• Consolidated Support. Support services are consolidated and integrated to the maximum extent possible

• Enable Core Capabilities. Scale core capabilities at the corporate center through COEs

• “One Dairy Way”. Policies, practices, processes, systems and job roles are harmonized and standardized

• Leverage Scale. Leverage Dairy’s scale for procurement efficiency and maximization of profitable sales

• Reposition for Growth. Take 12-18 months to reposition to a stable and efficient platform for growth

Enterprise-wide Operating Model Principles

Future StateLegal

HROps

Logistics

IT

Field Sales

National SalesFinance

Procurement

Operating Model Design Principles

Operating model design options align with the previously agreed design principles

Focus areas highlighted

Started

Here



44

Current operating model

Potential future state operating model was designed to maximize and capture efficiencies across "Large Dairy Company"


Finance

HR

Legal

Potential future state operating model

DSD

Shared

Services

Finance

HR

IT

Supply Chain / Ops

Warehouse New?

Division Division Division Division Division



Division Division Friendly’s

So

uth

No

rth

West

IT

Co

mm

ercia

l B

Us



45

Current Service Delivery Model

Total: 705 FTE

Processes Total Processes Total

Lo

cal

Reg

ion

al

Co

rp

orate

Rela

tio

nsh

ip t

o t

he B

usin

ess (

Rep

resen

tati

ve F

TE

’s)

Transactional Knowledge-Based

Method of Adding Value

Future Service Delivery Model

Total: 585 FTE

Processes Total Processes Total

Lo

cal

Reg

ion

al

Co

rp

orate

Rela

tio

nsh

ip t

o t

he B

usin

ess (

Rep

resen

tati

ve F

TE

’s)

Transactional Knowledge-Based

Method of Adding Value

The potential future state service delivery model would drive activities towards consolidation while continuing exception-based local support with estimated cost savings of $9–13M

Finance Service Delivery Model

Key Considerations

• Consolidating redundant field activities may yield savings of ~100 FTE and $9.3 –13.1M

• An interim regional model may be required to facilitate transition

AccountingAccounts PayableAccounts ReceivableCost AccountingCredit and CollectionsPayrollCash Application ProcessingRoute SettlementField Finance AdministrationFTE Total

3115742

666

2813355

58%

Business DevelopmentFP&A

FTE Total

334

5%

AccountingAccounts PayableControls and ComplianceCost AccountingPayrollFTE Total

6941132617

24% FTE Total 0%

Financial ReportingFinancial SystemsAccounts Receivable

FTE Total

283

2%

AuditBusiness DevelopmentFinance LeadershipFP&ATaxTreasuryFTE Total

921

50125

11%

Route SettlementCash Applications ProcessingField Finance Administration

FTE Total

12728

47

36% FTE Total 0%

FTE Total 0%

FP&A

FTE Total

7

1%

AccountingAccounts PayableAccounts ReceivableControls and ComplianceCost AccountingCredit and CollectionsFinancial Reporting Financial SystemsPayrollFTE Total

79455212244328

19

47%

AuditBusiness DevelopmentFinance LeadershipFP&ATaxTreasury

FTE Total

951

60125

15%

Notes: assumptions include: 1. local to corporate consolidation results in 30-40% efficiency, 2. regional to corporate consolidation results in 10%-20% efficiency, 3. FP&A local to corporate consolidation—and change in model to sales territories vs. P&Ls—results in efficiency of 40-50%

• Most transactional activities currently performed at the local and regional levels would be consolidated into corporate SSC

• Field FP&A and Business Development would be centralized in corporate, with targeted support at regional level

• Select inventory control and cash and control-related functions will remain in the field

Management actions

1

1

2

3

32

1 2



46

Spans & layers dashboards by function were designed to facilitate root cause analysis and accelerate the identification of optimization opportunities

Spans & Layers Dashboard



47

Using Deloitte’s Supervisory Burden methodology, we determined the optimal number of direct reports for each manager

Gap to Supervisory Burden

• "Large Dairy Company" teams rated workload across 4 dimensions:

− Nature of Work: How similar is the work of the manager’s direct reports?

− Degree of Standardization: To what degree can work be standardized?

− Complexity of Work: How complex are the activities of the direct reports?

− Interdependency of Work: How much must the manager coordinate activities with members of the work group?

• Key Findings

− Support functions have greatest gap to optimal span, and therefore largest opportunity for optimization

− Supply Chain / Logistics teams are generally well spread out, although there are still opportunities where span can be optimized

− Large gaps to optimal are primarily driven by geographic fragmentation



48

Program Results and Plan forward



49

Pillars Headlines on progress2018 Plan

savings ($MM)

2018 Expected

savings

($MM)

Annualized

savings

($MM)

Restructure and integrate

the operating model

✓ Sales restructuring complete✓ HR, FP&A and Supply Chain redesign complete• G&A centralization and outsourcing tracking to

plan

$13 $15 $51

Improve spend

management to drive

accountability and control

• Drive vendor responsiveness to price renegotiations and terms optimization

• Wave 1 of P-card cancellation complete

$25 $25 $63

Size operations to

capacity

• Plant consolidation being sequenced to balance

capex, benefits and transition costs

• New Operations Restructuring initiative

launched at plants not touched by consolidation

initiative

$17 $15 $51

Total $55 $55 $165

Program Investments ($10) ($10) ($6)

Net Benefits (EBIT) $45 $45 $159

The program is making measurable progress across and tracking to targets

Impact So Far

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