Ensuring Food Safety and Brand protection throughout the Supply Chain

Anil Nair Mondelez International Regional Corporate Quality World of Food Safety, THAIFEX, Bangkok. May 2013

Contents

2

Managing Supply Chain Quality Expectations Integrating Prevention based Food Safety

Approach Examining Consumer Relevant Quality

Standards Middle East Case Study – Cheese Handling in

the Supply Chain

Our Dream

3

CREATE DELICIOUS MOMENTS

OF JOY

Our Values Guide Us

4

Inspire trust. Act like owners.

Keep it simple. Be open and inclusive.

Tell it like it is.

Lead from the head and the heart.

Discuss. Decide. Deliver.

We Inspire Trust…

5

The Importance of Food Safety:

– Consumers have a right to trust all food they purchase…

– It is generally recognised across the food industry that food safety is not a source of competitive advantage

– We all want the highest appropriate standards applied across the value chain, to assure the highest levels of consumer protection.

Mondelēz International - Overview

6

Net Revenues of $35 billion in 2012

Global snacks powerhouse

Products marketed in 165 countries

No. 1 in Biscuits, Chocolate, Candy and Powdered Beverages

No. 2 in Gum and Coffee

Approximately 110,000 employees

Donated more than one billion servings of food since 1997

A Global Snacks Powerhouse With $35 Billion In Revenue (1)

7

(1) 2012 reported net revenues (2) Biscuits includes salty/other snacks

Biscuits(2)

32%

Chocolate 27%

Gum & Candy

15%

Beverages 17%

Cheese & Grocery 9%

Latin America

15%

EEMEA 11%

Europe 39%

North America

20%

Asia Pacific 15%

• Nearly 75% of revenues in fast-growing snacks categories

• In December 2012, we announced a reorganization of our management and reporting structure following the Spin-Off of Kraft Foods Group. Beginning in 2013, our operations, management and operating segments will reflect: Asia Pacific; Eastern Europe, Middle East & Africa (“EEMEA”); Europe; Latin America and North America. Accordingly, we will begin reporting on our new segment structure during the first quarter of 2013, including all historical periods we present. For purposes of this presentation the above pie chart reflects this structure based on our 2012 Net Revenues.

We offer many of the world’s favorite brands

8

Our Categories & Power Brands

9

Biscuits

~65% of Biscuit

Revenue

Gum & Candy

~60% of Gum &

Candy Revenue

Beverages,

Cheese & Dairy

Chocolate

~50% of Chocolate

Revenue

~50% of Beverages,

Cheese & Dairy Revenue

Our Geographic Presence

10

North America (NA)

Latin America (LA)

Europe (EU)

Asia Pacific (AP) Worldwide HQ: Deerfield,

Illinois

Eastern Europe, Middle East and Africa

(EEMEA)

Eastern Europe, Middle East & Africa

11

• Region headquarters:

– Dubai (UAE)

• Key markets:

– Egypt, Nigeria, Pakistan, Russia, Saudi Arabia, South Africa ,Turkey, and Ukraine.

• Net Revenues*=$3.7 billion

* In December 2012, we announced a reorganization of our management and reporting structure following the Spin-Off of Kraft Foods Group. Beginning in 2013, our operations, management and operating segments will reflect: Asia Pacific; Eastern Europe, Middle East & Africa (“EEMEA”); Europe; Latin America and North America. Accordingly, we will begin

reporting on our new segment structure during the first quarter of 2013, including all historical periods we present. For purposes of this presentation the net revenues provided above reflects this structure based on our 2012 Net Revenues.

Introduction to BU Quality

Ensure Compliance of Mondelēz

International’s requirements to assure product Quality and Safety in the Supply Chain.

12

• Compliance to QCMS & support to commercialization

T1

– Warehouse/Co Packer Audit support – SS Management support – BU-driven consumer complaint evaluation and support T2 – Consumer Premium coordination – Technical trade liaison, including BU-driven trade complaints – Licensing support – Label compliance approval (legal oversight) including final artwork verification – Manage due diligence/regulatory compliance issues involving imports T3 – QA input PAM – Development of BU Q Systems and Policies – Training KFI requirements for BU functions and support to BU assessments

• Business value programs

T4

– Field audits – Quality building programs with the trade (freshness, trade returns, unsalable, quality yield

initiative)

T1

T2

T3

T4

BU Quality Best Practice - 4 Tier Programs

Managing Supply Chain Expectations

14

Keep Storage Conditions (Temperature/Humidity)

Incoming

Dispatch

Control any

contamination

Pest/ Chemical

Traceability

Control of

returned product

FIFO

Principles

Hold &

Release

Damage/ physical/

heat

Quality

System Quality Management

System

? Warehouse

CONSUMER

Lead & Live Consumer Inspired Quality

- Quality Control

- Quality Systems/policies

Trade/Market

Quality feedback from Trade

Consumer complaints

Field Audit Warehouse

Retail Quality Audit - Quality Assessment - What is it?

16

• Checking the condition of products (Mondelez) in stores

– On Shelf availability, Shelf-ready packaging, Temperature

Retail Quality Audit - Quality Assessment - How do we do?

17

• Consumer units purchased and checked at home/office

– Package damage, print, easy open, inner unit wrap, coding

– Product damage, appearance, filling, colour, ingredients

Proactively Auditing the Supply Chain

18

Plant (Line) Plant (Warehouse)

Customer (Warehouse)

Consumer Shelves

Sandwich position Detailed/accurate data recording

Product identification

Product Sampling

Evaluating the Supply Chain

Saudi Arabia –Oreo Breakages

Tracking/Sampling at each stage of Supply Chain

19

Our Integrated Prevention Based Food Safety Approach is a Point of Difference

20

Risk Categories

Design Procure Convert* Distribute Trade Consumer

• Design Safety Analysis

• Specifications

• HACCP

• Supplier QA

• Plant & Equipment Design/Capability

• Contracts

• Selection/ Approval

• Material Monitoring

• Continuous Improvement

• Specifications

• HACCP

• Supplier QA

• Traceability

• Sanitation & Pest Control

• Complaint Mgmt

• Process Capability & Control

• Traceability

• Warehouse Controls

• Complaints

• Warehouse Control

• Specification

• Labelling

• Consumer Response

• Process Capabilities

*Applies to internal & external plants

Microbiological Chemical Physical

Scope

Risk Prevention Programs

Starts with Design and grounded in sound Preventative Programs

QCMS provides the framework for integrated product design.

21

Design Procure Convert Distribute Trade Consumer Consumer

Focus on what’s important

Design it in

Make it right every time

Talk about it in a meaningful way

Listen, learn, and improve

Design

22

Design Procure Convert Distribute Trade Consumer

We design robust products with food safety in mind

Our design process includes product safety gates at key development stages

Packaging integrity is a key element

Internal global food safety team provides expertise

Suppliers

23

Some examples of significant incidents which highlight the external risks.

Chinese milk powder contaminated with melamine sickens 1,253 babies

German Dioxin egg scandal spreads across EU

LOS ANGELES (AP) — The normally quiet almond industry has suddenly found itself struggling with a food producer’s worst

nightmare: a salmonella outbreak that has sickened more than two dozen people and prompted a nationwide recall.

Suppliers

24

Design Procure Convert Distribute Trade Consumer

Risk based supplier approval

Supplier development

Communications (specifications, expectations)

Material Monitoring program

Conversion

25

Design Procure Convert Distribute Trade Consumer

Our operations manage product safety based on the CODEX principles of HACCP

Founded on solid PRPs

CCP Process capability is validated against proven science

Internal Audit programs

Distribution & Trade

26

Design Procure Convert Distribute Trade Consumer

Warehouse & Transportation expectations

Training and coaching of trade partners

Supply chain traceability

Retail product audits

Consumers

27

Design Procure Convert Distribute Trade Consumer

Communications – product labeling

Understanding anticipated products use

Proactive use of consumer contacts

Monitoring for emerging food safety issues

What is Consumer Relevant Quality?

28

Consumer Relevant Quality is a program comprised

of Key Quality Attributes which are simple flavor

and visual standards aligned to customer and

consumer expectations measured throughout our

supply chain

Making Every Day

What Is So Special About CRQ’s ?

29

Consumer Relevant Quality (CRQ’s) Provides a leading vs. lagging tool, insight to consumer‘s

expectations

Integrates Retail Assessment programme providing a

powerful tool for market calibration

Differentiates Mondelez , builds competitive advantage

Consumer Relevant Quality Journey

30

IDEATION DESIGN MAKE DELIVER CUSTOMER CALIBRATE CI

CDM 49g Packaging

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Appearance Coding Registration Sealing Back Seal Alignment

Category

%

%G %A %R

CONSUMER

Consumer Relevant Quality Journey

31

RACI

R –R&D (Tech) A –Marketing C-R&D (Senior) C-Supply Chain Ops I –Category Quality I –Country Quality

Consumer Insight

IDEATION

RACI

Responsible Person that performs some or all of the tasks

Can be more than one person – segmented task or procedure

Accountable Person that will be held to account for performance/delivery

only one person allowed

Consulted Person or Persons that need to be consulted regarding the task

Informed Person or Persons that need to be informed regarding the task

Evaluation

• Post Launch Reviews (R&D) • Retails Quality Audits (Category Quality) • Consumer Preference Testing against PPQS (Marketing) • Consumer Response & Complaints via Care Lines (Category Quality)

32

Consumer Relevant Quality is specified, calibrated and improved via

Quality Measures along I2M within the supply chain

Idea Development Development

• Quality Perspective (Category Quality) • Concept Test (R&D / Marketing)

• Meridian Data Quality (R&D) • Product Testing (R&D / Marketing) • Visual Standards (R&D)

Execution

• Pre-Launch Quality Risk Assessment (Category Quality) • 1st Production Approvals (R&D / Supply Chain)

Cycle Time Metrics PDR to

Launch Approval

Launch Approval to First Production 1st Prod to

Release

Qu

alit

y M

eas

ure

s I2

M

Consumer Relevant Quality Journey

33

RACI

R – R&D (Tech) A – R&D (Senior) C- Marketing C- Supply Chain Ops I – Category Quality I – Country Quality

Product Specification

Development Naked

& Packaging

Process Specification Development

DESIGN

Key Product

Attributes Key

Quality Attributes

Standard Running

Conditions Plant

& Equipment Process Capability

R – R&D (Tech) A – R&D (Senior) C- Supply Chain Ops I – Category Quality

Consumer Relevant Quality Journey

34

RACI

R –Supply Chain Ops (Front Line) A – Supply Chain/Ops (Senior) C- Site/Plant Quality I – Category Quality I – Country Quality

Live Monitoring

of Key Product Attributes

& Key Quality Attributes

Live

Monitoring of Process Standard Running

Conditions

MAKE

35

Product Quality Visual Standard

Attribute Red Unacceptable

Amber Min acceptability

Green Target

Recipe distribution (Inclusions)

Uneven Fair distribution Even distribution

Quality Improvement

Product Quality Visual Standards

Consumer Relevant Quality Journey

36

RACI

R – Supply Chain (Distribution) A – Country Q C- Category Quality I – Supply Chain Ops

Transport &

Storage Condition

Mgmt

DELIVER

Consumer Relevant Quality Journey

37

CUSTOMER

GROWTH

PROFIT

Customer Confidence

Meeting

Customer Expectations

Consistent

Quality

Shelf Space Preference

over Competitors

Consumer Relevant Quality Journey

38

CONSUMER

Consumer Preference

V’s Competitor Products

Making Every Day

Meeting Consumer

Expectations

Consumer Trust

Consumer Relevant Quality Journey

39

RACI

R – Category Q (Project Owner) A – Country Q (Senior) C - Supply Chain/Ops C - Marketing C - Country Q I – Supply Chain Ops (Front Line)

Market Place

Buy Back

Post Production

Quality Reviews

Consumer

Preference Testing

Consumer

Response

Consumer

Complaints

CALIBRATE

CDM 49g Packaging

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Appearance Coding Registration Sealing Back Seal Alignment

Category

%

%G %A %R

Consumer Relevant Quality Journey

40

RACI

R – R & D R – Supply Chain/Ops R – Country Q A – Category Q C - Marketing I – Supply Chain Ops (Front Line)

Product

Specification

compliance

CI

Prioritised

Corrective

Action Plans

implemented

at agreed

stage in CRQ

Process -

Ideation

Design

Make

Deliver

CRQ Summary

41

CRQ’s are Key Quality Attributes that are simple flavor

and visual standards

Align to customer and consumer expectations at the

point of sale and consumption

Measured throughout our supply chain

Delivering consistent products that provide consumer

preference over our competitors

Middle East Case Study – Cheese Handling in the Supply Chain

42

Philadelphia – Supply Chain Evaluation

43

• 8.00 am: - A Philadelphia Order to a major Key Account being picked up for delivery from the Distributor warehouse (temperature +6 DC)

• Cartons were loaded manually into the reefer truck and was stacked properly (but cartons exposed to direct sunlight for a short period!).

Philadelphia – Supply Chain Evaluation

44

• The temperature inside the van before loading was +27 DC which is not the ideal temperature while delivering Philadelphia.

• Truck reached the outlet receiving area after a 25 minute drive. The temperature of the truck at that time was down to +4DC. All supplier truck s were positioned outside this small receiving area which was right on the road. No separate receiving area for chilled/ambient products. Receipts inside the outlet were on a first-in-first-come basis and we were No.17 in the queue.

Philadelphia – Supply Chain Evaluation

45

• It took around another 20 minutes (we were lucky as the average time is around 45 to 90 minutes) for the outlet representative to come and ask us to off-load the cargo onto their receiving cages provided (as shown in the above pictures). There was no checking of temperature to ensure the products have arrived in the right conditions. All cartons were stacked inside the cages provided in the open (products had direct sunlight for atleast 5 minutes. Outside temperature +36 DC)

Philadelphia – Supply Chain Evaluation

46

• These cages were then taken inside and kept near the door (inside the receiving area) for bar-code checks and receiving into their warehouse inventory/system. The products sat there for the next 30 minutes since other suppliers were also in the queue. The temperature in this area was around +30 DC.

• These receiving cages were then taken into the storage areas (a few meters inside the outlet). The temperature of the storage area was +8 DC. It’s a small warehouse with all chilled items from milk to cheese being stored. The Philadelphia cartons were kept on the floor. Just a meter away, in one corner in the same warehouse – there was a segregated area for keeping damaged/expired items for destruction. We found some cartons of expired/damaged cartons of milk/juices. However, there was no spillage or any evidence of cross-contamination at that time.

•

BU Quality Observations/Recommendation

47

• A major concern was noted on reefer temperatures once it leaves the port. The container arrives unplugged during transit from the port to warehouse. This as you know is harmful for the product (especially during summer). The data logger confirms that the container temperature at the time of warehouse arrival was around +18 DC (it should never go above +8C). During the 30 days transit (source to Bahrain port) it was consistently maintained at +5C. Needs to be taken up on a priority with the port authorities as this is not acceptable as Kraft delivers CIF in a reefer container and we expect to see the products off-loaded at your warehouse within the set temperature (as done from origin).

• Trucks shall be conditioned to the specified temperature prior to loading. Also internal temperature of the vehicle shall be checked and recorded before loading.

• Need to influence the Key Accounts staff to priortise reefer deliveries to be accepted/quickly taken to the warehouse to maintain ideal temperatures at all times. It would be also recommended to have the front of the receiving area covered to avoid direct sunlight on the products if not having a dedicated temperature controlled off-loading area for reefer products. Also keeping damaged/expired items in the same warehouse is not recommended as it risks cross-contamination and odour transfer.

Thought for the Day!

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– A world where all members of the global food industry have a common platform to manage food safety and protect our consumers, wherever they may be…

– … allows us to focus on making Delicious products

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