Purchasing Management Workshop

1. Purchasing Management Workshop Grand Hotel, Waterloo, Belgium October 11th and 12th 2005

2. Oriflame Purchasing Management Workshop Module 1 – Introduction, Six Dimensions, Status, SWOT Task Introductions Purpose Workbook Purchasing Six Dimensions / Challenges Status SWOT Task

3. Purpose of the Workshop Individual & Purchasing Team Improvement • Provide education on Strategic Purchasing to the Oriflame Purchasing Management team, in order to support career development plans and team skill levels & effectiveness. • Identify Oriflame Purchasing improvement opportunities, ensuring they are aligned with the Oriflame business strategy and priorities. • Develop the learning interactively in the workshop, so that there is ownership & applicability both internally within Oriflame and externally with Oriflame suppliers. Oriflame Business Improvement • Further improve Oriflame supply side profit and cash, respecting AQSCI (Supply, Quality & Regulatory, Service, Cost and Innovation) principles, thereby increasing Purchasing credibility and reputation with Oriflame Leadership, Employees, Customers, Suppliers and Stakeholders. Oriflame Purchasing Management Workshop

4. Attendees Purchasing Management Workshop – October 11/12th 2005 • Edwin Koehler • Maggie Taverna • Luca Nanni • Bruno Bastin • Bernard Hensenne • Francoise Beaujean • Julien Bellanger • Robert Connolly • Brian Rolfe (To be confirmed) Oriflame Purchasing Management Workshop

5. Agenda Oriflame Purchasing Management Workshop

6. Workshop Presenter Paul Warrick – The Delos Partnership Limited Through global purchasing leadership roles with ICI PLC, Elementis PLC, Lonza AG, Crown Cork & Seal and Georgia Pacific, Paul has acquired substantial Strategic Purchasing, Supply Chain and Business expertise and has a career track record ofdelivering outstanding supply side value Improvement. He has complete spend category and project management expertise and has recently led major supply side improvement projects on Strategic Sourcing of Raw Materials with volumes in excess of 500,000 tonnes, Inventory Reduction, Global Logistics & E Commerce. Paul wrote the Delos Procurement Masterclass, containing all of the leading edge procurement & supply tools and techniques, which has been delivered to numerous blue chip businesses. The Masterclass is based on both first hand global Purchasing experiences in the Chemicals, Packaging, Paper, Coatings, Biopharmaceuticals, Adhesives & Metal industries and the Delos approach. This recognises that the drive towards effective procurement will only be achieved through engagement of all of the people across the functions – from Sales & Marketing providing accurate forecasts, to Development innovating in a way that is integrated within an effective global Procurement Strategy, to working closely with Operations, Supply Chain and Finance to ensure P&L spending and Balance Sheet cash & assets are optimized. Paul has a chemistry & polymer science degree, is Six Sigma and World Class Manufacturing trained and has worked with most of the big five and leading procurement consultants. Procurementsupport and advice has been delivered to manufacturing, service and consumer companies. Oriflame Purchasing Management Workshop

7. Workbook • Oriflame data used in the workshop can be found in the excel workbook. • The Workbook also contains spreadsheets that can be customised for individual or team use. • Feedback on workbook improvements and further development is required from each delegate. Oriflame Purchasing Management Workshop

8. SRM DEALMAKING STRATEGIC SOURCING PROCESS & TOOLS COST, CASH & SPEND LEADERSHIP & PEOPLE Six Procurement Dimensions 6 Supplier Management – Relationships & Results 5 Negotiation & Agreements – Skills & Type 4 Strategic Sourcing – Process & Capability 3 Process & Tools – Awareness & Use 2 Cost, Cash & Spend – Management & Control 1 Supply & Procurement – Integration & Leadership Oriflame Purchasing Management Workshop

9. Challenges The Cost, Cash, Supply Chain & Inventory Challenge • Inflation Up – Oil & Energy, Asia Demand, Market Consolidation • Global Supply Chains – Asia Outsourcing by Europe & US • Customer Expectations – RFTQ100%OTIF, Faster, Cheaper • Shareholder Demands – More Profit, Higher Dividends • Excess Inventories – Slow Moving / Obsolescence Oriflame Purchasing Management Workshop

10. Purchasing – Check List Leadership & People – Key Areas • Purchasing Vision and Strategy – integrated with the Business • Internal customer / business “Buy – In” • Purchasing Capability & Management System Cost, Cash & Spend Focus – Key Areas • Focus on all key spend categories & suppliers • P&L, Balance Sheet and Expense coverage • Inflation (Cost) & Project Management Process & Tools – Key Areas • Integration with the ERP system / report • P2P • Sales Process (demand/forecast) understanding / management Oriflame Purchasing Management Workshop

11. Purchasing – Check List Strategic Sourcing – Key Areas • Managed supply risk on key strategic / critical products & services • Innovation (New Product/New Source) Project involvement • Standardisation / Dual Sourcing + Leverage Dealmaking – Key Areas • Complete Agreement coverage (CDA to Supply/Service Level) • Negotiation excellence • Clear terms, price lists and optimised invoice / payment Supplier Management / Benefits Tracking – Key Areas • Complete supplier mapping / management • Self Monitoring suppliers (RFTQ100%OTIF) & Finance integrated savings system • Strategic Supplier partnerships Oriflame Purchasing Management Workshop

12. Low Capability Purchasing Example Oriflame Purchasing Management Workshop

13. Workshop – Breakout Session You have been asked make a 10’ presentation to the Oriflame Board on Purchasing What went well – Where are the problems – Where are the opportunities ? • Costs Reduced  • Fragmented Supply Base  • Supply problems  • No Standardization of Products or Services  • No understanding of / support for Central Purchasing  • Internal battles and politics  • Supplier Quality improvements  • Service improvements  • High Emergency Transport Costs  • Excess Stocks  • Innovation & Plants doing their own thing  Oriflame Purchasing Management Workshop

14. SRM DEALMAKING Innovation Cost STRATEGIC SOURCING PROCESS & TOOLS Service COST, CASH & SPEND Quality/Regulatory LEADERSHIP & PEOPLE Assurance of Supply Workshop Task – Guide Use either / both the 6 Dimensions or AQSCI Pyramid in the presentation Oriflame Purchasing Management Workshop

15. Delos Procurement Assessment Oriflame Purchasing Management Workshop

16. Journey to Purchasing Excellence Procurement – Value Gap Analysis The Delos Partnership has assessed procurement capability and the value gap in businesses ranging from large multinationals through to S.M.E.'s, across all of the spend & territory map and in many market segments. Procurement is now firmly established as an essential part of Supply Chain and plays a vital role in global sourcing, supplier relationship and cost management strategies. We assess the capability of business procurement and how effective the business is in leveraging its cost and spend on behalf of its customers to support of the business vision, strategies and goals. We assess performance against the six dimensions of Procurement which cover leadership and people, internal and external customer performance, how spend & cost is managed, process capability, strategic sourcing, leverage, dealmaking and supplier relationship management. This provides an independent and quantitative measure of how much year on year net total value improvement is being delivered versus agreed goals & benchmarks and improvement opportunities in business profit , cash and service. Bronze = Entry level Silver = Developing Silver Gilt = Competent Gold = Advanced Platinum = Expert Oriflame Purchasing Management Workshop

17. Purchasing Assessment Results Oriflame Purchasing Management Workshop

18. Questions ? Oriflame Purchasing Management Workshop