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Becoming a company powered by insights and automation Our Digital Transformation Strategy


Our Plan

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Driving our plan is an epic quest for integration, fueled by automation and insights CURRENT STATE

FUTURE STATE

Siloed teams, processes, and hundreds of IT applications

An integrated team, process, and technology platform ted Business Planni a r ng eg Int

KLA

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Our Plan • Integrated Platforms

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Advancing and integrating our platforms is one of the most important initiatives in our digital transformation COMMERCIAL

Consumer, Commerce, and Product

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With an insights-driven ICP process enabled by the Consumer ID, we will create seamless consumer experiences and provide personalized products, while increasing the effectiveness of our brand building and generating greater value for our customers, distributors, and food operators.

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We will ensure our people are equipped with new tools and ways of working that unleash their creativity, productivity, and impact and that our business leaders are empowered by organizational performance and financial analytics to drive optimized planning for profit and growth.

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Employee Effectiveness, Human Resources, Finance, and GBS

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We will focus on the highest-value end-to-end opportunities, maximize the value and flexibility of our supplier partnerships, and bring insights and automation to how we make our food—all while providing world-class service and frictionless commerce.

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Planning, Sourcing, Smart Manufacturing, and Fulfillment

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SUPPLY CHAIN

Business Plan


Our Plan • Integrated Platforms

Commercial Platform Consumer, Commerce, and Product

We will significantly improve our three Commercial platforms while they are being connected to one another. Several initiatives will be specific to the markets we serve.

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Our Plan • Integrated Platforms

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Our Commercial platform will advance Bold Moves one, two, and three

Consumer

Consumer Experiences

Frictionless Commerce

Personalized Products

Shifting from manual and disconnected platforms...

...to automated and connected platforms...

...that ensure our...

Inconsistent and disconnected messages that are generalized for households

Seamless and holistic experiences that are tailored for each individual consumer

►► brand experiences are tailored and contextualized

across all channels ►► shopping experiences are seamless and convenient ►► brand-building investments are efficient, effective, and

automatically optimized in real time

Commerce

Product

Cumbersome commercial relationships that use limited insights and manual adjustments to adjust trade, pricing, and promotion

Frictionless commercial relationships that automatically optimize trade, pricing, and promotions based on precise consumer data

►► sales approach is informed by fact-based insights

Mass-market products that undergo a long product development process

Personalized products with traceable ingredients that are quickly tested, optimized, and introduced to the market

►► products and services can be personalized to meet nutritional

►► products are available to order anytime, across any

channel (emerging and mature markets)

and culinary preferences ►► ingredients can be traced to their provenance ►► product development timeline is reduced to 3-6 months


Our Plan • Integrated Platforms

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Our consumer platform will maximize the lifetime basket of each household

Consumer Experiences

FROM

TO

Impersonal and disconnected advertising, informed by approximations of our consumers and measured only after campaigns are finished

Deep, real insights about our consumers, leveraged to create personalized experiences that we can modify based on real-time data and feedback

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Build precise understanding of consumers

using our People-Based Cloud solution, integrated with our Consumer Database Management ►► Enhance our consumer insights by expanding

our Consumer Database Management solution (where applicable) and build FirstParty Data capabilities ►► Centralize our digital assets with an Asset

Management solution

►► Tailor our consumer messages by enhancing

our Experience Management capabilities ►► Increase the impact and efficiency of our

brand-building investments by expanding our Marketing Media Analytics capabilities through machine learning

►► Test People-Based Cloud solution in KNA in

2018 and scale to other regions in 2019 ►► Create Joint Business Planning partnerships

in each region—in KNA, we’ll work with Amazon, Google, Facebook, and others. Each region will complement this capability with different partners ►► Scale our Asset Management, Experience

Management, and Agile Marketing Media Analytics solutions to all regions by 2019 ►► Enable the KUBE with the right technology

and insights for all regions in 2018


Our Plan • Integrated Platforms

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Our commerce platform will ensure world-class service for our consumers, customers, distributors, and food-service operators

Frictionless Commerce

FROM

TO

Manually gathering basic, limited insights that drive trade, sales, and eCommerce

Scalable, automated, and fact-based insights about consumers, customers, and partners that enhance all aspects of our commercial process

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Automate in-store ordering, selling,

merchandising, and category management for customers, distributors, and foodservice operators with retail-execution and distributor-management capabilities ►► Enable data-driven, fact-based selling and

optimize omni-channel performance through machine learning by integrating trade promotions with retail execution ►► Provide personalized online shopping

capabilities for consumers on customer websites by deploying Where to Buy, Digital Shelf, and Syndication solutions (eCommerce B2B2C)

►► Automate online ordering, selling,

merchandising, and category management for our distributors and food service operators by launching a B2B portal (eCommerce B2B) ►► Provide direct-to-consumer, personalized

online shopping capabilities for our consumers by launching a D2C commerce platform (eCommerce D2C) ►► Transform our shelf into an intelligent platform

through sensors and IoT ►► Enable Kellogg and customers to improve

accuracy, speed, and cash flow by piloting blockchain distributed ledger on trade and deductions

►► Elevate our retail execution solution to be

more fact based for top 25 customers in KNA and KEU in 2018. We will also be automating the trade effectiveness in KNA in 2018 ►► For HFS and Specialty, deploy Distributor

Management capabilities in KAP in 2018 and deploy a pilot of B2B Portal in KAP and KNA starting in 2018 ►► For eCommerce, extend the Where to Buy,

Digital Shelf, and Syndication solutions around the globe


Our Plan • Integrated Platforms

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Our product platform will increase transparency and nutritional benefits

Personalized Products

FROM

TO

Pre-market testing of new products with limited consideration of consumer insights and virtually no ingredient traceability

In-market testing of new products through rapid prototyping informed by real consumer insights—plus the ability to trace ingredients from farm to fork

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Trace product ingredients within Kellogg and

our partner network by activating Product Management and Supply Chain platforms (PLM, MRP, and MES) ►► Lead with consumer insights in the product

innovation process by integrating product management with our Consumer platform

►► Accelerate food ideation by employing rapid-

prototyping, small-scale manufacturing, and eCommerce capabilities ►► Enable our consumers to trace Kellogg

products and ingredients by piloting a blockchain capability

►► Roll out product management in KEU in 2018

►► Roll out product management in KEU in 2018

and scale it to all regions starting in 2019

and scale it to all regions starting in 2019

►► Test and learn our accelerated food ideation

process in KNA in 2018 with a goal of scaling it across all regions beginning in 2019

►► Test and learn our accelerated food ideation

process in KNA in 2018 with a goal of scaling it across all regions beginning in 2019


Our Plan • Integrated Platforms

Supply Chain Platform

Planning, Sourcing, Smart Manufacturing, and Fulfillment We will significantly improve our four Supply Chain platforms while they are being connected to one another. Several initiatives will be specific to the markets we serve.

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Our Plan • Integrated Platforms

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Our Supply Chain platform will advance Bold Moves two and four

Planning

Frictionless Commerce

Supply Chain

From manual and hidden processes....

...to digitized, automated, and connected platforms that generate insights...

...that ensure our...

Slow, manual planning that has limited linkage with demand

Demand-driven, responsive, predictive, and automated planning

►► production and labor schedules automatically respond to

and anticipate shifting demand patterns ►► Supply Chain planning processes become linked

and automated

Sourcing

Limited visibility of commodity needs and short lead times to negotiate prices

Ability to predict needs and link directly to our Supply Chain’s partner network

►► procurement teams have factory-wide visibility into

raw material needs ►► suppliers are seamlessly integrated with our Supply Chain

supporting profitable agility

Smart Manufacturing

Paper-based, manual, and inefficient factories

Smart, optimized factories that run themselves and get smarter over time

►► production and labor schedules are automatically optimized ►► manufacturing operations are centrally controlled, leading to

automation, AI, and machine learning

Fulfillment

High-touch, manual, and inefficient order processing

Fast, automated, and traceable orderfulfillment that ensures world-class service

►► production and inventory plans respond to and anticipate

changing demand ►► Supply Chain planning process becomes automated


Our Plan • Integrated Platforms

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Our planning platform will set the foundation for our smart Supply Chain, ensuring we are focused on the highest value opportunities, end to end Supply Chain

FROM

TO

Manually driven and slow planning processes with limited links between marketplace demand and our Supply Chain schedules

Continuously optimized, adaptive plans that sense and rapidly respond to shifting omni-channel demand

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Optimize production and inventory with

changing customer-demand signals by building a global Supply Chain solution to enable agile end-to-end planning analysis and scenario modeling ►► Ensure our Supply Chain planning models are

equipped with omni-channel insights through enhanced demand-sensing capabilities

►► Expand Supply Chain planning analytics

capabilities with machine learning and automation ►► Drive a smart IBP Platform by integrating

Supply Chain planning solutions with Commercial Platform capabilities

►► Our global solution for Supply Chain will

begin in KEU and KNA and expand to KAP and KLA starting in 2019 ►► We will leverage a cross-functional pod

team approach to integrating data and insights across our Commercial and Supply Chain platforms by leveraging our Keystone analytics platform

►► Our global solution for Supply Chain will

begin in KEU and KNA and expand to KAP and KLA starting in 2019 ►► We will leverage a cross-functional pod

team approach to integrating data and insights across our Commercial and Supply Chain platforms by leveraging our Keystone analytics platform


Our Plan • Integrated Platforms

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Our sourcing platform will maximize the value and flexibility of our supplier partnerships

Supply Chain

FROM

TO

Limited oversight of commodities, supplier performance, and lead time to negotiate the best prices

Supplier-managed inventory enabled by realtime data and sourcing plans, more profitable commodity positions, and proactive global supplier collaboration

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Drive real-time visibility of raw material needs

across the factory network with MRP ►► Enable Procurement to get the best raw-

material pricing through commodity management and direct procurement capabilities ►► Enable vendor-managed inventory by

providing visibility into plant production schedules and raw material silo levels using IoT sensors

►► Drive increased production flexibility and

agility by integrating co-manufacturing / co‑packaging solutions ►► Provide industry-leading food quality and

safety through a centralized system for data collection and analysis with integration throughout the Supply Chain ►► Leverage automation capabilities to drive

speed and additional efficiencies within our Source-to-Pay (STP) processes

►► Begin the MRP rollout in KNA starting with

our Smart Factory pilot site, the Cary CheezIt factory; we will then deploy MRP across the rest of KNA and then extend into other regions ►► Use this same approach to enable vendor-

managed inventory at Cary and then across KNA and other regions ►► Integrate our platform with third-party

co‑manufacturing and co-packaging solutions to promote top-line growth through increased Supply Chain agility


Our Plan • Integrated Platforms

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Our smart manufacturing platform will bring insights and automation to how we make our food

Supply Chain

FROM

TO

Paper-based, manual processes and limited visibility of factory performance that lead to interruptions, inventories of safety stocks, and noncompetitive overhead

Real-time data from sensors, machine learning, and automated factories that enable successful prediction of factory outcomes and continuous improvement of the entire manufacturing process

Testing, learning, and scaling in key markets

Driving business outcomes through our new technology capabilities ►► Enable secure and scalable factory

IT/OT networks ►► Install smart sensors throughout factories,

located from receiving and inventory to the manufacturing lines and warehouse ►► Enable centralized visibility and control of

critical process parameters throughout the plant from a single control room location through MES ►► Integrate manufacturing insights throughout

the Supply Chain by leveraging data and analytics

►► Provide real-time visibility and insights into

inventory movement, and traceability through batch systems ►► Track employee time and attendance and

optimize labor scheduling and training with workforce management capabilities ►► Invest in continuous improvement and factory

automation through analytics and machine learning capabilities ►► Leverage automation capabilities to drive

efficient and fast Order-to-Cash (OTC) processes

►► Piloting a factory in each region, starting

with KNA and KEU, to prove the value. Then expand capabilities to other factories in the Supply Chain network, prioritized by the benefits each Smart Factory implementation will drive


Our Plan • Integrated Platforms

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Our customer fulfillment network platform will enable world-class service and frictionless commerce

Frictionless Commerce

Supply Chain

FROM

TO

High-touch order processing, manually intensive tracking, excessive warehouse inventories, and preventable transportation costs

Zero-touch, automated order fulfillment and rapid traceability and containment, driving continuously optimized distribution costs and best-in-class service

Driving business outcomes through our new technology capabilities

Testing, learning, and scaling in key markets

►► Know precisely the material movement

►► Design and build the template for our

throughout factories and distribution network through an EWM solution that is integrated with our plant floor systems ►► Communicate with the warehouse

management systems for third-party logistics (3PL) providers to build an integration hub ►► Enhance customer service at a lower cost

through a Direct Plant Shipment (DPS) solution for strategic and/or high-volume customers

Enterprise Warehouse Management (EWM) solution with our Smart Factory pilot site, the Cary Cheez-It factory, with a parallel approach in KEU. Following successful implementation, we will roll out EWM across KNA and KEU over a multiyear program ►► Our third-party logistics warehouse

integration solution is already underway in KNA and will continue to expand to other regions

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