1. Global Sourcing Strategies in a Volatile Environment
ELC Procurement
Quality
Service
Global Sourcing Strategies in a
Volatile Environment
Leonardo DeCandia, P.E.
Cost
Best Practices
October 12, 2010
Global Procurement

2. About the Estee Lauder Companies About the Presenter
Presentation Agenda
ELC Procurement
Quality
Service
About the Estee Lauder Companies
About the Presenter
Sourcing Practices at ELC
Current & Evolving Challenges
Tactics & Strategies
Q & A
Cost
Best Practices
Global Procurement 2

3. The Estee Lauder Companies Inc
ELC Procurement
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
Quality
Service
Cost
Best Practices
Global Procurement 3

4. 8 Years @ Roche; Last Role – Chief Supply Officer Pharma NA
Leonardo DeCandia
ELC Procurement
Quality
Service
15 J&J; Last Role – Head of Supply Management Consumer Companies
8 Roche; Last Role – Chief Supply Officer Pharma NA
4 AmerisourceBergen; Last Role – SVP/CPO Supply Chain Management
Part Time Lecturer – Rutgers University Graduate School of Business
Chair Emeritus – Rutgers University Supply Chain Center
Cost
Best Practices
Global Procurement 4

5. 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
ELC Procurement
Quality
Service
Cost
Best
Practices
Global Systems & Tools
Organizational Training & Development
Investment in Innovative Practices & Technologies
Marketplace Leadership
Continuous Improvement Mindset
Optimal Asset Utilization
Global Procurement
Wednesday February 10th, 2010

6. Current & Evolving Challenges
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?
ELC Procurement
Quality
Service
Cost
Best Practices
Global Procurement 6

7. ELC Procurement Priorities & Focus
Direct Material Sourcing
Global Brand Leads (Experienced & Integrated Resources)
Global Category Leads Source Supplier)
Global Innovation Lead (Integrated w/R&D Colleagues)
Third Party Manufacturing
Global Strategy & Supply Management
Consolidate Suppliers Based Upon Core Competencies
Formal Innovation Management Practices
Indirect Procurement
Global Buyer’s Network w/Regional Hubs
Global/Regional/Local Category Management Processes
Global Roll Out of SAP with Common Data & Policy
Organizational Development & Investment
Common Category Practices for All Procurement
Rotation Programs – Cross Brands, Regions & Procurement
Training in Performance Management
Quality
Service
Cost
Best Practices
Global Procurement 7

8. Service Quality Best Practices Cost
Tactics & Strategies for the Current Environment
Service
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
Quality
Full Understanding of Global Regulatory Environment
Dynamic Measures & Supplier Reward Systems
Early Supplier Engagement in Design for Execution
Metrics: receipt; % highest level; etc
Quality
Service
ELC Procurement
Best Practices
Cost
Best Practices
Cost
Organizational Design Aligned with ELC Strategy
Core Competency Focus Integrated & Complementary to Business Partner Needs
Procurement Professional Global Level
Metrics: Training hours; retention levels; high potentials %; 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
Global Procurement 8

9. Thank you Q & A ELC Procurement Quality Service Cost Best Practices
Global Procurement 9