2. Oriflame Purchasing Management Workshop Module 5 – Sourcing Process Stages Cost & Cash Data gathering RFI RFP Market Evaluation Supplier Scorecards

3. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop2 Sourcing Process Stages Risk & Value Analysis Cost & Cash Data Capture Scope, URS, Market Testing Supplier(s) RFI, RFQ, & Performance Leverage & Dealmaking Supplier & Results Management

4. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop3 Sourcing Project Scope Projects need to have defined and agreed Scope and Boundaries – some projects may be vetoed “Sacred Cows” Timing and prioritization is determined by factors such as risk, cost avoidance or impact, savings opportunity, customer importance, impact on the business etc. Resources and ease of implementation are also key factors

5. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop4 Project Scope Examples A top down Board imperative to immediately reduce inventories & then achieve further sustained improvement An integrated Supply Chain & Procurement project to improve Customer Service levels & improve ROCE (Cost, Cash and Assets) Finished Product Stocks Raw Material & WIP Stocks ERP & Systems Integration Inventory Reduction Project Sales & Operations Planning Process Sea, Rail & Road Into Europe, Out of Europe, Within Europe Warehousing Insourcing Outsourcing Workflow Costs Logistics Project All Logistics Charges & Invoices

6. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop5 Cebal & Other Tube Supplier Management Cebal & Other Tube Supplier Management Tubes Supply Demand Tubes Total Value Management Tubes Total Value Management Produce a detailed Strategy paper for the Oriflame Business leadership with recommended sourcing options Define best value approach under the existing planned future contract & Total Value Plan goals. Define current & projected HSE, Quality, Net Cost, Delivery, Service and Innovation in all Oriflame user plants. Develop a Request for Proposal for the new Tubes contract (RFQ). Define Oriflame future specification needs & choices, forward demand plans & current contract supply performance gaps. Complete a risk analysis on Cebal & other key suppliers – Tupack, Norden, Soupletube Define near & long term Tube Supply Demand position, options, developments, risks & balance Define near & long term Tube Supply Demand position, options, developments, risks & balance Create Strategic Sourcing share & cost options for each supplier& define partnership types & structure Define the optimum current & future Tubes Supply Chain & Logistics strategy & benchmark Prioritise the Top Value goals by supplier and select areas for 2005 and 2006 action & implementation Tubes – Strategy Plan Overview Element Oct 05 Nov 05 Dec 05 Jan 06

7. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop6 Engage all Oriflame stakeholders to ensure all key issues are covered and internal customer needs are met Complete a global Cebal Supplier Assessment Assess new supplier capability through both a quality and supply chain audit. Conduct detailed supplier Interviews to verify information Gather data from Plants and Finance on current Cebal Tubes Cost, Cash & process baseline Gather data to allow a complete strategic analysis of the Cebal business Gather global data on Tubes supply sources, specifications, quantities and complete a Tubes Market evaluation (Consultant support?) Gather data on the current Cebal supply risks and ensure the supplier completes an RFI & risk assessment. Ensure the Financial Status & Stability of all potential suppliers is known. Understand Supplier Strategies and Tubes growth rates Understand Tube market shares and relative status of each supplier. Put together a view of the best Oriflame Strategic Supplier options Define M&A Strategies Complete a list of preferred short and long term Oriflame Tube suppliers Sign off on the list with the Tubes stakeholders Agree when to start to issue the Tubes RFQ and Total Value Plans. Gather Input from Oriflame Stakeholders Gather Input from Oriflame Stakeholders Establish Cebal & Supplier key criteria Establish Cebal & Supplier key criteria Form List of future supplier RFQ recipients Form List of future supplier RFQ recipients Project Data gathering Project Data gathering Cebal & Supplier Management

8. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop7 Meeting / Disk / CD Electronic / Mail Oriflame Intranet Completion timelines Obtain key stakeholder sourcing goals & needs Utilise Oriflame current tubes knowledge Use Market/Industry Information Oriflame Business Open-ended questions Oriflame Business Closed-ended questions Oriflame Business current specifications included? Oriflame Business deal making & supplier relationship strategy Key Oriflame performance measures Summarise supplier RFQ content Focus on the RFQ Supplier Candidates Visit the Supplier Sites Determine RFQ Transmission Format Determine RFQ Transmission Format Determine Tubes RFQ Format Determine Tubes RFQ Format Analyse Tube RFQ Analyse Tube RFQ Establish Tubes Key Criteria Establish Tubes Key Criteria Develop a RFQ for Cebal & Others

9. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop8 Oriflame long term commitment Supplier Strategic alignment Competitor Alignment Technical service capability HSE Compliance New product supply & development Overall Capacity available Oriflame specification / grade capacity Multiple plants Financial Stability Geographic locations, distance Capital Investment Process Innovation Electronic Commerce Oriflame Integration - Inventory, Cash, SFDM Tubes Schedule Achievement 100% On time in full Supply Chain / Logistics Mgt. Inventory Management Tubes Right First Time Quality (ppm) Defective Product Process ISO accreditation & process Percentage of supplier turnover Oriflame ERP system integration TPM & Engineering Transport/packaging quality Insurance cover Indemnity Warranty – acceptance of penalties Deal type & cost transparency Lowest cost producer status Price strategy & stability Lowest “total cost” Purchasing & Consultant Expert Data Oriflame Stakeholder InputOther Market Knowledge Establish Tube Evaluation Criteria Tubes Supply Sources – Future Trends / 5 Year View / Supplier Criteria Oriflame Long Term Supply Capability Delivery Quality Oriflame Alignment Cost Others

10. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop9 Oriflame Tubes RFQ Scorecard See Delos Procurement Excel Workbook

11. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop10 Put together the Tubes negotiation plans & agendas Ensure that the Cebal agreement has been thoroughly reviewed. Ensure an NDA is in place so that there is no market leakage of strategic Oriflame information. Analyse & evaluate completed RFQ’s Use/modify evaluation criteria Get key stakeholder input Discuss and develop Oriflame needs and wants. Discuss and agree the different Oriflame Negotiation roles & styles. Create the Oriflame Tubes negotiation team (never alone!! and typically 3-4 people) Decide on Tubes negotiation team roles. Tubes Supplier Selection Legal Supply and Service level agreement and Total value plan, Performance Measures Supplier and Oriflame relationship management Communicate of results on a need to know basis. Plan the Tubes Meetings & new Oriflame Agreement Plan the Tubes Meetings & new Oriflame Agreement Develop Tubes Negotiation Strategy Develop Tubes Negotiation Strategy Post Tubes Negotiation Actions Post Tubes Negotiation Actions Develop Tubes Negotiation Goals Develop Tubes Negotiation Goals Negotiate / Select the 2006+ Supplier(s) See Delos Procurement Excel Workbook

12. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop11 Workflow – Oriflame / Suppliers Include Savings opportunities in Oriflame – Supplier Workflow

13. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop12 Supplier Management involves the implementation of a formal program that focuses on current performance & continuous supplier improvement within the overall business Supplier Map. Formality ensures; Joint Key Performance measures are defined There is focus on what is important to the customer The deliverables (service levels) in the agreement are measured Continuous improvement occurs The Business / Supplier relationship is improved versus competition Final Stage – SRM Supplier & Results Management

14. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop13 Supplier Management Tool See Delos Procurement Excel Workbook

15. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop14 Sourcing or Category Manager Business Managers Key Users & Stakeholders Total Value Elements HSE Cost Supply Chain Delivery & Service Quality Innovation Performance Measures Metrics Collection Methodology Business Standards Market Dynamics Industry Standards Best Practice Weighting & Scoring System Product / Service Classification Performance Incentives Performance Remedies Contractual Issues Publication frequency Raising the Bar Scorecard / Assessment Supplier Management Considerations & Process Stages Supplier Assessment Assemble Product / Supplier Team Identify Supplier Participants & Performance Goals Agree feedback, Meet Suppliers for review & set milestones Obtain Inputs against agreed Scorecard Define Scoring System and Verbiage Senior Level Business Update Vision & Strategy Competition Carrot / Stick Volume Impact

16. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop15 First Stage of Sourcing Process Risk & Value Analysis Internal Create cross-functional team, led by Sourcing, consisting of representatives from each stakeholder Sales & Marketing Development Supply Chain Operations Purchasing / Sourcing Finance Etc. Baseline current spend and usage Review current contracts (if any) Internal supplier analysis Map transaction processes – ERP and P2P process Identify opportunities and project scope Develop a source plan detailed workplan / timeline External Consider use of expert consultant for data gathering & data interpretation Benchmark best practices with others (including e-commerce) Supplier / Industry / Economic analysis Investigate new technologies that are available

17. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop16 First Stage of Strategic Sourcing Risk DriverExampleConsequence Supplier HSE RiskMajor Accident at main Supplying PlantDisruption / Cancellation of Supply Supply RiskSupplier declares Force MajeureNo product – Production plants on stop Quality RiskRaw Material ContaminationMajor Customer Claims Lead Time RiskLead Time increases to 8 weeksCustomers buy elsewhere Commercial / Trading RiskSupplier Corporate FraudAdministrators seize all inventories Cost Up RiskPrice increase of 10%Customer supplied at a loss Risk Management (Assurance of Supply, Cost Control)

18. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop17 First Stage – Risk Analysis

19. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop18 First Stage – Value Analysis Example Freight Project Spend Scope Finance P&L accounts Define the accounts that will be included in value & spend analysis so that there is complete understanding and visibility Primary Accounts Inbound Domestic Outbound Domestic Export Demurrage Duty Lease Costs Courier Costs Secondary Accounts Repairs Samples Storage Repackaging Fork Lift Hire Printing Baseline Current Spend

20. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop19 Second Stage of Sourcing Cost & Cash Data Capture Define service requirements/ understand individual business needs Define the scope Formalize sourcing strategy and objectives Build pricing models Draft RFQ Gain agreement from team on RFQ Define supplier base to receive RFQ Distribute RFQ

21. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop20 Third Stage of Sourcing Scope, URS, Market Testing Define internal customer needs – now and in the future Develop supplier evaluation criteria for RFQ’s Circulate draft RFQ to stakeholders Issue to all Suppliers Review and score supplier responses Decide on “short list” of suppliers

22. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop21 Fourth Stage of Strategic Sourcing RFI, RFQ Performance Supplier discussions with “short list” Negotiate pricing and service levels with final supplier(s) Develop savings methodology for on going saving tracking Gain management approvals

23. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop22 Leverage and Dealmaking Leverage & Dealmaking Decide on the deal that you want and the realistic chances of obtaining it. Work with legal on formal contract and service level agreement based on discussion during the RFQ process Develop communications plan to utilize vendor sourced Identify the key performance metrics for supplier management Develop scorecard process for on-going vendor management

24. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop23 Supplier Management involves the implementation of a formal program that focuses on current performance & continuous supplier improvement within the overall business Supplier Map. Formality ensures; Joint Key Performance measures are defined There is focus on what is important to the customer The deliverables (service levels) in the agreement are measured Continuous improvement occurs The Business / Supplier relationship is improved versus competition Final Stage – SRM Supplier & Results Management

25. Purchasing Workshop Module 5 © The Delos Partnership 2005 2005-10-11 Oriflame Purchasing Management Workshop24 Questions ?