This document discusses GSK's bank funded supply chain financing solution. It provides an overview of GSK as a company, their strategic priorities and organizational structure. It then discusses GSK's working capital program and evolution in improving days payable outstanding. The main part of the document describes GSK's implementation of a bank funded supply chain financing program, including the process, supplier onboarding, and go live. It concludes with some key lessons learned around communication, education, and ensuring suppliers understand the benefits.

1. Supply Chain Financing – Bank Funded
Solution
Stephen Kunz– Director of Corporate Finance, Working Capital Lead
Stephen.Kunz@gsk.com
Sean McDermott – Manager, North America Accounts Payable CBS
Sean.J.McDermott@gsk.com

2. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

3. GlaxoSmithKline Mission

4. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

5. Strategic priorities
Our business is focused around the delivery of five strategic
priorities, which aim to increase growth, reduce risk and improve
our long term financial performance

6. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

7. GSK Structure
Working
Capital Team CBS
Finance HR Procure
-ment
Real IT
Estate
R North Europe Asia
E
G America Pacific
I
O
N
A
L
Business Service Centers
G
L
O
B
A
Business Process
L
Outsourcing

8. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

9. Cash Cycle Performance - External View

10. Progress Versus Benchmarks - Ranked by 2010 Performance
Days Inventory Outstanding Days Sales Outstanding Days Payable Outstanding
Unilever 62 Unilever 31 Bristol Myers 55
Bristol Myers 92 Novo Nordisk 47 Unilever 47
AstraZeneca 98 Eli-Lilly 54 Sanofi 46 GSK 2011
43
Bayer 120 Merck-SGP 55 GSK 2011 Novartis 42
61
Roche 146 Bristol Myers 62 AstraZeneca 37
Novartis 161 161 AstraZeneca 66 Pfizer-Wyeth 37
Sanofi 186 Bayer 66 Bayer 36
GSK 2011
GSK 2010 190 Novartis 66 GSK 2010 29
192
GSK 2009 201 GSK 2010 66 GSK 2009 26
GSK 2008 203 Sanofi 67 Merck-SGP 26
Eli-Lilly 224 GSK 2009 70 Novo Nordisk 24
Merck-SGP 232 GSK 2008 75 Eli-Lilly 23
Pfizer-Wyeth 243 Roche 76 GSK 2008 21
Novo Nordisk 308 Pfizer-Wyeth 79 Roche 13
2010 Data from published reports and Citigroup Investment Research and Analysis
10

11. Evolution of Working Capital Efficiency 2008 – 2011
Dec-2008 Dec-2009 Dec-2010 Dec-2011
DSO 75 70 66 61
DPO 21 26 35 43
DIO 203 200 190 192
Total CCC 257 224 221 210
WCAP
34% 27% 23% 21%
% of Sales

12. 2011 FY Investor / Analyst Results Presentation

13. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

14. GSK - DPO Journey to Best in Class
 Key Activities: DPO
– Centralized Working Capital Team 50
–Procurement 45
–Finance 40
– Standard Terms 35
– Payment from Receipt of Invoice 30
– Contract Terms to Spend Actual 25
DPO
– Supplier Rationalization 20
– Supply Chain Finance Program 15
10
5
0
2009 2010 2011

15. Keeping Your Business Partners Happy
• Terms and Conditions.
Communication • Payables Process.
Streamlined • Efficient receipt and processing of
Payables invoices.
Operations • Supplier visibility of payment process.
Multiple • Supply Chain Financing
• Discounting Programs
Solutions
• Procurement Card Spend

16. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

17. Supply Chain Financing - Bank Model Process
E-Invoicing Portal Invoice
Invoice Receipt and
Submission Approval
Supplier decides to
accelerate
payment and paid Invoice Data
by bank Sent to Bank
SUPPLIERS
Payment is made to bank based on
suppliers terms.
17

18. Program Implementation
• Internal Champions
• Identify suppliers
• Communicate Benefits:
• Accelerate DSO
Supplier • Alternative Source of liquidity at a potentially lower cost
Engagement • Manage cash flow needs
• Collaboration required between all parties.
• Agree Strategy
• Complete Legal and Technology activities
Supplier • Provide Training
• Process overview.(internal)
onboarding
• Ensure internal process is well documented.
• Monitor program suppliers
Go Live

19. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

20. Key Learning and Takeaways
 Learnings:
– Ensure payables process is streamlined.
– Key business partners need to be educated when their supplier moves onto the
program.
– Change in process rules internally must be identified
– Change in company policy need to be communicated to bank.
 Takeaways:
– Communication with you bank partner is critical.
– Understanding at the operation teams who is the key contacts.
– Ensure your suppliers are betting the benefit!

21. Agenda:
GSK - Who we are
Strategic priorities
Structure
External view
Working capital program
Bank funded supply chain solution
Lessons learned
Questions

22.  Stephen Kunz– Director of Corporate Finance Working Capital Lead
 Stephen.Kunz@gsk.com
 Sean McDermott – Manager, North America Accounts Payable CBS
 Sean.J.McDermott@gsk.com