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ELECTROCOMPONENTS
Value-added solutions
November 2019
MAKE MORE POSSIBLE
PRESENTERS TODAY
Mike England President, EMEA Joined in November 2015 as MD UK and Northern Europe Responsible for the commercial operation, business
transformation and profitable growth for the EMEA region Previously, he was Sales Director at Brammer UK Limited
and a member of its UK Board for 10 years Also spent 10 years at Hagemeyer (now Rexel) where he
held a number of senior commercial and operational roles
Debbie BowringPresident, IESA Joined IESA as Chief Operating Officer in 2013,
becoming President of IESA on 1 June 2019 Responsible for creating and leading the
implementation of strategy within IESA to deliver profitable and sustainable growth
Previously had senior international roles, leading transformation, growth and change to drive growth
Simon HiltonBusiness Development Director, IESA Joined as Director of Operations in 2001 and has
been a Business Development Director since 2012 Prior to joining IESA, Simon spent seven years at
MTS Precision as the General Manager Simon has led the majority of IESA’s client wins
Andrew PerryCFO, IESA Joined IESA in 2010 and has held the position of CFO
since 2014, responsible for Finance, Commercial, IT Infrastructure and Digital
Prior to becoming CFO, Andrew held multiple roles within the company including Finance Director, Commercial Director and Operations Director
Prior to joining IESA, Andrew was a Partner at Voisey & Co, an accountancy firm based in Warrington
2
AGENDA
2
3
4
Customer challenges
Providing solutions for our customers
Mike England President, EMEA
Debbie BowringPresident, IESA
Simon HiltonBusiness Development, IESA
Andrew PerryCFO, IESA
1 Why value-added solutions
5 Looking forward
IESA overview
3
Value-added solutions
WHY VALUE-ADDED SOLUTIONS
1
We are building a range of solutions to help our customers manage their indirect spend more effectively. Today we offer solutions right across the product life cycle from design to procurement, inventory management and maintenance.
WHY VALUE-ADDED SOLUTIONS – ACROSS THE PRODUCT LIFE CYCLE
5
£100bn+Market
1%Share
£20bnGermany
£10bnItaly, France, UK
£5bnSpain,
Scandinavia, Benelux, Eastern
Europe
£1.2bnEMEA revenue
18Countries
c.£90bnIndustrial
c.£10bnBLE
WHY VALUE-ADDED SOLUTIONS – OUR OPPORTUNITY IN EMEA
Fewer partners
Digital partnership
One-stop shop
Value-added solutions
What our customers want
Largely offline
Small and regional
Single product / niche focus
Our competition
6
WHY VALUE-ADDED SOLUTIONS – CUSTOMER SEGMENT OPPORTUNITY
Cus
tom
er se
gmen
tatio
n
CorporateInternational or nationwide company, multiple locations, central purchasing, high spend potential
KeySingle location medium-sized company, medium spend potential
StandardSingle location SME company, low spend potential
Integrating
Consolidating
Transactional
Opportunity
£33bn
Opportunity
£33bn
Opportunity
£33bn
Op
por
tuni
ty £
100b
n
Current
£600m
Current
£600m
Current
£300m
Note: Figures illustrated are EMEA.
Value-added solutions focus
£300m revenue£300m IESA pass through
7
Value-added solutions have been a significant focus over the past few years and are key initiative to drive our growth moving forward.
We have been focused on three key areas – grow, evolve and innovate.
WHY VALUE-ADDED SOLUTIONS – OUR JOURNEY
Historical offering Grow Evolve Innovate
eProcurement
Purchasing ManagerTM
RS Local branches
Laboratory services
VendStockTM
ScanStockTM
ConnectPointTM
Showpad
eProcurement
Purchasing ManagerTM
RS Local branches
Laboratory services
eProcurement
Purchasing ManagerTM
Laboratory services
We have improved existing services and evolved offering – with a renewed focus on value-added solutions.
To be launched in Q4 FY20
Launched in Q3 FY20
Launched 18 months ago
Launched 2 years ago
Lack of focus on existing services
8
WHY VALUE-ADDED SOLUTIONS – OUR SERVICE PROPOSITION
We are focused on making our customers’ lives easier
We are enhancing our range of solutions across design, procurement, inventory management and maintenance phases of our customers’ journey through the product life cycle
We are expanding our current solutions across the globe as well as looking for further opportunities to introduce new solutions to customers
Design
How we can continue to disrupt and accelerate
Procurement
Inventory management
Maintenance
Our brands Our solutions
eProcurement
PurchasingManagerTM
ConnectPointTM
Calibration
Condition-monitoring
Predictive maintenance / IoT(1)
Store management
VendStockTM
ScanStockTM
Design tools
OKdo design, prototyping and cloud services
(1) IoT is Internet of Things.
9
WHY VALUE-ADDED SOLUTIONS – CUSTOMER GROWTH
Customer needs and drivers are changing
Customers are looking for ways to make their lives easier, they want convenience at their fingertips
Our analysis shows that clients who use our value-added solutions, grow on average 4 percentage points faster
Moreover as we sell more value-added solutions to our customers the relationship becomes stickier and our growth rate improves
100%
130%
153%
240%
No VAS 1 VAS 2 VAS >3 VAS
Growth rates typically improve as customers take more value-added solutions
On average customers with 2 value-added solutions grow >50%
faster than those with none
Note: Includes sites that contribute to the top 60% of spend and based on rolling 12-month data to July 2019 for the UK.
10
Value-added solutions
CUSTOMER CHALLENGES
2
CUSTOMER CHALLENGES – ACROSS PROCUREMENT
Source: Supply Management, Proxima Buying Solutions, ISM – Spend Analysis & Supply Base Rationalisation.
Fragmented supply base
Customers have an average of 1,200 suppliers for indirect materials
1,000+Indirect Suppliers
Direct Suppliers
10-20
Multiple product categories
Thousands of products across multiple categories
Avg. 40+
Electronic & Industrial Supplies Product Categories
Cat
1
Cat
2
Cat
3
Cat
4
Cat
5
…
Cat
40
Many stakeholders
<
27%
Fewer stakeholders for indirect
=
19%
As many stakeholders
>
44%
More stakeholders for indirect
63% of companies have equal or moreindirect stakeholders to manage
Pressure to reduce costs
Cost saving is the main objective for 61% of companies undertaking spend analysis
20%
11%8%
Other
Supply baserationalisation
Channel spend
Cost saving61%
12
CUSTOMER CHALLENGES – ACROSS PROCUREMENT
Soft vs hard costs
Hard costsSoft costs
30% - 40%60% - 70%
Source: Joel Roth – A practical guide to Cost Reduction in MROP Procurement.
Product costs
Value engineering e.g. substitution
Purchase order costs
Sourcing costs
Inventory costs
Maintenance time saving
Example Proxies:• Avg Order Size: c. £90• Avg PO Cost: c. £80• Inventory Carrying Cost: c. £18
When looking at the total costs of industrial supplies, process costs can be twice the amount spent on products13
CUSTOMER CHALLENGES – ACROSS PROCUREMENT
Estimates indicate c.45% of industrial supplies spend relate to unplanned purchases
55%45% Planned
purchases
Unplanned purchases
Unplanned purchases are common… Further increasing process costs
Planned items are bought more frequently
Freq
uenc
y of
pur
cha
se
Number of unique items
Unplanned purchases represent non- routine purchases & incur more total cost
The total costs linked to industrial supplies is amplified by the volume of unplanned purchases14
CUSTOMER CHALLENGES – ACROSS PROCUREMENT
Beyond product costs, it’s important to quantify the time & resource consumed around the procure to pay process for indirect items
By understanding our customer’s procure to pay processes, we can help drive efficiencies and unlock significant savings
Purchasing action Typical process cost
Searching for asupplier & product
Quotation throughto placing the order
Chasing supplier &receiving delivery
Processing invoices
Paying a supplier
£12.80
£24.00
£15.20
£24.80
£3.20£Total process cost per order £80.00
Source: Through consultation with Chartered Institute of Purchasing and Supply. 15
CUSTOMER CHALLENGES – ACROSS INVENTORY
Inventory waste
of items carry in excess of a year’s supply10%
of items purchased never get used5%
of engineers leave stores without desired item22%
of stores throughput is attributable to 3% of lines80% Shrinkage
Excess holding
Operator motion
Weak process
Obsolescence, theft or shelf life
Unnecessary process
Excessive walk & wait for required items
Inventory facts
Excess inventory relative to demand
1
Source:(1) Business by Numbers, The Economist, Sept 07(2) Cost Reduction in MROP Procurement, Joel Roth.
The costs associated with unneeded inventory averages 18% of purchase price2
16
CUSTOMER CHALLENGES – ACROSS MAINTENANCE
The impact of machine downtime is costing the UK’s manufacturers more than £180bn every year
17Source: www.themanufacturer.com/articles/machine-downtime-costs-uk-manufacturers-180bn-year/
Value-added solutions
PROVIDING SOLUTIONS FOR OUR CUSTOMERS
3
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – PROCUREMENT
Order management eProcurement
A web-based order management tool that helps manage spend & provide visibility over all orders placed through the RS website.
PurchasingManager™
Integrated into customer eProcurement systems providing fast access to our product range and purchase information.
PunchOut
Fast and secure ordering direct from customer systems to ours. Eliminates paper, providing accuracy and transparency.
eOrdering
Paperless solution sending invoices from our system to customer systems. This saves both time and money in administration processes.
eInvoicing
£
Our solutions help customers to create an efficient process whilst providing the information to manage procurement as effectively as possible
19
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – PROCUREMENT
20
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – INVENTORY
The right type of procurement and inventory approach varies depending on product type and volumes
21
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – INVENTORY
22
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – INVENTORY
Who do vending services help?Purchasing & finance Increased control Lowers inventory carrying costs & reduces
working capitalStores Removes unnecessary warehouse
processes associated with low-value items Optimises inventory Frees up time to focus on higher value &
critical inventoryProduction & maintenance Increases product availability Reduces operator motion (walk & wait) Optimises and controls product availability Health & safety Builds an audit trail of product issues Promotes accountability and safety focused
culture Keeps your workforce compliant
Bringing our RS PRO product range together with our digital capabilities & calibration services to create a comprehensive inventory and asset managed solutions
RS VendStockTM
23
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – MAINTENANCE
24
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – BUILDING CAPABILITY
Cus
tom
er se
gmen
tatio
nCorporateInternational or nationwide company, multiple locations, central purchasing, high spend potentialTypical revenue per customer >£250,000 p.a
KeySingle location medium-sized company, medium spend potential Typical revenue per customer £10,000 - £250,000 p.a.
StandardSingle location SME company, low spend potential Typical revenue per customer < £10,000 p.a.
Integrating
Consolidating
Transactional
1. Value-added solutions• Procurement solutions• Inventory solutions• Maintenance solutions• Design & Innovation solutions
2. Full range supply• Broader & deeper• Specialist knowledge & expertise
3. Value-led selling effectiveness• Consistent value proposition• Value selling effectiveness
Customer experience Ease of doing business
Hum
an to
uch
& va
lue
incr
ease
s
Digi
tal F
irst
OutsourcedBusiness Process Outsourcing (BPO)
25
Typical customer Customer: Small food manufacturing company Local operator with 5-15 employees
Customer need Ad-hoc industrial items Reliable suppliers who can meet just-in-time needs Easy and convenient ways of identifying and ordering
Our solutions Best-in-class online solution 24/7 Customer Service team RS Local Branch
Outcome Intuitive and simple web offer – ease of ordering and tracking for
over 500,000 items Supported by the human touch and online technical help Access to local inventory and support
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – BUILDING CAPABILITY C
usto
mer
segm
enta
tion
CorporateInternational or nationwide company, multiple locations, central purchasing, high spend potential
KeySingle location medium-sized company, medium spend potential
StandardSingle location SME company, low spend potential
Integrating
Consolidating
Transactional
26
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – BUILDING CAPABILITY C
usto
mer
segm
enta
tion
CorporateInternational or nationwide company, multiple locations, central purchasing, high spend potential
KeySingle location medium-sized company, medium spend potential
StandardSingle location SME company, low spend potential
Integrating
Consolidating
Transactional
Typical customer Customer: PP Control & Automation 1 site with around 150 employees Buys c.10,000 components each year
Customer need Vendor rationalisation Reduction in production process waste Greater procurement efficiency Support with inventory management
Our solutions Local dedicated sales and technical support RS custom order solutions kitting and consolidated deliveries RS ScanStock™ at 11 lineside locations managing c.1,000 fast
moving products critical to production RS ProductPlus offering an extended range solution
Outcome Reduction in vendor base allowing greater commercial leverage Efficiencies via removing non-value adding activities such as
goods receipting, locating parts and matching deliveries Improved throughput – high and consistent product availability
27
Typical customer Customer: Southern Water Hundreds of sites across Hampshire, E Sussex, W Sussex, Isle of
Wight, Kent
Customer need Optimisation of procurement processes Greater availability of parts and convenient access Consolidation of vendor base Reduction in non-value adding activities
Our solutions RS sector specialist national account manager, regional sales
support and technical support Procurement solutions such as RS PurchasingManager™, RS
ConnectPoint™, PunchOut and electronic ordering Inventory management and optimisation via RS ScanStock™ RS ProductPlus offering extended range
Outcome Order processing efficiencies, reduced operational downtime Increased control over ad-hoc spend Improvement in product standardisation and availability
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – BUILDING CAPABILITY C
usto
mer
segm
enta
tion
CorporateInternational or nationwide company, multiple locations, central purchasing, high spend potential
KeySingle location medium-sized company, medium spend potential
StandardSingle location SME company, low spend potential
Integrating
Consolidating
Transactional
28
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – GLOBAL PROPOSITION
Value-added solutionsWe support customers with complex needs to drive vendor consolidation, reduce total costs, improve productivity and deliver innovation Value delivery
CollaborationCore product and service offer
Our core product and service offer supports over one million customers worldwide
Maintenance Solutions >
Procurement Solutions > Inventory Solutions >
Product & Supply Chain > Multi-channel Approach >
Service Excellence > Core Services >
29
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – GO TO MARKET APPROACH
Reorganisation and recalibration of sales function‒ Sector and regional
specialisation Introduction of priority matrix
‒ Data-driven prioritisation of sales resource
Salesforce effectiveness‒ Shift from product-led sales
to value-led sales Enhanced sales tools
‒ Use of data analytics‒ Showpad field sales tool
30
PROVIDING SOLUTIONS FOR OUR CUSTOMERS – GROWTH WITH IESA
31
Electrocomponents strengthens IESA offer and growth pipeline
c.500,000 Customers
+39,000 Corporate sites
+£300m Corporate sales
+1,500 EMEA sales forceUK business
RS Marketing engine
+250 Corporate sites
+£300m Corporate sales
Limited marketing and sales resource
+80 Customers
Global infrastructure
+£1,200m EMEA product sales+£300m product sales
IESA will continue to be run independently
Ability to leverage on Group infrastructure to drive faster growth benefiting all suppliers to IESA including RS and RS Pro
Value-added solutions
IESA OVERVIEW
4
WHO WE ARE
IESA is an international Industrial BPO (Business Process Outsourcing) organisation.
33
200+Locations
27,000Suppliers
150+Stores
7Countries
1,000,000Products
20,000Users
80+clients
520Employees
65,000Quotations
WHO WE SERVE
IESA has over 80 clients across 7 countries – UK, Ireland, Germany, Singapore, France, Sweden, Slovakia. We are currently setting up a business to launch with a customer in the Netherlands early in the New Year.
34
Our core services are Procurement and Stores Management
We do not distribute and re-sell, we are product agnostic.
OUR BUSINESS PROPOSITION
Moving to IESA simplifies the process and supply chain.
35
PRICE OF GOODS
COST OF INVENTORY
COST OF PURCHASE
WHAT WE DO – OUR CORE SERVICES
IESA’s core services cover three primary areas:- Price of goods- Cost of purchase - Cost of inventory
1
2
3
Procurement services – with over 160 preferred suppliers representing 40% of spend and an additional 27,000 vendors
Stores management – set up, hardware, software, personnel and processes Inventory management – re-order reduction, on-hand reduction, spend
reduction and obsolete removal
Transactional processing – offering one source and one invoice
Digital systems – MyMRO, my CAT and SAP solutions
Stores excellence
Site efficiency – providing vending, lineside and kitting solutions
Technical benefits – product specification, OEM parts conversion, alternative products, improved products and repair
Key differentiators include:
36
£1m Spend
3,500Invoices to Log
4,000Purchase
Orders
250 - 500Vendors
5% - 10%Carriage Values
10%Fast
Inventory
35%Critical
35%Obsolete
20%Slow
Inventory
30%Lost Engineering
Time
10%Excess Spend Value
Manual Process
Legacy Systems
Poor Compliance
Emergency Orders
Local Supply
Engineer Buyer
Down Time
Poor Data
20%Excess Inventory
Value
OUR BUSINESS PROPOSITION
Why do companies choose integrated supply?
Every company is different but some or all of these symptoms will apply...
A customer of ours may look as follows…
37
£0.9m Spend
12Invoices to Log
1Purchase Order
1Vendor
0% - 2%Carriage Values
15%Fast
Inventory
30%Critical
35%Obsolete
10%Slow
Inventory
100%Engineering Activity
10%Spend Reduction
Automated Process
Cloud Systems
Process Compliant
Inventory Available
Leveraged Supply
Sourcing Service
KPI
Audit Data
20%Inventory Reduction
OUR BUSINESS PROPOSITION
We can help them achieve a lesser spend, with one invoice and give them back the time to focus on their direct production and procurement needs
38
Value-added solutions
LOOKING FORWARD
5
Innovation Managing and utilising
data MyMRO and digital user
marketplace
Growth Grow client base Expand internationally ‒
through existing clients and acquisitions
Supply expansions Develop new channels
Operational excellence
Build people capability Expand global supply chain
& automation Technical infrastructure Inventory & technical
excellence
STRATEGY
40
IESA’S AND RS COMPONENTS’ RELATIONSHIP
41
IESA continues to be one of RS’ largest customers and through the acquisition our relationship has grown further
We maintain an arms length relationship when it comes to our transactions, however have been able to take away key learnings from both sides
Together RS and IESA have been able to support each other’s businesses by creating an IESA Lite and RS Plus business model
BUILDING CAPABILITY TO WIN
Cus
tom
er se
gmen
tatio
n
CorporateInternational or nationwide company, multiple locations, central purchasing, high spend potential
KeySingle location medium-sized company, medium spend potential
StandardSingle location SME company, low spend potential
Integrating
Consolidating
Transactional
1. Value-added solutions• Procurement solutions• Inventory solutions• Maintenance solutions• Design & Innovation solutions
2. Full range supply• Broader & deeper• Specialist knowledge & expertise
3. Value-led selling effectiveness• Consistent value proposition• Value selling effectiveness
Customer experience Ease of doing business
Hum
an to
uch
& va
lue
incr
ease
s
Digi
tal F
irst
OutsourcedBusiness Process Outsourcing (BPO)
42
Value-added solutions
Q&A
THANK YOU FOR YOUR CONTINUED INTEREST IN ELECTROCOMPONENTS
6
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