electrocomponentsshowpad. eprocurement. purchasing manager. tm. rs local branches. laboratory...

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


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


What our customers want

Largely offline

Small and regional

Single product / niche focus

Our competition

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WHY VALUE-ADDED SOLUTIONS – CUSTOMER SEGMENT OPPORTUNITY

Cus

tom

er se

gmen

tatio

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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


RS Local branches

Laboratory services

eProcurement


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

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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.

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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


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


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


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


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/


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

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PROVIDING SOLUTIONS FOR OUR CUSTOMERS – PROCUREMENT

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PROVIDING SOLUTIONS FOR OUR CUSTOMERS – INVENTORY

The right type of procurement and inventory approach varies depending on product type and volumes

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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

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PROVIDING SOLUTIONS FOR OUR CUSTOMERS – MAINTENANCE

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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




Integrating

Consolidating

Transactional

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usto

mer

segm

enta

tion




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

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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


usto

mer

segm

enta

tion




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


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:

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£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


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


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


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




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


Q&A

THANK YOU FOR YOUR CONTINUED INTEREST IN ELECTROCOMPONENTS

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