Dorel Juvenile China

President & CEO Dorel Juvenile, Jean-Claude Jacomin
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Dorel Juvenile: Front runner in the industry
The foundation: collaboration and integration
Organizational blueprint: ongoing efficiencies
Elevated R&D capabilities
Chief Operations Officer Dorel Juvenile, Dave Reilly
Responsible to drive the operations activities of Dorel Juvenile China
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Driving our global operating capabilities
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Realizing consolidation, efficiencies, and a Manufacturing Center of Excellence
President & CEO Dorel Juvenile China, George Huang
Responsible for unlocking the potential of the Chinese market
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Committed to establish a strong market presence
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Driving growth of the domestic sales
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Offering a broad and relevant brand portfolio, leveraging global capacities
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Dorel Juvenile segment
overview
Zhongshan,
October 28
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All over the world
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We care for
the future generation
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Front runner in the industry
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Always one step ahead
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Establishing our own division
in China
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Acquisition of the
juvenile business
of the Lerado Group
o Transaction closing date: 3rd of November 2014
o Scope of acquisition:
o Over 4500 employees;
o 6 sites
o China: Manufacturing, Domestic Sales, R&D
o Taiwan: R&D Center
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Realizing a vertically integrated
value chain
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Mastering our destiny
Taking control of our supply chain
Opening up the Chinese market
Increasing our global innovation power
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Dorel Juvenile China
Strengthening our global leadership, extending our
world-leading brands and competitive advantage
Global operating
capabilities
Expansion into
Chinese market
Elevated R&D
capabilities
12
- Operations footprint
- Employee base (from 3,500 to 7,500)
- - R&D center in Taiwan
- Presence in the Chinese market
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Adding Angel as strong local brand
Global brands
Regional and local brands
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Status of
organizational
integration
Established a skilled leadership team
George Huang
President & CEO
Seng Ming Lim
VP Operations
Sam Wu
VP HR &
Communications
Fan Mingfeng,
VP R&D
Scott Chen
VP Program
management
& 3rd Party Sales
Rick Feener
VP Quality
Gary Kao
CFO
Harrison Cheng
GM Domestic
Sales
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Building a Dorel Juvenile identity
Care for Precious Life
呵护新生命
Visible presence
A unified culture: Adapted functional work wear enforcing our identity
and visual control
Website: Building online presence in China
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Integrating company cultures
Welcoming a new division: celebrations
across the world
USA celebrating first products shipped from
Dorel Juvenile China
Dorel Juvenile China competing in Dragon
Boat Race
Exchange of knowledge: European employee
working in Taiwan for dedicated period
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Informing and engaging employees
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Informing and engaging employees
Implementing global systems and
processes
• Upgrading IT infrastructure and integration into Dorel Juvenile IT eco-system
• Dorel Juvenile product costing methodologies implemented
• Roadmap for upcoming MRP improvement plan in place.
• Along with Internal Audit team, work underway on CSOX internal control compliance
obligations.
2016
2015
Q1
Q2
Product costing
methodologies
implemented
Q3
Q4
IT infrastructure
Integrated
Q1
Q2
Q3
Q4
MRP
roll-out
23
Realizing an optimal organization
lean, smart, and well-equipped
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Key elements
 A new Senior leadership team
 Upgraded skillbase under the senior management for a more efficient
operation
 Strong support teams for Finance & IT and HRM
 Reduction of management layers in Operations
 Creation of Dorel Juvenile Asia Sourcing team focusing on supplier
management
 Strong Domestic Sales team to sell Dorel Juvenile brands
 R&D structure in line with Dorel Juvenile product categories
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Optimization of the organization:
a two-way approach
Indirect
Headcount
Reduction
Direct
Headcount
Reduction
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1.Indirect headcount reduction
• On-going process:
Organization Optimization focusing on the indirect headcount
• Purpose:
1.Align structures with new business model
2.Reduce costs
3.Revise structures and upgrade skills
• Results today:
First optimization round done: July and December
Result: indirect headcount reduction of 468 fte vs December 2014
= Annual savings of USD 3,400,000
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2. Direct headcount reduction
Drive Consolidation:
• Work more efficiently and cost effectively
• Reducing the level of complexity
Centralizing activities in Zhongshan:
• Closing facility in Yangjian – sewing
• Closing facility in Fei Long – warehousing
MAKE versus BUY:
• Closing facility in Guohong (outsourcing)
• Scope of direct head count reduction: 294 fte
= Expected annual savings of USD 1,110,000
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Dave Reilly
Role and responsibilities
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Operations Strategy Development
Quality assurance and control
Sourcing, Manufacturing and Supply Chain optimization
Logistics and Customer service
Cost Savings initiatives
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Global operating
capabilities
Presentation Dave Reilly
Chief Operations Officer, Dorel Juvenile
Dorel Juvenile China:
Strengthening our global leadership, extending our
world-leading brands and competitive advantage
Global operating
capabilities
Expansion into
Chinese market
Elevated R&D
capabilities
31
Overall presence of Dorel Juvenile China
Huangshi
Shanghai
Zhongshan
Shenzhen
Chiayi
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Operations presence of Dorel Juvenile China
Huangshi
Shanghai
Zhongshan
Shenzhen
Chiayi
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Zhongshan and
Huangshi
4%
15%
57%
Production per
Stroller
Product
category
Car Seat
Home Equipment
(Jan ~ Aug.,2015)
Others
24%
2%
8%
Production per
Region
(Jan ~ Aug.,2015)
5% 1%
63%
North America
Europe
21%
Asia
South America
Oceania
Afrida
Africa
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Zhongshan
Assembly
-24 assembly lines
Sewing
- 62 sewing teams
Injection molding
- 68 injection molding
machines
Tube cutting, forming &
robotic welding,
powder coating &
liquid painting
- 7 robotic welders
Fabric cutting
- 9 auto - fabric cutters
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Huangshi
Assembly
-7 assembly lines
Sewing
- 9 sewing teams
Injection molding
- 30 injection molding
machines
Tube cutting, forming &
robotic welding,
powder coating &
liquid painting
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3 auto-tube cutters
8 auto tube sealing
Fabric cutting
- 2 auto - fabric cutters
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Strategy
Objectives
• Consolidate supplier base to reduce complexity and realize cost savings
• Drive maturity in the organization via competency assessments and
appropriate development
• Enhance Quality control and process improvement to raise the level of
output
• Establish Center of Excellence approach
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Global operating capabilities
Objectives DJC
Supplier consolidation
and leveraging
Competency
assessment and
development
Quality controls and
process improvements
Centre of Excellence
approach
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Global operating capabilities
Objectives DJC
Supplier consolidation
and leveraging
Competency
assessment and
development
Quality controls and
process improvements
Centre of Excellence
approach
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Supplier consolidation and leveraging
Factory Supplier base:
• Reduced by 25%
• Resin, steel, fabric, packaging
Savings:
• 7.5% to date.
Rationalized both small plastic parts and
wheels.
• Allowing for the consolidation of
operations
• Selling facility Guohong
• Terminating the lease Yangjiang
Savings:
• Reducing expense by 6-8%
Finished goods insourcing
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Global operating capabilities
Objectives DJC
Supplier consolidation
and leveraging
Competency
assessment and
development
Quality controls and
process improvements
Centre of Excellence
approach
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Competency assessment and
development
• Global procurement team established concentrating on:
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Supplier partnerships
Savings programs
Linkage with design groups.
• Completed assessment of manufacturing operations concluding in:
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Large injection molding and metal forming competence.
Investments in these areas will continue, as well as assembly methods.
• Core competency model defined:
• Used to support insourcing / outsourcing opportunity development.
• High effort in educating employees in quality standards.
• A focused organization structure implemented to benefit professionalism
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Global operating capabilities
Objectives DJC
Supplier consolidation
and leveraging
Competency
assessment and
development
Quality controls and
process improvements
Centre of Excellence
approach
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Quality controls and process
improvements
• Improvement of quality levels:
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From 54% in January to 93% in September
• Acceptance On Deviation (AOD) improved:
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from 40% to 1%.
• Implementing Kaizen lean techniques:
• Setup times reduced from 1.2 hours to 30 minutes.
• Cellular progressive manufacturing replacing batch / large lot size production.
• 6-month forecast established resulting in improved:
• Capacity planning
• Lead-time
• Utilization.
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Quality Level
AOD
100%
45%
90%
40%
80%
35%
70%
30%
60%
25%
50%
20%
40%
15%
30%
20%
10%
10%
5%
0%
0%
jan-15
feb-15
mrt-15
apr-15
mei-15
jun-15
jul-15
2014
2015
Working faster and better
Setup time
minutes
aug-15
80
70
60
50
40
30
20
10
0
2014
2015
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Quality controls and process
improvements
• Established a tool life database and total
productive maintenance system for
proactive equipment and tool maintenance.
• Converted all manual welding:
• 8 robotic welders
• steel and aluminum
• Individual incentive system now
accounts for non-conforming parts and
finished goods.
• Harmonization of quality inspections /
testing underway.
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Global operating capabilities
Objectives DJC
Supplier consolidation
and leveraging
Competency
assessment and
development
Quality controls and
process improvements
Centre of Excellence
approach
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Manufacturing Centers of Excellence
• Evaluation of manufacturing landscape to integrate the role of Dorel
Juvenile China
• Selection of Manufacturing Centers of Excellence based on:
• Competency / expertise level
• Cost effectiveness
• Ability to control manufacturability and quality
• IP protection
• Investment in both equipment and people are necessary to establish
manufacturing leadership and competitive differentiation.
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Global Manufacturing capabilities of Dorel Juvenile
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Key milestones:
Moving existing product platforms and launching new platforms
Moved existing platforms, NA:
• Travel Systems, Play-yards, High Chairs, Walkers
• 2 million umbrella strollers
New platforms, EU
• July: Manufacturing of premium stroller Stella of Maxi- Cosi/Bébé
Confort using progressive cell manufacturing concepts.
• September: Manufacturing of premium stroller Dana of Maxi- Cosi/Bébé
Confort
January 2015: Shipment
of Safety 1st Step ‘N Go
Umbrella stroller
Stella
Dana
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2016
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1. Manufacturing Centers of Excellence for
strollers in Zhongshan, Huangshi (umbrellas), and Portugal
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2. Car seats Centers of Excellence in Columbus, Portugal,
Helmond, Zhongshan and Brazil
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3. Transform Dorel Juvenile China’s operations into an
established and lean organization
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Rationalize injection molding (wheels, small parts)
Improve capacity and capability
Establish good balance of insourcing and outsourcing
Operate with high quality systems, labs, and testing
Commit to 95+% on-time deliveries
Commit to 95 +% quality
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4. Realize solid global processes and ownership
• Align business strategy with
operations processes:
 Improve control and consistency
 Improve operational efficiencies
 Reduce redundancies
 Improve overall communication
Processes| S&OP |Supply Chain | Customer Satisfaction | Manufacturing | Operations |Quality
Assurance |Quality Control |Lab expertise |Procurement
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George Huang
Role and responsibilities
• Implement overall strategy and annual business plans
• Accomplish a successful integration of the Chinese
organization into Dorel Juvenile
• Constantly drive a rapidly increasing domestic business
growth
• Transform Dorel Juvenile China into a viable market
organization and strong operations partner for our other
divisions
• Successfully support the progression of our internal
production capabilities
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Unlocking the potential
of the Chinese market
Presentation George Huang
President & CEO, Dorel Juvenile China
Dorel Juvenile China:
Strengthening our global leadership, extending our
world-leading brands and competitive advantage
Global operating
capabilities
Expansion into
Chinese market
Elevated R&D
capabilities
Strategy
Expansion into Chinese market
2 focus points
Growing domestic
market Sales
Shifting non-Dorel
Juvenile sales to private
label business
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Growing domestic
market Sales
Shifting non-Dorel
Juvenile sales to private
label business
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Market analysis
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Source: IMF
Overview of the World Economic Outlook projections
(percent change unless noted otherwise)
Economic indicators for China
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Stroller & Car Seat Market in China
Total Retailing Sales of Stroller & Car Seats in China:
• 2014: US$ 1.8 Billion
• Estimation 2018: US$ 3.3 Billion
• The sales of billing from the brands in 2014: US$ 862 Million
3.3
0.82
2010
1.0
2011
1.2
2012
1.5
2013
1.8
2014
2.08
2015
2018
Unit：Billion USD
Source: Internal Estimation
Exchange rate: 6.38:1
New Borns
• The number of new born babies developed rapidly
Millions
New borns
16,5
16,4
16,3
16,2
16,1
16
15,9
15,8
15,7
2008
2009
2010
2011
2012
2013
Source: National Bureau of Statistics of PROC
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Competitive landscape
• Strollers: +/- 160 brands
• Car seats: +/- 90 brands
Premium
HPP
MPP
OPP+
OPP
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China market channel overview
Brand Owner
Importer
National Agents
In-house Sales Team
Area/Provincial Distributor
Department
KA
Baby Shop
Wholesale
Store
Hypermarket
(36%)
(5%)
(16%)
(20%)
Specialty
Store
(12%)
E-Commerce(11%)
Consumer
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Key Account Hypermarket
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Baby Shop
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Specific E-commerce channel China
Tmall.com
• Tmall.com is a Chinese-language website for (B2C) online retail.
• A platform for local Chinese and international businesses to sell brand
name goods to consumers in mainland China.
• It allows foreign brands to enjoy the Chinese market without having an
actual presence.
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Key success factors
 Brand awareness, company image &
reputation
 Channel coverage & relationship
with channels
 Product innovation & fashion design
 Logistics & after-sales services
 Product quality, 3C compliance &
guarantee
 China local manufacturing
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Objectives
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To realize a sustainable growth
To offer a brand portfolio with a full range of
products
To lead the way in the market by offering omnichannel solutions
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Overview Strategic Implementation
1. To realize a sustainable growth
• Scale down unprofitable KA Hypermarket
• Have closed own stores
• Introduce new car seats, strollers and small furniture
• Gain market share via Pincer Attack strategy
2. To offer a brand portfolio with a full range of products
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Re-position: Angel brand (Mass Market whole product range)
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Expand:
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Quinny (Premium Stroller)
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Maxi Cosi (High-end Car Seat & Stroller
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Follow the Halo Effect strategy, driven by brand equity, to strengthen the brand positioning of the other brands
Introduce:
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Bébé Confort (High-end Feeding & Home Equipment)
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Safety 1st (Medium-end whole product range)
Leverage Dorel Juvenile product platforms to benefit the development of specific products for China
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Overview Strategic Implementation
3. To lead the way in the market by offering omni-channel
solutions
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Focus on Baby Shops and e-commerce channel.
Grow online sales
Develop new channels
Set up partnership program for the O-to-O (On-line& Off-line) strategy
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Objective
• To realize a sustainable growth
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To offer a brand portfolio with a full range of
products
To lead the way in the market by offering omnichannel solutions
78
Dorel Juvenile China – Price point & Channel overview
Department stores
National baby chain
stores
Regional baby chain
stores
Premium
HPP
Community
baby chain stores
MPP
Wholesale market
in major market
OPP+
Hypermarkets
Wholesale market
In minor market
OPP
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Quality
high
Pincer Attack
Strategy
Price
high
low
• Quinny
• Safety 1st
-Premium
-MPP
-Stroller
-Whole range
• Maxi Cosi
• Angel
-High-end
-OPP+
-Car Seat & Stroller -Whole range
• Bébé Confort
OPP
Local brand
-High-end
-Feeding & Home Equipment
low
80
Objective
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To realize a sustainable growth
• To offer a brand portfolio with a full range of
products
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To lead the way in the market by offering omnichannel solutions
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Brand and
product strategy
Brand portfolio strategy
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Shanghai CBME Fair
Introducing,
Bébé Confort, & Safety 1st
Expanding
Quinny, Maxi-Cosi
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Shanghai CBME Fair
Re-positioning Angel
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Car seats
• Chinese consumers buy one car seat for their child from 1 year to 6 years old.
• Maxi-Cosi and Safety 1st are set-up to serve these consumers with convertible/ multi-group car
seat solutions
• The various product launches are therefore aimed at convertible solutions
86
Convertible solutions
• Launched in 2015 (Maxi-Cosi):
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the Group 0+ /1 and Group 0+/1/2 MiloFix and Opal
MiloFiX
Opal
• Launched in 2015 (Safety 1st)
• Group 0+/1, Group 0+/1/2 Simply Safe
Simply Safe
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Broad range of stroller portfolio
For the affluent consumers of China:
From affordable Angel, to Safety 1st, Max-Cosi, and premium Quinny:
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Adding Angel as strong local brand
Global brands
Regional and local brands
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'Where there are children, there is Angel'.
• A diverse range of affordable juvenile products in line with the needs of Chinese parents.
• Product categories:
• strollers and home equipment
• 2016: Introducing car seats
• Reinforcing Angel by leveraging global capacities of other Dorel Juvenile brands
• Wide distribution channel across wholesale and hypermarkets enabling parents to shop
Angel in many cities across China.
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Re-positioning strollers
3 key stroller categories in China:
Handle reversible | Car seat reversible |Buggy
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Objective
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To realize a sustainable growth
To offer a brand portfolio with a full range of
products
• To lead the way in the market by offering
omni-channel solutions
92
Omnichannel
strategy
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Channel strategy
• Focusing on realizing growth in baby stores and online sales (tmall.com)
• Scale down unprofitable KA hypermarket stores and department stores
• Closed 5KA channels, and 600 stores
• Closed owned stores and shop-in-shop stores
• Reaching generation Y parents
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Focus on social networks and online communication
• Websites, Weibo, Wechat
• In-store-communication (trade marketing and consumer promotion
• Brand websites, online flagship stores
94
Market Channel Strategy
Brand Owner
Importer
National Agents
In-house Sales Team
Area/Provincial Distributor
Focus
Focus
Baby Shop
(36%)
Department
KA
Wholesale
Store
Hypermarket
(5%)
(16%)
(20%)
Specialty
Store
(12%)
E-Commerce(11%)
Consumer
95
Channel development
Number of stores
% of Net Sales
50%
1400
45%
1200
40%
1000
35%
30%
800
2015
25%
600
2016
20%
15%
400
10%
200
5%
0
Baby Chain store
Baby Shop (Wholesalers)
2015
KA Hypermarket
0%
Specialist
Mass Market
Distributor
Retail
Online Sales
2016
96
Online
approach
97
Specific Chinese Channels:
WeChat – free messaging and call app
• Supports different ways of instant
message
• Supports users to register as a public
account, which enables them to
interact with subscribers and provide
them with service.
• Public accounts have become a
common service or promotion
platform for government,media and
companies.
98
Specific Chinese Channels:
Weibo- microblogging platform
• Weibo" (微博) is the Chinese
word for "microblog“ and is
increasingly being used in China
• Similar functionalities to
Twitter, using 140 (Chinese)
characters
• Western companies are utilizing
Weibo to gain access to the
Chinese market
99
Online Marketing 2016
• Quinny, Maxi Cosi, SF1, & BBC
• 4 Websites & Translation
Weibo & WeChat
• Weibo/ Wechat communication
• Angel
• Redesign Angel website & Photography
• Weibo/ Wechat communication
• Tmall flagship stores for all brands
100
Specific marketing approach China:
Online micro-movies
• Micro movies have become increasingly popular
• In China’s vast metropolises long commute times
mean millions spend hours watching content on
their smartphones
• Micro-movies are shot over a short period of time,
last from three to thirty minutes
• One reason for the growing popularity of micromovies is that they are streamed on video sites with
built in social media features that make them
easier to share further.
101
Dorel Juvenile China:
Including micro-movie in marketing
• Develop a series of micro-movies to
promote online and offline sales
• Include consumers in defining the
narrative of the story
• Introduce brand and products
• Engage with consumers via local
marketing forum and WeChat
• Use of well-known blog sites and key
opinion leaders
102
Micro-movie: An extensive online interlinked
approach
•
Embedded
Micro Movie
Embedded core product features by using attractive story.
Mini-Site
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Elaborate product information: interaction with consumers
•
Engage fans to
receive attention for
movie and product
Key Opinion Leader
(KOL)
WOM Marketing
(Forum)
•
Make some “noise”: talking
as consumers
•
Introduce brand
idea and products
Weibo
(2nd Official Website
WeChat
(CRM Tool)
•
Solve online consumers problem
and guide them to retail
Online & Offline Promotion
•
Post suggested products and direct links to online and offline shop information
Online & Offline Sales
103
Growing domestic
market Sales
Shifting non-Dorel
Juvenile sales to private
label business
104
Non-Dorel Juvenile sales
Business Strategy
• Harvest Strategy for market competitors
- Maximizing the profit and cash in-flow
• Strengthen the business development of the private label business of retailers
105
Retailer
Model
Carrefour
HA1360
Carrefour
FA0050
Carrefour
RA2041
Picture
Carrefour WA1240
Carrefour
EB3950
106
Elevated R&D
capabilities
Strengthening our global leadership, extending our
world-leading brands and competitive advantage
Global operating
capabilities
Expansion into
Chinese market
Elevated R&D
capabilities
108
Consolidate global R&D footprint
To drive innovation & synergies
4 Global R&D centers of excellence
Consolidate global R&D footprint
To drive innovation & synergies
• Focused innovation to support strategic Brands & categories
•
Car Seats and technology
•
Maxi-Cosi & Quinny Mobility
•
Safety 1st Home Safety & Infant Health
•
Tiny Love developmental play
• Clear roles for our development centers
• Operational efficiencies leveraging processes & infrastructure
• Time to market reduction
Asia R&D
Key development center to support stroller expertise
& regional consumer needs
• Global Engineering excellence
for Strollers and Home
Equipment
• Global OPP/PL Design to
Manufacturing for all brands
• Regional development for
China /South East Asia
markets
R&D capabilities
• Dynamic Crash Test Lab for CRS
• In-house test facilities for Strollers and Home,
raw materials
• In-house measurement and dynamic test
facilities
Europe R&D
Leverage strong expertise
• Global design development for
Maxi-Cosi and Quinny mobility
solutions
• Global Advanced Car Safety
Solutions
 Research & technology expertise
 Automotive and biomechanics
113
USA R&D
Leverage strong expertise
• Global design development for
Safety 1st
• Global development for Home
Safety and Infant Health ,
Connected Home solutions
• Regional developments
supporting NA consumer needs
and customer requirements
Tiny Love:
Center of Excellence for development play
• Global Tiny Love design and
advanced concept developments
• Digital play and connected
solutions
115
Global Strategy
We took control of our global leadership position,
and now have the ability to design our leadership
for the future
117
Focus
2016-2018
118
1. Grow our global leadership
Omni-channel solutions:
New markets
119
2. Deliver 5-star products
Global NPD centers
Use of consumer insights
120
3. Reduce brand & category
complexity
Profitable brands & categories
Rationalization product platforms
121
4. Consumers know our brands,
buy our brands
Best-in -class digital capabilities
Increasing marketing investment
122
5. Achieve synergies & cost
savings
Simpler organization
Optimal use of our operations
123
6. World-class organization
capable of transformation
Employee accountability
Change management capabilities
124
Transformation
One journey.
Worldwide.
Team up to Transform.
126