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Wolseley UK Site Visit analyst presentation
Adrian Barden Managing Director Understanding Wolseley UK Wolseley at the hub of the UK construction industry Organic growth record Depth & quality of management Critical business differences providing competitive advantage Re-invention to address changing market needs Consolidation of Offices 2 offices Strategy – Warwick Back-office – Ripon ‘One team, One company’ Structure & Branding Ripon Warwick Strategic & Executive Leadership Structure Adrian Barden Managing Director Keith Jones Brand Development Director Alan Stevenson Brand Director Plumb David Hunter Brand Director Build Matt Neville Finance Director David Moody Sales & Marketing Director Mike Lynn-Jones HR Director Alan Ball Brand Director Parts & Climate Paul Gordon Brand Director Drain TBA Brand Director Pipe David Himsworth Brand Director Hire Ian Tillotson Commercial Development Director Bathstore Derek Hufton IT Director Chris Kitchen Brand Director Broughton Crangrove Ken Evans Project Director Garry Flanagan Logistics Director Darran Rickards Product Director Andy Holmes Product Director The Strategic Leadership Team has responsibility for the long-term direction of the business The Executive Leadership Team is in charge of delivering our tactical business plans to ensure we maintain and strengthen our market position Mike Lynn-Jones HR Director Tibbet & Britten HR restructuring Employment & retention of staff Derek Hufton IT Director Legacy systems Customer liaison International responsibilities Keith Jones Brand Development Director Growth & profits Formerly HR & ‘Lightside’ Vast experience Ian Tillotson Commercial Development Director Founder partner of HRPC Organisation & processes Benefits from IT Garry Flanagan Logistics Director Pepsico Integrated distribution network Vision of the future Matt Neville Finance Director PwC Robust approach Re-shaped team David Moody Sales & Marketing Director PwC Market segment focus Loyalty programme Adrian Barden Managing Director 30 years experience Medium & larger groups Heavyside Matt Neville Finance Director The Wolseley Way Strong Organic sales growth • Aggressive branch opening programme • Low capital outlay Strategic Acquisitions Improved profitability and ROCE • Purchasing benefits • Increased sales • Central cost savings • Stable cost base • Accelerate organic • Quick to profitability growth • Improved working capital management • Improved ROCE Source of sales growth 25% 20% 15% 10% 5% 0% 98/99 99/00 00/01 Organic Total CG A cquisition CG 01/02 02/03 A cquisition Organic CG Sales by division 2002/2003 51.2% 26.2% 5.8% Light 16.8% Heavy Commercial Spares 1998/1999 56.5% 25.5% 6.5% Light Heavy 11.4% Commercial Spares Trading Profit by Division 2002/2003 51.8% 27.4% 8.3% 12.5% Light Heavy Commercial Spares 1998/1999 15% 64.2% 11.9% Light Heavy 12.4% 11.5% Commercial Spares Branch development history – By division 1400 1200 1000 Spares 800 Commind 600 Heavyside 400 Lightside 200 0 1999 2000 2001 2002 2003 Branch development history – Core & Complementary 1400 1200 1000 Bathstore Timber 800 Hire 600 Heatmerchants Core 400 200 0 1999 2000 2001 2002 2003 Acquisitions as a base for organic growth – Hall & Co. 20 18 16 14 12 10 8 6 4 2 0 250 200 150 100 50 0 1999 2000 Sales £m 2001 2002 Profit £m 2003 Key product growth Radiators Boilers 160 160 140 140 120 120 100 100 80 80 60 60 1998/99 Qty 2002/03 Mkt share 1998/99 Qty 2002/03 Mkt share Working Capital - 5 Years to July 2003 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% July-99 July-00 July-01 Working capital July-02 Stock July-03 ROCE – 5 Years to July 2003 23.0% 22.0% 21.0% 20.0% 19.0% 18.0% 17.0% Jul-99 July-00 July-01 ROCE July-02 July-03 Half Year to 31 Jan 2004 Actual Jan-04 £'000 Last Yr Jan-03 £'000 £'000 1,018.3 918.7 99.6 10.8% 68.7 6.7% 59.6 6.5% 9.1 0.3% 15.3% Sales growth - Organic - Acquisition 10.8% 5.6% 5.2% 10.6% 3.3% 7.3% Working Capital 13.8% 14.1% -0.3% -2.1% No. of branches 1,460 1,313 147 11.2% 11,564 10,003 1,561 15.6% Sales Trading profit Trading profit % No. of employees Variance % Performance initiatives - Sales Organic growth programme, >50 new branches year-to-date Different branch formats Implants Express Multi-site Restructure to brand focus More focused acquisition strategy Acquisition strategy – Target Identification Strategic direction Market sectors Complementary opportunities Competitive considerations Prioritisation Five year plan Performance initiatives – Gross Profit Category management Central purchasing team International purchasing strategy New markets – Retail, Landscape, Express branches Performance initiatives - Costs Supply chain management project Investment in Human Resources Development of property portfolio Head office rationalisation Centralised Commercial team Financial Management and Controls Performance management Benchmarking KPI’s Corporate Governance Sarbanes Oxley Internal Audit The Future Continuing sales growth Reduced cost base Increased controls Improved Operating margin David Moody Sales & Marketing Director The Wolseley Way Market Background • Statistics • Dynamics Redefining our role • Hub of the industry Innovation • New products • New customers • New services UK construction market remains one of the most consistent in Europe 12.0 European Construction Output 1999 - 2003 10.0 Average Annual Growth (%) 8.0 6.0 -4.0 Source - Euroconstruct Portgl . Belg N’Lands Norway France UK Italy Czech Ireland -2.0 Spain Germany 0.0 Austria D’mark 2.0 Poland 4.0 Wolseley Market dynamics provide new opportunities CONSTRUCTION OUTPUT 2002 2003 2004 2005 £million 2000 constant prices % change YoY Actual Forecast Forecast Forecast Public 8.0 12.0 10.0 5.0 Private 17.0 3.0 -2.0 0.0 Total 15.4 4.5 0.1 1.0 Public Non-Housing 17.0 12.0 1.0 0.0 Infrastructure -11.7 1.0 3.4 2.0 Industrial -5.0 0.0 3.0 5.0 Commercial -6.2 -4.7 0.1 1.4 Total other new work -2.7 1.1 1.4 1.4 Total New Work 1.5 2.0 1.1 1.3 Private Housing RM&I 5.0 3.0 -3.0 -1.0 Public Housing RM&I 10.0 10.0 5.0 5.0 Public other R&M 10.0 0.0 0.0 0.0 Private other R&M 4.0 -5.0 -8.0 3.0 Total RM&I 6.4 1.1 -2.5 1.5 TOTAL ALL WORK 3.8 1.5 -0.7 1.4 HOUSING OTHER NEW WORK REPAIR, MAINTENANCE & IMPROVEMENT Source - CPA Market dynamics more revealing than statistics Housing Severe housing shortage by geography/economics Growth of ‘affordable’ homes Increasing cost of moving and attractiveness of improving Lifestyle issues Non-housing Years of under investment in health/education Growth of long term FM contracting Growth in service industries e.g. Leisure/Retail, Distribution Our brand portfolio is balanced to exploit each sector movement Forecast Public/Private Sector 2001 2002 2003 2004 2005 2006 Expenditure Actual Actual Forecast Public Sector inc PFI 0.4% 8.8% 10.2% 7.5% 3.1% 2.5% Private Sector 3.7% 2.9% 0.8% -1.5% -2.8% 0.8% Forecast Forecast Forecast Source - CPA Branch Development The last 20 years… 1985…… 150 Branches 1990……… 300 Branches 1995…………. 400 Branches 2000…………… 1000 Branches NOW………………… 1500 Branches 2010 …………………… 2000 + Branches Branch Development Programme Year 03 20 01 20 99 19 97 19 95 19 93 19 91 19 89 19 87 19 85 1800 1600 1400 1200 1000 800 600 400 200 0 19 Total No Branches Wolseley Branches 1985-2004 JB/Bathstore Timber Hire Heatmerchants HRPC Crangrove Control Pipe Drain Build Plumb Branch Openings to July 2004 Heatmerchants/Tubs & Tiles Year Ending HEATMERCHANTS TUBS & TILES Total Branches No Branches No Branches No 31/7/99 9 11 20 31/7/00 12 12 24 31/7/01 15 14 29 31/7/02 23 15 38 31/7/03 28 16 44 Forecast 03/04 34 18 52 Future Development Plans Plan to expand branch network to 2000 by 2010 Over 50 Build Center branches identified for Plumb implants More Plumb Center Express sites Develop ‘Multi-Brand’ sites Dynamics of Industry I.T. - More relevant - More accessible MERCHANTS Suppliers - Polarised - European - Non-inflationary pricing - Logistics - Information - Market Makers Alternatives - More retail orientated - More process driven Customers - Polarised - Smarter - More demanding - Fragmented Mass Fragmentation • Professional management • National & central models emerging Large • Bespoke solutions multi product • Wolseley Maintenance users (000s) • As above Large specialist contractors (1000?) • Owner managed • Local market • Specialist product needs Small specialist contractors (30,000+) • As above • • • • Can’t find them Local Cash oriented Mixed product needs • Homeowners • Improving skill levels Multi skill contractors(100,000+) Black Economy (1,000,000?) Trade Related Retail (Millions) • Focus by brand (PC/BC/etc) • Specialist service in branch (Timber/Bulk/etc) • Focus by brand (PC/BC/etc) • Brand extension • Build Center Local • Build Center • Unifix • Bathstore Wolseley UK Maintenance Large multi product users Building on the strengths of each trading brand Highly targeted – a ‘virtual’ team Additional products are offered e.g. electrical Client/Partner Manchester City Council Date won 2000 - Ongoing Emcor Drake & Scull London Borough of Lewisham Our role Supply Chain Partner, Voids and Response Maintenance ,disabled aids and adaptions Total Supply Chain Partner Response Maintenance Supplies to IST”s at larger Stores International partner Total Supply Chain Partner South Staffordshire Housing Assoc. Total Supply Chain Partner 2001 – Ongoing Contract Liverpool City Council -Enterprise Tesco 2001– 7yr contract 2000 Ongoing Ongoing 2002- 7year contract Bespoke Business Solutions Solution 1 – Standard Items Solution 2 Non - Standard Items Imprest kit used to complete job Pre-printed picking list completed Wolseley collects picking list from site Wolseley contacts operative on agreed delivery day Wolseley delivers kit and collects next picking note Operator uses purchasing card at Wolseley No time lost at counter Reduced paperwork Reduced travelling time Reduced stock throughput Reduced processing Delivery notes loaded by admin Delivery notes delivered to Procurement Procurement checks statement inc line item detail provided by Wolseley terminals Statistics from Manchester City Wolseley share of business up from 10% to 71% Value of stock issued per week Total Stock Holding Counter visits per week Number of Vehicles Procurement Staff Deliveries per week Store issue notes processed 2002-2003 1999-2000 £18,914 £102,000 420 2 5 10 721 £3,090 £40,375 145 0 1 206 163 Bespoke Business Solutions Tesco Tesco Store Store Identifies problem Tesco Maintenance Call Centre Issues order Wolseley Call Centre/Internet Branch Branch Directs to relevant branch Branch Collect / deliver Tesco engineers / contractors Branch Branch - in - Branch A multi-specialist response – not a one-stop-shop Overlap of customer needs e.g. builders need plumbing Excellent use of property assets Where Host Branch Implants Date Gravesend Build Center Plumb, Build (Timber), Hire Centers Sept 2003 Daventry Build Center (Timber) Build Center March 2003 Swindon Build Center Plumb Center Feb 2003 Dinnington Build Center (Timber) Build and Hire Centers Dec 2002 Blyth Plumb Center Parts Center Sept 2001 Falkirk Plumb Center Parts Center March 2001 Branch - in - Branch Middlesbrough / Highgate / Gravesend A true Wolseley trade park …… Brand Extensions Plumb Center Express Small specialist trades Retail Under 2,000 sq ft 2 people High street location No delivery Supported by central distribution/local branches High margin aspirations Core targeted product range Plumb Center Express Where Bristol Cardiff Chester-le-Street Edgware Hatch End Penge Surbiton Wylde Green Size 1252 1027 1725 1021 960 1010 1100 1437 Date 17.03.03 24.03.03 03.11.03 01.09.03 01.11.03 02.01.03 22.09.03 03.06.03 New Customer Services Web & Electronic • 24 x 7 • Visual Call Center • Convenient • Immediate Customer Field Visits • Hands-on • Consultative Branches • Local • 1400+ Wireless Project Wolseley UK benefits: Unique in the construction sector Low cost business channel Leverages existing assets Innovative Promotes loyalty Simple to implement Customer Benefits Identified need for remote field management Cuts administration costs Improves employee utilisation Improves cash flow Great marketing tool Innovative Training HE Boiler Training Initiative Research – course content/venues/manufacturers/customers Course planning and preparation – marketing of course Implementation – manufacturer events 25 venues refurbished and ready so far 32 training sessions completed, 800+ in the diary 278 installers trained, targeted to reach 8000 91% registered within 7 days of course, 87% attendance Increased take up of A1 Boiler Schemes Added Value Services Offsite Fabrication Pipe Center Build Center Climate Center Housepacks Leveraging the Brand Customers have high, and positive, awareness of our key brands Investment in branding continues in Print Websites P.R. Sponsorship e.g Masters Football New Branches Positive brand associations support a strong programme of own brand introductions More own brand opportunities exist… time uniqueness commoditisation Radiators Radiator valves Sanitaryware Plumbing Fittings Bricks Heating Spares Own brand consolidation, Europeanisation is our next goal Cross-Functional Processes A critical source of competitive advantage Managing suppliers Strategic marketing planning Customer franchise development Managing customers Competitive advantage Innovative products/brands Customer relationships Managing the supply chain Customer retention Long term profitability Implications for organisation, culture and ways of working Supply chain processes aligned with customer’s and supplier’s processes Source – Professor Martin Christopher Tim Pollard Marketing Director Wolseley Centers Current brands 1986 Originally designed for few companies New demands on brands Internal External The Brief To take a critical look at brands with a view to rationalisation To judge all brands for equity Where necessary to update strong brands Create brands to suit sectors/companies Develop solutions for sub brands and acquisitions Solution must be ‘scaleable’ and ‘exportable’ Scope All brands from Wolseley Centers down Links with other group brands Practical Factors Improve colour rendition Make more unique Make more flexible Make more disciplined Make less complex and more instantly recognisable Future-proof Features Unique ‘Wolseley’ typeface based on Peignot Bold Lozenge acts as control device preventing tampering Colour altered to be more practical and showing clearer differences Plus: Family feel / Working together / Scale & Size / 2 colours Direct Proportional relationship between text and pictogram 2D logo is less complex and nondateable Common colour throughout New and Remodelled Brands Sub-lozenges for specialist branches Two New Brands Brand Hierarchy r t t Timber Express Stainless Refrigeration Catering Glass BCGM Valves Air Conditioning Domestic Local Bathstore Ironmongery Wolseley Ireland Insulation Commercial Heatmerchants Tubs & Tiles Allwood Flooring Gas & Oil Tile Bathroom Unifix Signage Mixed Signage Mixed Vehicles and Branches Totem and Directional Wolseley Centers Ltd Stationery Remittance Advice Feeder Wagon Designs Own Brand Own Brand OLIVER HÄFFNER OLIVER HÄFFNER Garry Flanagan Supply Chain Building competitive advantage Delivering competitive advantage The Wolseley UK supply chain today Delivering value through our supply chain Plans for the future Wolseley UK has an unrivalled product and service offer, made possible through best in sector supply chain 400,000 product lines Network of 1500 branches 6 Regional Distribution Centres (RDCs) Large in-house transport operation Cut-offs 4.30 in branch for next day delivery Direct to customer on next day service 99 % + delivery compliance Melmerby DC is a blueprint for our DCs of the future 400,000 sq ft 40,000 locations : multi product storage Warehouse Management System and Radio Frequency VDL automation and Warehouse Control System X-trained , multi-skilled staffing A focus on performance and continual improvement Efficient Supply chain expertise is a core competency Management Expertise Supply Chain Development Team Best practice sharing Continual improvement Performance focus We leverage our distribution network to take cost out of the extended supply chain and improve our competitive position Distribution Centers Integrated transport Supplier benefits are shared Reduced/consolidated deliveries Reduced delivery costs Wolseley benefits are realised Improved fill/accuracy Specials Reverse logistics Barrier to entry Reduced cost Improved availability Improved efficiency Our national transport operation delivers improved asset utilisation lower operating costs and drives executional excellence Wolseley Branch Replen cycle Supplier Factory/ DC Wolseley UK N/RDC To deliver reduced cost and improved availability It’s a win-win situation Wolseley UK Lower operating costs Higher availability Lower product landed cost Our Suppliers Sales upside Efficiency improvements Lowest cost to market Our national network enables great service innovation across a diverse customer base Product range Branch network Delivery capability Service promise Innovation Direct customer delivery Small format branch JIT ‘packaged’ deliveries direct to point of use Wolseley UK – Supply Chain Vision “Meeting the customer needs by providing the right products and services, when and where they are needed at competitive prices” Wolseley UK 5 “C”s Consumers Customers Competitors More demanding ! End-to-end solutions required …Providing new challenges for supply chain – end to end …Creating …Supply chain is further need for becoming a key supply chain competitive flexibility & weapon - the performance Wolseley aim is to utilise its supply chain as a means to secure cost/service advantage over competition Getting smarter Capabilities It works but….. …The opportunity is there to build a world-class supply chain from supplier to customer Collaborative Culture Teamwork ! …Requirement for both internal (Supply Chain and rest of the organisation) and external (customers and suppliers) collaboration Supply chain excellence is the key to Wolseley UK’s continuing success Service – right product, right place, right time – one size does not fit all Price competitiveness – we have to be the best value service/product provider Agility and speed of change Changing marketplace e.g. consolidation New technologies More demanding customer We will transform these challenges into opportunities !! What Could World Class Supply Chain Execution Look Like? Deliver Order Collect Forecast Pay Customer Contact Supplier Collaboration Real Time Execution Information The options will be developed through inputs from a number of areas IBM ideas Customer and supplier input Option Option Development Development Transformational thinking within UK and Group Benchmarking The strategic review process Concept Discovery Strategic Options Detailed Analysis Detailed analysis & modelling Implementation Planning Alternative model review Benefits case Implementation Plan Detailed Business case High Level Business case Execute Implementation Recommende d solution Operate Post implementation review Continuous Improvement Wolseley UK strategy will leverage its size and build on its strengths Rationalisation Centralisation Integration Technology-enabled Collaboration-enabled Category management will focus on leveraging our purchasing scale Organisational focus Product category focus European and worldwide sourcing COGS benefit An integrated supply chain enables increased collaboration with our supplier base Collaborative Planning Forecasting and Replenishment Shared forecast at base and event Planning of promotions/events New Product Development management Optimum sourcing to replenish Vendor Managed Inventory Transparent terms reflecting cost to serve An integrated supply chain offers further opportunities for profitable growth Availability driving sales Efficiency driving price/margin opportunity Innovative customer strategies Quick and easy absorption of acquisitions Wolseley UK is the hub of the construction industry The best supply chain in the industry DC network Branch network Transport fleet Product portfolio Improving on the best to build our business further Supplier development Customer solutions Integration to reduce cost and improve service Adrian Barden Managing Director Wolseley UK Led the field Right product, right time, right place, right price Hub of the construction industry Supply chain efficiency National distribution Vehicle fleet Tailored solutions Early involvement From the biggest ………. ………..To the smallest Change Environment Customer diversification Technological Innovation Online Purchasing E-Billing Wireless Skills & Training Supply chain European organisation Leveraging Strengths Unbundling costs Improved purchasing via category management New store concepts Divisional to Brand structure 13 to 7 businesses Retains specialisms whilst providing integration Single point of contact Re-branding Wolseley led the way in 1986 Acquisitions introduced new brands Consolidate under Wolseley banner Sympathetic family feel Multiple applications Wolseley UK BC/GM, Bathstore & Ireland Warwick Leadership Brand management Marketing Product management Human Resources Commercial Finance Summing Up Financially strong Sales and share up Growth – organic & acquisitive Increase in volumes AND margins Adapting to customer needs and meeting them Logistics and Supply Chain Customers & Suppliers – hub of industry Unbundle costs and factory gate prices Unique structure Global marketplace People New structure Training & development Listening & understanding Wolseley UK Different business model Quality management Continuous improvement Hub of the industry Organic growth Questions?
