Kingfisher Plc · LSE:KGF
Kingfisher — Investor Day (November 2003)
36 slides from Kingfisher's investor day presentation, November 2003
Slide 1: Investor Event November 2003
Investor Event November 2003 1
Slide 2: Group Commercial
Group Commercial George Adams 2
Slide 3: Agenda
Agenda • Scale of the opportunity • Intelligence • Strategic Supplier Management - SSM • Direct sourcing • Key categories • Own brands 3
Slide 4: Scale - a major opportunity for the Group
Scale - a major opportunity for the Group Cost reduction Value Added • strategic supplier • best sellers management • key categories • direct sourcing • key brands • exclusive own brands Supply Chain, Process, Systems, People 4
Slide 5: Scale - cumulative cash benefits total more than £1 billion over 5 years
Scale - the cumulative cash benefits total more than £1 billion over the 5 years £m 400 300 200 100 2003/04 2004/05 2005/06 2006/07 2007/08 Annual increment Rolled up benefit 5
Slide 6: Scale - cumulative cash benefits total more than £1 billion over 5 years
Scale - the cumulative cash benefits total more than £1 billion over 5 years •Benefits are tracked monthly •Up to 75% of cash will be re-invested •price •in store service •store modernisation •new infrastructure •new stores •Allocation between levers is complex 6
Slide 7: Scale - we have achieved a number of quick wins already
Scale - we have achieved a number of quick wins already Key Strategic Supplier Management Best Sellers Categories - CPR gained in Castorama France. Paint: own brand Power tools tender 8-13% saving - Teams set up in Castorama France, Brico Depot, Italy, Poland and Asia. Sealants: own brand - E-auctio
Slide 8: Scale - leveraging the supply side
Scale - leveraging the supply side % of purchases - NOW % of purchases - FUTURE Top 200 = 60% Top 200 = 70% Common Common 100 100 = 30% 8,800 = 40% = 40% 4,800 = 30% Direct Direct = 5% = 10% Total number of suppliers Total number of suppliers 9,000 5,000 8
Slide 9: Intelligence - we now know much more about our supply chain
Intelligence - we now know much more about our supply chain • We have been able to analyse the supply chain and mine data for the first time • Findings are very interesting, e.g. • 70% variability on identical product cost prices • Major variability on terms • 7% variation in availability 9
Slide 10: Intelligence - identifying common suppliers
Intelligence – identifying common suppliers • 100 of the suppliers are common to at least two Operating Companies (“OpCos”) • These suppliers represent EUR 2.6 bn purchases - over a third of total Group spend 10
Slide 11: Intelligence - identifying product commonality
Intelligence - identifying product commonality By knowing: ►”Same Product, Same Barcode” ►”Same Product, Different Barcode” ►”Like-for-like product” (e.g. AAA Batteries) …we can arrive at core common range models and resultant economies of scale benefits. 11
Slide 12: Intelligence - Same Product, Same Barcode
Intelligence - “Same Product, Same Barcode” • Over 9,000 products common to at least 2 Kingfisher Operating Companies • Spend on these 9,000 products is over EUR 350 m 12
Slide 13: Intelligence - aligning net cost prices across the Group
Intelligence - aligning net cost prices across the Group • Of the 9,000 products, 5,000 investigated to date • Aligning these 5,000 products across the Group to lowest existing net cost price is: – EUR 11 m, on a purchase value of Eur 230m (CPR = 4.7%) • Further work is taking this total higher stil
Slide 14: Intelligence - Same Product, Different Barcode
Intelligence - “Same Product, Different Barcode” But… • ..many identical products from same supplier with differing barcodes ..so • by cross-linking these products we are able to identify further opportunity 14
Slide 15: Intelligence - Example: Same Product, Different Barcode
Intelligence - Example: “Same Product, Different Barcode” BOSCH PEX 400AE Multi-Sander Casto-France EAN: B&Q EAN: Brico Depot EAN: 3165140248242 3165140237390 3165140248242 15
Slide 16: SSM - builds on the success of CPR at B&Q
SSM - builds on the success of CPR at B&Q £m’s cumulative c175 savings at B&Q 114 57 9 2000 2001 2002 2003e 16
Slide 17: Strategic Supplier Management
Strategic Supplier Management Set the Objectives Manage Suppliers Innovation Advantage / Parity / Availability Disadvantage Cost Business plans Strategic alignment Measure Benchmark Measure benefits Range reviews Keep benefits separate Tender request Performance dashboard Value chain analysi
Slide 18: SSM - a dedicated team now in place
SSM - a dedicated team now in place… Headcount Relevant experience and skills B&Q 15 Retailers Kingfisher, Body Shop, Sainsbury, Programme co-ordinators 5 OBI Castorama France 13 Brico Depot 9 Manufacturers Castorama Poland 4 Cable & Wireless, Alsthom, Newell - Castorama Italy 2 Rubbermaid, Dana Pro
Slide 19: CPR Polska Tools
CPR Polska Tools 19
Slide 20: SSM - Developing tools to support buyers
SSM – Developing tools to support buyers 20
Slide 21: SSM - Developing tools to support buyers
SSM – Developing tools to support buyers 21
Slide 22: Direct sourcing - rapid growth
Direct sourcing - rapid growth +800 Kingfisher Direct DIY shipments £m 256 150 110 16 27 38 4 11 1995 1996 1997 1998 1999 2000 2001 2002 2007 22
Slide 23: Direct sourcing - a global network
Direct sourcing - a global network • Warsaw 2004 • Milan Prague • Istanbul 2005 • Shanghai • Jaipur • Hong Kong • Kuala Lumpur 2005 • South America 2005 • Durban 23
Slide 24: Direct sourcing - Project Widget
Direct sourcing – Project Widget What is a “Widget”? Small items, typically many sku’s, usually packed singularly or as multiples in bags. e.g. Nuts/bolts/screws, Fixings, Home Hardware How do we source today? We source entire ranges from UK Distributors who source these products in Asia, manage com
Slide 25: Project Widget at B&Q
Project Widget at B&Q Eastern China European sources sources: 60Million 4Million bags bags 500 skus 4000 skus India sources: 10Million bags 1000 skus 25
Slide 26: Key categories - piloting 5 categories
Key categories – piloting 5 which cover nearly 40% of margin and 30% of sales The 5 categories – paint, adhesives, hard flooring, power tools, lighting 14 Margin participation % 12 10 8 * 6 4 2 Part 0 * based on B&Q 2003 participation 26
Slide 27: Key categories - Paint
Key categories - Paint • The European Paint Buying Team meets every quarter (Started in April 2001) • The main role of this forum is to – Discuss and agree common European paint strategy – Coordinate range review alignments – Agree and implement advantaged supplier strategy – Negotiate group terms a
Slide 28: Key categories - Paint objectives
Key categories – Paint objectives ¾ Common European Own Label Strategy ¾ Common European Branded Paint Strategy ¾ Develop And Implement European Universal Paint Tinting System ¾ Group Supplier Management And Development 28
Slide 29: Key categories - Paint results
Key categories – Paint results Year Action Result 2001 Group Rebates €5m Entry Price Tender €2m 2002 Group Rebates €5m Ongoing/New Tenders €3m 2003est Group Rebates €6m Ongoing Tenders €3m 2004est Group Rebates €6m Ongoing/Euro Tender €7m Total €37m 29
Slide 30: Key categories - Paint Own Brand 2003 Tender
Key categories - Paint Own Brand 2003 Tender • Combined volume in excess of 140 million litres • B&Q, Castorama France and Brico Depot • Among categories in the tender: - Entry price level - Coloured emulsion - Masonry - Gloss • Combined purchase value in excess of €250 million 30
Slide 31: Key categories - Paint Own Brand 2003 Tender Results
Key categories – Paint Own Brand 2003 Tender Results • We achieved a total saving of around 7.4% of costs of goods sold over 3 years • It allowed us to consolidate our volume from our current 8 suppliers to 4 suppliers • Finally, it enabled us to benchmark our prices to the best in class paint suppl
Slide 32: Key categories - Learnings
Key categories - Learnings • Time consuming • Very complex with many variables • Big savings achievable • Group work allows economies of scale • European purchasing integration can be achieved 32
Slide 33: Own brands - Power tools
Own brands - Power tools 33
Slide 34: Own brands - Power Tools now sourced together
Own brands - Power Tools now sourced together Top 10 Products B&Q Casto F Casto Italy Hornbach 1500 w table saw 9 9 9 Pro 6pc kit 9 Pro 4pc kit 9 9 Router table with Router 9 9 14.4 sp Megapro drill 9 PP pro mitre saw 9 9 9 1250w Router, TCT Bits 9 9 9 9 PP 8” Table saw 9 750w Scroller jigsaw 9 9 9
Slide 35: Bosch Video
Bosch Video
Slide 36: Conclusion - a major opportunity worth the effort
Conclusion.- a major opportunity worth the effort… • Over £1 billion cash savings between 2003/4 and 2007/8 • We have 6 levers to achieve it • We are building on successes with CPR, paint and power tools and Asian sourcing • We are learning, developing our people, systems and resources • Using clear