the case for a comprehensive supply chain solution spring 1999
TRANSCRIPT
The Case forThe Case for
A Comprehensive Supply Chain SolutionA Comprehensive Supply Chain Solution
Spring 1999Spring 1999
2
Agenda
General Cable Corporation Overview
Supply Chain Case Study
Telecom Business
Recent Acquisition
Career Planning
3
General Cable Company Profile
Size = ~ $1.2 Billion Sales ~ $128 Million Operating Income
Products = Copper, Aluminum & Optical Fiber Wire & Cable
Markets = Communications & Electrical
Facilities = 18 Manufacturing Plants 5 Regional Distribution Centers
Employees = 4,600 Associates
An Industry Leader
4
Specialty Building Wire
6%
Non-Residential Building Wire
20%
Residential Building Wire
12%
Instrumentation& Control
11%Cordsets
5%Communications
Assemblies2%
Automotive5%
Electronics3%
Data Communications
11%
Telephony/Outside Plant25%
General Cable Product Mix
Electrical: 59%Electrical: 59%
Communications: 41%Communications: 41%
Everything Our Customers Need - Power of One
5
$858$936
$1150 $1242
$1028
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1995 1996 1997 1998 1999Analyst
Est.
Constant 1998 Copper Copper Impact
$1044$1135 $1150
$1242
$1061
Results of Operations1995 -1999 Est.
Net Sales ($MM)Net Sales ($MM) Operating Earnings ($MM)Operating Earnings ($MM)
$79
$45
$105
$130
$148
5.2%
8.4%
10.2%
11.9%11.3%
$0
$20
$40
$60
$80
$100
$120
$140
$160
1995 1996 1997 1998 1999Analyst
Est.
0%
2%
4%
6%
8%
10%
12%
6
Agenda
General Cable Corporation Overview
Supply Chain Case Study
Telecom Business
Recent Acquisition
Career Planning
7
GCC Supply Chain Management - 1995
Industry Characteristics-1995
Warehouses: 80
Inventory Turns: 4.2
Typical Cycle: 15 - 45 days
Metrics: None
Technology: Outdated
Processes: Manual andUnresponsive
Fill Rates: 80 - 85%
High operating costs
Poor asset utilization
Large inventory investments
Long cycle times
Poor customer service
Unresponsive planning systems
ResultsDomino Approach
Purchasing
Manufacturing
Warehousing
Distribution
Transportation
Custom
erS
atisfaction
Fragmented and Functional Management
SCM Professionals: 1
8
Supply Chain Management - 1998
GCC
GCC Characteristics-1998
Anaheim, CA
Dallas, TXAtlanta, GA
Tampa, FL
Low operating costsOutstanding asset utilizationReduced inventory investmentsShort cycle timesLegendary customer serviceResponsive planning systems
RESULTS
Horizontal and Integrated Management
CustomerRequirements Purchasing
Forecasting&
SchedulingManufacturing
Replenishment &
DistributionTransportation
CustomerSatisfaction
Processes
Systems and Information Flows
Financial Management
Product & Service Flows
1998 Network
Toronto
Vineland, NJLebanon, IN
Seattle, WA
SCM Professionals: 20
Warehouses: 9
Inventory Turns: Up to 5.5 Typical Cycle: 1 - 3 Days
Metrics: Comprehensive
Technology: State of the Art (Downstream)
Processes: Fast and Improving
Fill Rates: 95+%
Clifton, NJ
9
The team had driven substantial change: Three year strategic plans and annual business plans are a part of our culture 70 warehouse locations have been closed Five new distribution centers are fully operational These five facilities, with a total of 1.1 million square feet, shipped $700 million in 1998 sales We hired more than 200 Associates and re-located approximately $100 million of finished goods inventory to enable this network Metrics are comprehensive and timely, enabling all organizations to understand and react to key challenges Inventory accuracy now exceeds 98% Inventory planning and deployment is now driven by full-time professional supply chain managers 7 to 40 day cycle time reductions have been driven through our scheduling and deployment processes Several thousand SKUs have been eliminated More than 40 enhancements have been made in redesigning our legacy systems, enabling basic upstream capabilities such as planning and deployment State of the art systems have been installed downstream:
Modern, paperless warehouse and transportation management systems support our new infrastructure Every bar code in the company has been re-designed Approximately 500,000 data elements were corrected to enable the systems to operate properly
Partnerships have been developed with key carriers, driving several progressive programs: 60% of our carriers have been eliminated EDI relationships now represent 65% of all transactions, up from zero less than one year ago Dynamic consolidation programs are driving bottom-line savings Metrics are timely and actionable Internal costing is now activity-based
10
Key Customer BenefitsOur customers are rewarding our results. For example:
Our top 20 customers, representing 60% of company sales, are growing at 30% annually
The Home Depot will exceed $150 million in 1999 sales. We are shipping at 98% fill rates through our new network. Products are sold on behalf of 5 product teams, manufactured in 12 plants. Volume is up from less than $10 million three years ago
US West views our capabilities as so progressive that they asked us to re-design their supply chain capabilities, and at one point asked us to provide the logistics services
Together with Sales Systems, we’ve brought a number of value-add services to our customer base: Comprehensive EDI capabilities VMI Direct Store Delivery Consolidated, cross-dock DSD Advance Ship Notifications Custom bar coding
Inventory turns are up 25%, supporting a RACE near 30%
11
Key Customer Benefits
GE SupplyGE Supply
12
Lessons Learned
Dallas RDC Unionization
Poor Atlanta WMS Start-up
Poor fill rates
Leadership and union avoidance training Negotiated a contract which produced
$180,000 in savings over 3 years Building the foundation for decertification
NERDC Results: Transparent to our customers, went live with WMS, constructed a new facility, staffed up by 50%, launched The Home Depot, increased line volume throughput by 300%, and moved $10 million of inventory out of 3 buildings into new facility
Comprehensive root cause analysis Compensation system alignment Resource deployment
To be sure, we had some “set backs”, but we’ve learned from the disappointments to build an even stronger capability:
Set Back Reaction
13
Cross-functional teamwork will be more important than ever
Service and turns will be heavily dependent on manufacturing execution
Forecasting and demand management will contribute to service success
State of the art supply chain systems (planning, scheduling, manufacturing and
deployment tools) will drive step change performance in service, output, and
working capital
“Turns and service” will drive all priorities
The foundation has been built for success in 1999 and beyond:
1999 AND BEYOND
14
What Is It?
An integrated system solution consisting of a suite of tools.
The suite is connected to instantly view results of activities up and down the supply chain.
Demand ManagementDemand Management
–Forecast accuracy and integrity–Data based insights–Consensus planning–Uncertainty reduction–Impact modeling–Planning by customer
Inventory & ReplenishmentInventory & Replenishment PlanningPlanning
–Simulation modeling–Inventory optimization–Planning by targets–Continuously reconcile demand with supply–Constraint balancing–Available to promise capability
Manufacturing PlanningManufacturing Planning
–Optimizing resources–Balancing demand priorities with objectives–Finite capacity planning–Cross enterprise utilization–Activity based costing models–ADC/paperless shop floor
On Line, Enterprise Wide, Real TimeOn Line, Enterprise Wide, Real TimeSales and Operations PlanningSales and Operations Planning
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Benefits Summary
Cycle Time Reductions Significant (40%)
Data Entry Reductions Significant (75%)
WIP Reductions Significant (25%)
Lead Time Reductions Significant (30%)
Product Quality Input Significant (15%)
Sounds Like a “Silver Bullet” - Too Good to Be True?
16
Risks and Concerns
This is only software - it doesn’t actually manufacture or distribute products
It does not keep equipment up and running
It is fully dependent on high quality data - many parts of our company do not have it
Significant culture and behavioral changes are required
“Top grading” will be required
System is LAN/WAN based
We Must Not Be Lured Into Thinking $2 Million and 6 - 12 Month Systems Integration Project Will Take
Us to a Significantly New Level of Performance
17
Agenda
General Cable Corporation Overview
Supply Chain Case Study
Telecom Business
Recent Acquisition
Career Planning
18
Outside Voice & Data Products
GCC markets telecommunications wire & cable products to RBOCs, independent telephone companies and communications distributors
General Cable, CSI and Superior deliver 90% of the U.S. demand
GCC operates a customer-driven team focused on outstanding service and value creation
Superior39%
CSI18%
Nordx3%Essex
5%
Other2%
GCC33%
Business OverviewBusiness Overview CompetitorsCompetitors
BellSouth Graybar Ameritech USWESTGTE Supply SBCPower & Telephone Supply
Key CustomersKey Customers
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Business Strategy
Perfect quality Low cost producer Competitive pricing Relentless productivity Strong brand recognition Reputation as service leader Capital investment for future
quality and growth
Reduce fixed costs in customer operations (facility closures)
Drive non-price approaches to customer productivity (Copper forward purchase, Copper tolling programs…)
Drive working capital and operating cost reductions through process re-design
Provide VMI to drive outstanding turns and service for our customers
Responsiveness through on-site integration managers
Our assets, expertise and creativity are focused on providing outstanding quality and service at competitive pricing, while simultaneously driving “value” on behalf of our customers.
Customer “Value” CreationCustomer “Value” Creation
Business FoundationBusiness Foundation
Proven Results - Demonstrated Value
20
Value-Add Services
Reels Management
Customer FValue-Added Services Customer A Customer B Customer C Customer D Customer E
"Power of One" Sales
"Supplier as Customer"
Copper Tolling
VMI
On-Site Integration Manager
MWBE Programs
Copper Forward Purchase
Fixed Asset Elimination
Process Integration
100% Supplier
We continue to provide an increasing array of services to our customers.
We Seek to Differentiate GCC and OurCustomers With Creative Value-Add Services
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Result: Poor service and long lead times
Foundation For Service ExcellenceWe have departed from industry norm and taken a radically different approach to planning, scheduling, manufacturing and finished goods strategies.
Industry Standard
Feb 1 Schedule March Production
Time (Weeks)
General Cable Approach
Result: Outstanding service and short lead times
Jan 28 Schedule Feb 8-19
Production
Time (Weeks)
Demand driven sequencing
Make to stock strategy Ship on demand
performance
Manufacturing driven sequencing
Make to order preference Ship when ready
performance
This Capability Provides the Foundation For Sustained High Levels of Service
22
1999 Plan
232
277
336
0
50
100
150
200
250
300
350
1997 Actual 1998 (Est) 1999 Plan
36.2
48.0
61.8
0
10
20
30
40
50
60
1997 Actual 1998 (Est) 1999 Plan
5.9
7.17.2
0
1
2
3
4
5
6
7
8
9
1997 Actual 1998 (Est) 1999 Plan
Copper Adjusted Sales - Up 21%Copper Adjusted Sales - Up 21% Operating Income - Up 29%Operating Income - Up 29%
Working Capital Turns - Up 1%Working Capital Turns - Up 1%
60
70
80
90
100
Jan Feb
Mar Ap
rMay Ju
n Jul
Aug
Sep
Oct
Nov Dec
1999 Plan
93%
95%+
Service - Steady at 95% or BetterService - Steady at 95% or Better
$ M
illi
ons
$ M
illi
ons
Tu
rns
On
-tim
e F
ill R
ate
23
Agenda
General Cable Corporation Overview
Supply Chain Case Study
Telecom Business
Recent Acquisition
Career Planning
24
General Cable / BICC Company Profile
Size ~$3.0 Billion Sales
~$170 Million Operating Income
Products Copper, Aluminum & Optical Fiber Wire & Cable
Markets Communications, Electrical, Industrial & Utilities
Facilities 58 Manufacturing Plants in 19 Countries
Employees Over 13,000 Associates
Strengths People Customers Technology & Materials Knowledge Manufacturing Capabilities Product Offering Innovation & Marketing Skills
A Worldwide Leader
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Integration Plan
L eadersh ipCo ntinu ityAcco un tab ility
Org /HRCo m p/Ben efits
Cu stom er &Rep "h arm o ny"F ou nd ationfor g ro w th
G o to M arket
Syn ergy?In teg ration
UtilitiesBu sin ess
Sales synergyCu stom erco ntinu ityPro du ct/M ktg .m an agem ent
Ind ustrialBu sin ess Desig n
Accretive resu lts"M ake the Nu m bers"Cash gen eration
Sou rcin g
In fo rm ation accessBasic op eration sF ou nd ationfor g ro w th
IT &F in an cial System s
G row thCu stom er satisfactionCash gen eration
Sup p lyCh ain
Pro du ctivityServiceRation alizatio n
M an ufactu ring
Em plo yeeu nd erstan d in gM arketu nd erstan d in gInvesto r relation s
Co m m un icatio n s
Integration Teamand
Resource Planning
Focus:
Why?:
26
Agenda
General Cable Corporation Overview
Supply Chain Case Study
Telecom Business
Recent Acquisition
Career Planning
27
Selecting A DirectionWhat do you want?What do you want?
What are the implications of your ambition?What are the implications of your ambition?
Profession?
Lifestyle?
Pressure?
Responsibility?
Lifestyle?
Personal Time?
Hobbies?
Spouse?
Children?
Friendships?
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A Path To Success
Aggressiveness
Intelligence
Analyses
Communication skills Verbal Written
Broad business insight
Common sense
Strategic thinking
What capabilities are required?What capabilities are required?
. . . A “Balanced Portfolio” Is a Likely Path to Success
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Think Strategically
Shareholder and Wall Street values
Executive Suite
Management Team
The people who make you successful
Increasing shareholder value
Increase EPS, ROI, cash flow, sales growth, income growth, working capital progress
Strong value proposition Reducing operating costs Improving customer service Winning new business Turning inventories faster
Attract, retain, teach, develop, train, educate, promote
Value PropositionValue PropositionRoll In OrganizationRoll In Organization