Presentation on theme: "Steve True, Finance Director Sapa Profiles UK 7 th November 2006."— Presentation transcript:
Steve True, Finance Director Sapa Profiles UK 7 th November 2006
Todays Agenda Sapa Company & Group background UK Aluminium Extrusion Market Movex Requirement & Implementation Senior Management meet pVelocity Sapa Customer Case Study Future Plans with pVelocity MPI TM
Sapa Profiles Limited – Who we are Sapa AB - Aluminium Manufacturing Group 27 companies operating in 15 countries Collective turnover of c£1 Billion 8,200 employees Sapa Profiles Ltd - Major supplier of Aluminium extrusions in the UK with T/O of £80 Million, employing 350 people 2 manufacturing sites (Derbyshire/Gloucestershire) 4 extrusion presses (+30,000 tonnes per annum) 850 customers (building & construction, transport, engineering) One raw material, 20,000 different products!
Movex Implementation In 2000 Sapa Ltd and Indalex Ltd merged to become Sapa Profiles Ltd Movex project commenced in 2001 and implemented in 2003 Implementation difficulties:- –Movex used as a vehicle to merge the businesses –Differing bespoke legacy systems, data migration –Extrusion not the norm, some heavy modifications –Reporting – lack of costing/profitability analysis
UK Extrusion Market Approx 220,000 tonnes per annum, 2% growth UK market traditionally supplied by UK extruders, but no longer the case –5 years ago import penetration 15% –Now over 50%, leading to over capacity in UK –UK extruders (big and small) have suffered through volume losses and selling price Estimated total market size: £500 M Differentiated service offering, based on the value of local supply, is now key to Sapas success in the UK. But instant profitability analysis is also critical, particularly with the need for a changing mix of customers
Our challenge: Improve Margins While Protecting Volume Value Generating Opportunities Manufacturing Product Contract Terms Services Channel Brand Customer Buying Behavior Service Oriented Price Sensitive Market Cost to Serve Profit Balance
Senior Management meet pVelocity pVelocity asked Sapa Management who is Best / Worst customer?…..resulted in completely different views! pVelocity took sample data and demonstrated profit mining capabilities –Manufacturing Profit Intelligence TM –Provides the necessary intelligence about customers, products, and processes –Enables decision makers to easily identify, analyse, and act on the relevant drivers of profitability –Bridges the gap between production and financial systems New KPIs based on profit velocity introduced Based on the success of the UK pilot pVelocity has been chosen by Sapa Group as the preferred profitability software tool for extrusion companies
Manufacturing Profit Intelligence Manufacturing Profit Intelligence (MPI) –Bridge between production and financial systems –Identify, Analyse, and Act on drivers of profitability: –Customers –Products –Processes
Customer Segmentation based on Profitability Strategies to: Protect ^ Grow ^ Improve Opportunities for Improvement High Value Customers Proportion of Total Contribution Proportion of Total Volume Tonnage Contribution Number of Customers Contribution per Press Hour
Value Proposition Identify poorly performing products Adjust batch sizes / price / process inefficiencies Allocate capacity to more efficient products Improve service level agreements Low Profitability Nominal Profitability High Profitability Current Low Profitability Nominal Profitability High Profitability Goal Continuous Process Product Portfolio / Capacity Utilisation
Sapa Customer Case Study In January 2006 a major customer (15%) threatened to move to cheaper offshore supply In response Sapa Profiles Ltd created a recovery plan 5 main targets:- –Reduced price through economic batch sizes –Eliminate small orders placed (other than samples) –Reduce the frequency of orders using the same die (tool) within the same week –Reduce the number of order lines placed by 30% (admin saving) –Smooth daily ordering patterns to assist planning of presses and improve delivery performance But, to achieve the plan and increase profit!
Plan implemented April 2006, results 5 main targets:- –Reduced price through economic batch sizes –Eliminate small orders placed (other than samples) –Reduce the frequency of orders using the same die (tool) within the same week –Reduce the number of order lines placed by 30% (admin saving) –Smooth daily ordering patterns to assist planning of presses and improve delivery performance Price reduction for 1 ton lot sizes Price premium if <250kg Reduced by 1,000 order lines per qtr (35%) Reduced by 75% for top runners Improved capacity utilisation & delivery performance Sapa Customer Case Study Customer has not only stayed with Sapa Profiles but has increased our share of their business….
Future Plans with pVelocity MPI TM Initiate continuous PIPs (Profit Improvement Programmes) utilising pVelocity profit mining capabilities Roll out pVelocity to Sapa extrusion companies world wide (15 plants) –All Profiles companies within Sapa Group will implement to a common, but adaptable standard (Framework) Improved Sapa Group benchmarking opportunities through standardised KPIs & software ….Visit the pVelocity stand for your interactive CD, containing various profit related white papers