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Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 1Q12 Supplier Communication Meeting Rockwell Automation February 6 & 7, 2012.

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Presentation on theme: "Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 1Q12 Supplier Communication Meeting Rockwell Automation February 6 & 7, 2012."— Presentation transcript:

1 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 1Q12 Supplier Communication Meeting Rockwell Automation February 6 & 7, 2012

2 Copyright © 2011 Rockwell Automation, Inc. All rights reserved. 2 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier Performance M. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change ProductivityB. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Strategic Sourcing Q & AAll Attendees

3 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. Fiscal Year 2012 First Quarter Conference Call Dick Fowler Vice President, Finance February 6 & 7, 2012

4 Q1 Key Messages Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 4 Solid year-over-year sales growth of 8% –Mixed results across the regions Strong process sales growth of 22% year over year EPS of $1.27 – 22% growth year over year Return on invested capital of 31.5%

5 Q1 Results: Rockwell Automation Total ($ millions) SalesSegment Operating Earnings Sales increased 8% YOY, including 1 pt from acquisitions; currency translation reduced sales 1 pt Sales decreased 11% sequentially primarily due to the timing of solutions sales; currency translation reduced sales 2 pts Segment operating earnings up 28% YOY Segment operating margin expanded 3.0 pts YOY to 19.3%, primarily due to volume leverage Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 5

6 Q1 Results: Architecture & Software ($ millions) Sales Segment Operating Earnings ($ millions) Sales increased 6% YOY; currency translation reduced sales 1 pt Sales decreased 5% sequentially; currency translation reduced sales 2 pts Segment operating earnings up 22% YOY Segment operating margin expanded 3.7 pts YOY to 28.6% Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 6

7 Q1 Results: Control Products & Solutions ($ millions) SalesSegment Operating Earnings ($ millions) Sales increased 10% YOY, including 2 pts from acquisitions offset by 1 pt currency translation Sales decreased 15% sequentially; currency translation reduced sales 2 pts Segment operating earnings up 42% YOY Segment operating margin expanded 2.6 pts YOY to 11.8% Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 7

8 Q1 Results: Regional Sales ($ millions) 8

9 Fiscal 2012 Guidance Note: As of January 25, 2012 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 9

10 Copyright © 2011 Rockwell Automation, Inc. All rights reserved. 10 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier Performance M. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change ProductivityB. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Strategic Sourcing Q & AAll Attendees

11 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. Supplier Performance Mark Todd Director, Supply Management February 6 & 7, 2012

12 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 12 Applicable Facilities: CAM, DOM, TEC, SGP, CGN, DUB, LAD, MAN, MEQ, MKE, RCH, SUM, TWB, MMC, GNL Supplier Performance – 2012 Consolidated Scorecard Key Takeaways: Record delivery performance across markets -Mechanicals ~97% -Electronics ~97% -Factored Products ~95% Significant reduction in late deliveries >5 days past due, needs continued root cause focus Stay in front of supply/demand shifts -Continue monitoring forecast, usage, economic indicators, RA guidance Assure safety stock position for repeat spend parts/material -Continued improvement, needs acceleration Are you reviewing your monthly scorecard? Monthly Safety Stock status report?

13 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 13 Applicable Facilities: CAM, DOM, TEC, SGP, CGN, DUB, LAD, MAN, MEQ, MKE, RCH, SUM, TWB, MMC, GNL Supplier Performance – 2012 Consolidated Scorecard Key Takeaways: 3 day lead-time improvement over Q1 -Electronic reduced ~20% to 21 days -Mechanical reduced ~5% to 16 days -Factored reduced ~10% to 26 days -Still longer than 3Q ’09 levels Parts with Lead-times > 45 Day -Assure focus on long lead-time parts -6+ day reduction in Q1 -Received 33% less parts than in Q4 Need increased Quality focus -PPM only slighter better than goal -3 stop orders vs. annualized goal of 10 Need continued acceleration of supplier safety stock positions to facilitate lead-time reduction to “transit” for repeat spend parts/material

14 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 14 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier PerformanceM. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change Productivity B. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Sourcing Q & AAll Attendees

15 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 15 New Product Introduction (NPI) - Sourcing Project Management Mark Todd Director, Supply Management February 6 & 7, 2012

16 16 New Product Introduction Sourcing Project Management Scope: Focused NPI Sourcing Project Management Team 8 Sourcing Project Managers on-board Aligned with business unit product development Planning additional Sourcing Project Managers to cover business projects Engagement with suppliers during feasibility phase Supply chain assessment is now a required CPD milestone Beginning component level risk assessment Balanced Scorecard is in place Key benefits: Increased leverage of RA preferred suppliers -Differentiated supplier performance -Collaborative engineering support Lower material costs and improved lead-times at start of new production introduction Decreased supply risk Early supplier selection key element of improved supply chain performance and decreased future risk Copyright © 2012 Rockwell Automation, Inc. All rights reserved.

17 17 NPI Sourcing Project Engagement Making immediate impact: NPI Sourcing Project Managers are now engaged with ~60+ top projects across the company Most projects were already in execution phases Success despite late involvement 34 parts moved from Approved to Preferred suppliers 18 Parts moved from New to Preferred/Approved suppliers 47 Parts moved from No New Business and Exit to Preferred/Approved suppliers 59 Parts moved to improved technology/lifecycle alternatives (no stratification changes) Copyright © 2012 Rockwell Automation, Inc. All rights reserved.

18 18 NPI Sourcing Project Management - Balanced Scorecard Key Performance Indicator FY11 Baseline FY12 AOP ** Targets Baseline Metrics New parts awarded to Preferred suppliers (%) All parts awarded to Preferred/Approved/New suppliers (%) All parts with a lead time <= 25 days (% in CPD Closeout Phase) 66.2% 96.8% 64.7% 85% 99.3% 90% 100% 95% Productivity Purchased material BOM cost avoidance (%) 2%*10%10%+ Supplier Risk Component Resiliency Index n/aTBD Stakeholder Satisfaction Prototype & pilot builds without material availability delays (%) NPI Stakeholder VOC Index 66%* n/a 100% TBD 100% TBD * Estimate based on the Voice of Customer (VOC) ** Measured at Project Completion Copyright © 2012 Rockwell Automation, Inc. All rights reserved.

19 Key NPI Takeaways Creation of a focused NPI Sourcing Project Management team –Increasing spend going to Preferred Suppliers –Target transit lead times by project closeout –Risk mitigation –Cost reduction Aligned with Business Unit development teams Shift supplier selection and contracting earlier in development process Sourcing engagement earlier in the process (Feasibility) Clear ownership of NPI supplier decisions within sourcing organization Increasing concentration of spend with smaller # of high performance Preferred Suppliers Tight linkage between Preferred Supplier Strategy and New Product Introduction Project Management provides a competitive advantage Copyright © 2012 Rockwell Automation, Inc. All rights reserved.

20 20 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier Performance M. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change ProductivityB. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Sourcing Q & AAll Attendees

21 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. Supplier Change Productivity Brad Phillips Director, Supplier Risk February 6 & 7, 2012

22 Supplier Change Productivity Productivity that is achieved through the successful implementation of a significant supplier change event such as: –Supplier Transition –Change in Product Physical Characteristics – Form, Fit and Function –Change in Product Material selection or manufacturing process –Component change/elimination ‘Change Productivity’ expands our current collaborate program to include standard part transitions Low success rate for implementing productivity ideas with smaller savings Difficultly in current process in providing timely supplier feedback on projects Commodity focused approach does not align well with BU resource allocations Program Definition Why Change?

23 Supplier Change Productivity Idea Management OES Commodity Productivity Teams Eng Services, SSO BU Productivity Teams Lean Champions, Continuation Eng. Change Productivity Data Table Product Portfolio Strategy Competitive Benchmarking RoHS2 Schedule Product Improvement Schedule Integrated Supplier Change Productivity Portfolio Better able to align productivity opportunities with BU project schedules Team has the ability to identify and target products where change is more likely to be accepted Technically feasible ideas will be retained in hopper to be grouped with other ideas Ideas will be available “on demand” via a tool that has widespread usage in the technical community Standard Part Transitions Key Improvements Inputs Complete BU product schedule integrated with all change productivity opportunities Output

24 Summary and Next Steps Summary: OES and the BUs are committed to the change productivity program as part of our toolkit in order to drive continuous improvement Improved process in place for better feedback and results Dedicated resources are in place to support this initiative –Kim Riedel, Sourcing Manager- Change Productivity Going forward: How do we continue to grow the Supplier Generated Pipeline? –Sharing innovative technology, manufacturing processes, and productivity ideas –Regular scheduled idea generation/ brainstorming meetings with your commodity manager & the collaborate team Regular supplier communication and feedback on program progress Right processes are in place … need idea pipeline filled!

25 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 25 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier Performance M. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change ProductivityB. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Strategic Sourcing Q & AAll Attendees

26 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. Key Takeaways Mike Jacobs Vice President, Strategic Sourcing February 6 & 7, 2012

27 1Q Supplier Webex - Key Takeaways Top line results continue to show good YOY growth –Seasonality, mixed results by region during 1Q –Full year RA FY12 guidance remains unchanged at 5-9% Supplier performance at record levels during 1 st quarter –Keep up the good work !!! –Sustain current levels while reducing longest lead-times focus for FY12 2 key strategic initiatives for FY12 – Sourcing / Supplier engagement in NPI and Supplier Change productivity –Engage with your commodity teams to identify mutually beneficial opportunities Closely monitor your forecasts / order rates during 2Q (and beyond) –If something doesn’t make sense, ASK ! Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 27 Excellent 1Q performance... Improved focus on strategic initiatives

28 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 28 Agenda Opening Comments M. Jacobs VP Strategic Sourcing RA Business OverviewD. Fowler -1Q12 Recap VP Finance Outlook Supplier Performance M. Todd Dir., Supply Management New Product Introduction M. Todd Dir., Supply Management Supplier Change ProductivityB. Phillips Dir., Supplier Risk Key Takeaways M. Jacobs VP Strategic Sourcing Q & AAll Attendees

29 Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 29


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