Supplier Risk - Rockwell Automation

Report
1Q12 Supplier
Communication
Meeting
Rockwell Automation
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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 Strategic Sourcing
Q&A
All Attendees
Copyright © 2011 Rockwell Automation, Inc. All rights reserved.
2
Fiscal Year 2012
First Quarter
Conference Call
Dick Fowler
Vice President, Finance
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
Q1 Key Messages
• Solid year-over-year sales growth of 8%
– Mixed results across the regions
• Strong process sales growth of 22% year over year
• EPS of $1.27 – 22% growth year over year
• Return on invested capital of 31.5%
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
4
Q1 Results: Rockwell Automation Total
Sales
Segment Operating Earnings
($ millions)
($ millions)
1,800
300
1,600
1,400
$283.8
$1,473.9
$1,365.8
250
1,200
$222.0
200
1,000
150
800
100
600
400
50
200
0
0
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Sales increased 8% YOY, including 1 pt
from acquisitions; currency translation
reduced sales 1 pt
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Segment operating earnings up 28% YOY
• Segment operating margin expanded 3.0 pts YOY
to 19.3%, primarily due to volume leverage
• Sales decreased 11% sequentially primarily
due to the timing of solutions sales;
currency translation reduced sales 2 pts
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
5
Q1 Results: Architecture & Software
Segment Operating Earnings
Sales
($ millions)
700
($ millions)
$650.5
$613.9
200
$186.3
$153.1
600
160
500
400
120
300
80
200
40
100
0
0
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Sales increased 6% YOY; currency
translation reduced sales 1 pt
• Sales decreased 5% sequentially; currency
translation reduced sales 2 pts
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Segment operating earnings up 22% YOY
• Segment operating margin expanded 3.7 pts
YOY to 28.6%
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
6
Q1 Results: Control Products & Solutions
Sales
Segment Operating Earnings
($ millions)
($ millions)
1,000
140
900
800
$823.4
$751.9
120
$97.5
100
700
600
80
500
400
60
300
40
200
$68.9
20
100
0
0
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Sales increased 10% YOY, including 2 pts
from acquisitions offset by 1 pt currency
translation
• Sales decreased 15% sequentially; currency
translation reduced sales 2 pts
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Q1 '12
• Segment operating earnings up 42% YOY
• Segment operating margin expanded 2.6 pts
YOY to 11.8%
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
7
Q1 Results: Regional Sales
($ millions)
Region
Reported
Sales
U.S.
$
% Change
vs. Q1 '11
Adjusted
For Currency
% Change
717.6
8%
8%
Canada
105.2
10%
11%
EMEA
315.0
11%
13%
Asia-Pacific
213.2
1%
0%
Latin America
122.9
8%
14%
$ 1,473.9
8%
9%
TOTAL
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
8
Fiscal 2012 Guidance
Sales
Sales Increase (Excluding Currency Translation)
Currency Translation
Segment Operating Margin
Diluted EPS
$6.2B to $6.5B
5% to 9%
(1)%
~18%
$5.05 to $5.45
Free Cash Flow*
~75% of Net Income
*After a discretionary pre-tax pension contribution of $300M to the company's U.S. pension trust.
Note: As of January 25, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
9
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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 Strategic Sourcing
Q&A
All Attendees
Copyright © 2011 Rockwell Automation, Inc. All rights reserved.
10
Supplier Performance
Mark Todd
Director, Supply Management
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
Supplier Performance –
2012 Consolidated Scorecard
Key Takeaways:
DM
95.4 96.8
97.1 97.3 96.1
96.8
FP
91.4 95.3
95.2 95.7 95.1
95.3
DM
790 456
441 424 504
456
FP
843 475
509 489 427
475
• 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?
Applicable Facilities: CAM, DOM, TEC, SGP, CGN, DUB, LAD, MAN, MEQ, MKE, RCH, SUM, TWB, MMC, GNL
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
12
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
DM
21.1 18.5
18.9 19.6 17.0
18.5
FP
28.3 25.5
25.0 25.3 26.3
25.5
DM
1006
1190 2686 950
1938
FP
3933
1996
1154
311 1100
Applicable Facilities: CAM, DOM, TEC, SGP, CGN, DUB, LAD, MAN, MEQ, MKE, RCH, SUM, TWB, MMC, GNL
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
13
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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&A
All Attendees
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
14
New Product Introduction
(NPI) - Sourcing Project
Management
Mark Todd
Director, Supply Management
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
15
New Product Introduction
Sourcing Project Management
Sourcing Touchpoints During CPD Process
Sourcing Touchpoints
• Supplier
Assessment
Plan
(Factored)
• Intellectual
property
review
(Factored)
• Import /
Export
Compliance
• Initial Cost
Estimates
• Supplier
Evaluation
• Supplier
Selection /
Agreement
(Factored)
• Make vs Buy
Assessment
• Supply
Chain
Assessment
• Supplier
Capability
Review
(required
step)
• MRI Risk
Assessment
• Supplier
Selection /
Agreement
(Dir Materials)
• Supply Initial
Order Release
• Order
Management
18
(Confidential – For Internal Use Only) Copyright © 2010 Rockwell Automation, Inc. All rights reserved.
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
Ability to Influence Supplier Selection during
CPD Process
AR2
PAR3
AR1
PAR2
INITIATION
High
FEASIBILITY
1
DOE
EXECUTION
2
AFC
RELEASE
3
4
New Timing - RA
Supplier Selection
Early supplier selection key element of
improved supply chain performance and
decreased future risk
Design Flexibility /
Ability to Influence
Supplier Selection
Impacts: Price, Lead-Time,
Delivery, Quality . . .
Low
Time
(Confidential – For Internal Use Only) Copyright © 2010 Rockwell Automation, Inc. All rights reserved.
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
19
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
16
NPI Sourcing Project Engagement
BU and/or
Site
Consider. Initiation
APBC
APBC
APBC
APBC
APBC
APBC
APBC
APBC
APBC
APBC
APBC
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
CVB-MAY
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
Std Drives
SSCB
SSCB
SSCB
SSCB
SSCB
SSCB
SSCB
SSCB
SSCB
SSCB
Motion
Motion
Motion
ICB
CVB-MKE
ICB
LV MCC
LV MCC
LV MCC
Feasibility Execution
Release
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Closeout
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.
17
NPI Sourcing Project Management - Balanced
Scorecard
Key Performance Indicator
FY11
Baseline
FY12
AOP **
2013+
Targets
66.2%
96.8%
64.7%
85%
99.3%
90%
90%
100%
95%
2%*
10%
10%+
n/a
TBD
TBD
66%*
n/a
100%
TBD
100%
TBD
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)
Productivity
• Purchased material BOM cost avoidance (%)
Supplier Risk
• Component Resiliency Index
Stakeholder Satisfaction
• Prototype & pilot builds without material availability delays (%)
• NPI Stakeholder VOC Index
* Estimate based on the Voice of Customer (VOC)
** Measured at Project Completion
Copyright © 2012 Rockwell Automation, Inc. All rights reserved. 18
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.
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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&A
All Attendees
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
20
Supplier Change
Productivity
Brad Phillips
Director, Supplier Risk
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
Supplier Change Productivity
Program Definition
• 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
Why Change?
• 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
Supplier Change Productivity Idea Management
•
•
OES Commodity
Productivity
Teams
Eng Services, SSO
Change
Productivity
Data Table
BU Productivity
Teams
Lean Champions,
Continuation Eng.
Inputs
Output
Inputs
•
Standard Part Transitions
Complete BU product
schedule integrated with
all change productivity
opportunities
•
•
•
•
Product Portfolio Strategy
Competitive Benchmarking
RoHS2 Schedule
Product Improvement Schedule
Key Improvements
•
•
•
•
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
Integrated Supplier Change Productivity Portfolio
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!
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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 Strategic Sourcing
Q&A
All Attendees
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
25
Key Takeaways
Mike Jacobs
Vice President, Strategic Sourcing
February 6 & 7, 2012
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
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 1st 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 !
Excellent 1Q performance . . . Improved focus on strategic initiatives
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
27
Agenda
Opening Comments
M. Jacobs
VP Strategic Sourcing
RA Business Overview
D. Fowler
- 1Q12 Recap
- 2012 Outlook
VP Finance
Supplier Performance
M. 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 Strategic Sourcing
Q&A
All Attendees
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
28
Copyright © 2012 Rockwell Automation, Inc. All rights reserved.
29

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