OPERATIONS Lotte Franch Wamberg, COO. Investor Day April 6, 2016

Transcription

1 OPERATIONS Lotte Franch Wamberg, COO Investor Day April 6, 2016

2 BRANDS AND OPERATIONS SHARE THE VALUE CHAIN WHERE IT MAKES SENSE Design Sourcing Logistics Marketing & Sales Hong Kong Hub Romania Hub One Distribution Center 1

3 PRIMARY FOCUS AREAS FOR OPERATIONS ARE PLATFORM FUNCTIONS AND BUSINESS PROCESS DEVELOPMENT Operations Platform functions Sourcing Logistics IT Continuous optimization of current processes and systems Ensure platform and support for brand strategic priorities Business process development (across brands and functions) 2

4 GROUP SOURCING GLOBAL FOOTPRINT IS SPLIT BETWEEN EUROPE AND ASIA Rest of Europe 10% Romania 16% Africa 4% Romania hub Turkey 6% Europe and Africa 39% of production value 41% of pieces 65 suppliers 33 employees India 3% Bangladesh 1% Rest of Asia 2% China 46% Vietnam 9% Hong Kong hub Asia 61% of production value 59% of pieces 87 suppliers 35 employees 3

5 GROUP SOURCING WORKS AS A LOCAL EXTENDED ARM FOR THE BRANDS AND ENSURES GROUP SYNERGIES Responsibilities Supplier base Scouting for new suppliers Onboarding of suppliers (contracting) Manage global supplier portfolio Compliance Ensure CR compliance Quality control Day-to-day operations Price negotiations with suppliers in cooperations with brands Finish style development in co-operation with suppliers Sourcing of trims Allocating and planning capacity Monitoring production and shipment Focus areas Supplier strategy and optimal sourcing footprint Optimize existing supplier base by spreading volumes in an optimal way Reduce cost Mitigate risks Ensure quality Increased focus on end consumer Agile supply chain Reduced leadtimes More frequent delivery drops 4

6 GROUP LOGISTICS SOON CONSOLIDATED INTO ONE DISTRIBUTION CENTER Inbound Transport by type (% of total pieces) 8% 36% 35% Inbound volume (pieces) by brand Tiger of Sweden 57% Distribution center Priorparken, Brøndby, Denmark All formerly outsourced services insourced into one DC by June 1, 2016 Consolidation of volumes Additional 4,000 sqm - scalable for future growth 25 FTE + temps Services own retail, franchise and wholesale customers as well as e- commerce end consumers 5.2 million pieces handled and delivered annually (2014/15) Outbound 24 delivery capsules a year (retail, franchise and wholesale) Majority of outbound volume (pieces) shipped in flat packs Flat 87% 15% By Malene Birger 49% Peak Performance 13% Hanging 5

7 COST EFFICIENT LOGISTICS WITH STRONG DELIVERY PERFORMANCE Aim at pushing logistics costs below 3% while maintaining high delivery performance. Percentage of net sales Revenue, DKKm (Premium brands) Consequence of divestment of Mid Market division 3,478 3,394 3,401 3,211 3,094 97% 2, % 3.8% 3.2% 2.7% 2.5% 3.2% < 3% Average number of orders delivered on time and on agreed terms 2009/ / / / / /15 6

8 CONTINUED EFFECIENCY IMPROVEMENTS THROUGH BUSINESS PROCESS DEVELOPMENT Operations Service functions Sourcing Logistics IT Continuous optimization of current processes and systems Ensure platform and support for brand strategic priorities Business process development (across brands and functions) 7

9 GROSS MARGIN HAS DECREASED SINCE 2010/11 BUT ACTIONS HAVE BEEN TAKEN TO IMPROVE 57.8 (3) pp / / / / /15 To reverse the trend we have initiated projects that focus on two important measures: TGM - Theoretical gross margin / product margins GTN - Gross-to-net sales 8

10 INITIATIVES IMPLEMENTED TO IMPROVE PRODUCT MARGINS (TGM) Sourcing optimization Top 20 supplier negotiations finalized in 2015 Volumes re-allocated to other markets Average of 5% saving on adressable FOB value 5% of volumes transferred to other markets and further 5-10% planned for transfer Margin control Define GM targets on product Group level before we start developing Implement stage/gate model to ensure GM focus throughout the development proces Low GM styles identified, cancelled or re-designed early in the development process Pricing initiatives General price increases Smart pricing We continuously monitor market prices and work actively with pricing Ensuring optimal price ladders within each product category 9

11 AS WELL AS GROSS-TO-NET Review and manage customer discount policies Terms and Conditions updated: Small order fee Cash discount removed Discount reduction plan ready Small order fee implemented to change behaviour Implementation of approval policies to limit discounts Limit returns and cancellations Approval process for returns and cancellations Fees introduced for returns and cancellations Implementation of approval policies and fees to limit returns and cancellations Customer segmentation model Improved customer segmentation to support customization of Terms and Conditions Segmentation analysis updated twice a year based on: Financial criteria (e.g., revenue and contribution margin) Branding criteria (e.g., positioning and competition) 10