Strengthening operations and simplifying the organisation

Transcription

1 Strengthening operations and simplifying the organisation CEO, Jens Birgersson

2 Improved operational performance is critical for future success Rationale Four focus areas A strong start position... Effective OPCO model with clear P&L accountabilities Talented and passionate people who believe in the product and company...but with clear areas of improvement Untapped scale advantage due to siloed structures and limited collaboration Stagnating fixed cost productivity Complex structures and interfaces Unclear and overlapping role and mandate of group functions Simplifying the organisation Procurement Pricing and Product Management Customer Experience 1

3 Four main streams 1 Simplifying the organisation Simpler and flatter organisation with a leaner and more powerful HQ A more global set-up in business support functions Reduced duplication of tasks 2 Procurement Global bundling within main categories: Hot and cold end raw materials, logistics, indirect materials, CAPEX/spare parts and services Best practice sharing and development 3 Pricing and Product Management Simplification of product portfolio Product positioning Structured pricing process 4 Customer Experience Structured customer feedback processes Rapid and structured issue resolution and continuous improvement Go out and sell 2

4 1 Simplifying the organisation The well-functioning business model with regionally based insulation companies and globally structured System businesses will be maintained The aim is to reduce hierarchical layers, elimination of overlapping activities and establish a more globally driven organisational model for most of the business support functions The main DESIGN CRITERIA for the new organisation are Clear separation between Business Areas and Group Functions More balanced volume split between insulation Business Areas Clear accountabilities and mandates Leaner Group Functions lean and with best practice sharing Group Functions clustered and reporting directly to CEO Operations and Technology Marketing, Communications and Public affairs Higher span of control, also in the top layers of the organisation 3

5 1 Example: Most of our teams were smaller than 6 people Rationale for reducing the number of micro teams Slows down decision-making and communication due to increased number of layers Reduces collaboration across teams (up/down chain instead of across teams) Leads to micro management instead of coaching with a reduction of employee motivation due to lack of empowerment # of teams Most of teams with SOC < 6; SOC to be increased in those teams >12 SOC - Span of Control 4

6 2 Procurement Today approximately one third of the Group s total procurement spend is managed by Group Procurement aim is to get close to 100% by 2017 (EUR billion) The aim is to maximise the synergies through bundling of purchase volumes and implementing best practises across the Group: Global category management with local presence Global procurement processes and tools Procurement competence development Raw materials Logistics Indirect Maintenance CAPEX Total RW Category maturity 5

7 2 Example: Procurement related observations > suppliers in the Group > 4000 suppliers in marketing thereof 3000 vendors only serving one profit centre > 2400 vendors of travel services thereof 1400 only serving one profit centre > 2700 types of packaging material in Europe, supplied by almost 300 suppliers > 900 types of pallets in Europe > 800 suppliers in facility management 6

8 2 Example: Procurement improvement potential goes beyond pure purchasing 7

9 3 Pricing and product management Today we have no commonality on how we manage pricing and a limited development and exchange of best practise on pricing as well as product management in the Group The aim is to get the fundamentals in pricing and product portfolio management right, to improve price and margin quality while reducing portfolio complexity The pricing and product management initiative will Develop a common global framework with principles, rules and guidelines, which is adaptable to local conditions Install clear KPIs for transparency, steering & control Establish a "drum-beat" for pricing and train our organisation to anchor it Strengthen our IT-system "backbone" to make the effort sustainable, transparent and accurate 8

10 3 Example: Typically ~10% of the SKUs contribute with ~80% of our absolute contribution margin in some key segments % of total Contribution Margin Number of SKUs 9

11 Contribution margin, % The 2015 ROCKWOOL Capital Market Day November 23, Example: Need for pricing and product portfolio review Too many products and a significant spread in profit margins Net sales by SKU 10

12 4 Improving customer experience Base is good but we have variances. E.g. ROCKWOOL Germany won both the EUROBAUSTOFF and the hagebau award 'Top Insulation Supplier '. More than 2,900 outlets have chosen ROCKWOOL as the No. 1 Supplier in the insulation business. Main reasons: our excellent customer relationship, the service level and product quality. Aim is to get a uniform outside-in view on how our customers experience the service they get from Rockwool through an ongoing feedback process and drive improvements based on that On 11 November 2015 the Group initiated the first Global customer satisfaction survey based on the Net Promoter Score (NPS), reaching out to more than contacts to get feedback How likely is it that you would recommend Rockwool to a friend or colleague? This first survey will form baseline for future goal settings for year-on-year improvements 11

13 New management processes supported by a Program Management Office secure progress on actions and impacts It starts with focus The Group s management processes have been changed in order to make the Business Transformation Program an integral part of the management agenda in Group Management as well as in P/L units A Program Management Office (PMO) has been established to manage the program, with reference directly to the CEO The PMO ensures regular progress follow-up on actions and impacts The Business Transformation Program actions and targets have been integrated into all P/L units plans and budgets 12

14 We have established KPIs to track the overall program progress Overall program ambition is to deliver a positive contribution of EUR 50 million to the 2017 operating result, of which EUR 20 million to be reached in 2016 Target Status Comments 1 Organisational Clarity 75% of potential realized by end of Q On track 2 3 Procurement Pricing and Product Management 50% of group spend covered by global procurement end 2016, >90% by end % of revenue managed by new principles & tools by the end of 2016 On track On track 4 Customer Experience NPS target will be set once the first baseline has been established Global NPS study launched 11 November 2015 to establish baseline 13