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””Going Going east” east” –– Alfa LavalAlfa Lavalin in Asia Asia and and RussiaRussia
”Controllerdagarna””Controllerdagarna”Teknikföretagen, May 25Teknikföretagen, May 25
Peter LeiflandPeter LeiflandExecutiveExecutive VP VP
Region Region AsiaAsia, Latin America, Africa and Oceania , Latin America, Africa and Oceania
© Alf a Lav al Slide 3 www .alfalaval.com
A global company
Year 200Year 20033
•• Total sales: MTotal sales: MSEK 14,000SEK 14,000•• No. of employees: No. of employees: 9,4009,400•• 20 production units20 production units•• 70 service centres70 service centres•• Sales Companies in 50 countries Sales Companies in 50 countries •• Other sales representation in more than 45 countriesOther sales representation in more than 45 countries
© Alf a Lav al Slide 4 www .alfalaval.com
Capital salesCapital sales//core product groupcore product group
Heat TransferHeat Transfer41%41%
SeparationSeparation30%30%
Fluid HandlingFluid Handling18%18%
Heat Transfer Separation Fluid Handling
Market share36%
Market share24%
Market share10%
© Alf a Lav al Slide 5 www .alfalaval.com
Alfa LavalGroup
President and CEOPresident and CEO
Operations-divisionPurchasingLogisticsManufacturing
Operations-divisionPurchasingLogisticsManufacturing
Process TechnologyDivision
Food TechnologyEnergy & EnvironmentProcess IndustryLife ScienceParts & Service
Process TechnologyDivision
Food TechnologyEnergy & EnvironmentProcess IndustryLife ScienceParts & Service
EquipmentDivision
Marine & DieselSanitaryComfort & RefrigerationFluids & UtilitiesOEMsParts & Service
EquipmentDivision
Marine & DieselSanitaryComfort & RefrigerationFluids & UtilitiesOEMsParts & Service
-Support functions-Support functions
Sales companiesAsia, Oceania, Africa, Latin AmericaEuropeNorth America
Sales companiesAsia, Oceania, Africa, Latin AmericaEuropeNorth America
© Alf a Lav al Slide 6 www .alfalaval.com
Orders received by RegionOrders received by Region
Cen
trC
entr.
& E
ast
9 %
. & E
ast
9 %
North A
merica
17 %
North A
merica
17 %
Asia 25 %
Asia 25 %
L. Am
e rica 4 %
L. Am
e rica 4 %O
t her 2 %O
t her 2 %
Western EuropeWestern Europe30 %30 %
Nordic 13 %
Nordic 13 %
January – December 2003
--
----
++++
++
+++18%
+23%
© Alf a Lav al Slide 7 www .alfalaval.com
Orders received by CountryOrders received by Country
Russia 4%
Russia 4%
January – December 2003
China 7%China 7%
India 4%India 4%
+51%
+44%
+26%
Growth 2000Growth 2000--20032003
© Alf a Lav al Slide 8 www .alfalaval.com
Performance Asia and CEE
•• Same gross Same gross marginmargin--level level as West Europeas West Europeand and AmericasAmericas
•• Lower sales Lower sales and administration and administration costcost•• Shorter payment Shorter payment termsterms
© Alf a Lav al Slide 9 www .alfalaval.com
China1984
South Korea1979
Japan1930
Philippines1986
India1937
Saudi Arabia1995
Thailand1983
Singapore1978
Indones ia1993
Taiw an1986
Malaysia1969
Establishment of sales companies
Pakistan1987
Dubai1994
© Alf a Lav al Slide 10 www .alfalaval.com
Ukraine
Poland1991
Cz/Slov1991
Balt ic1996
Russia1993
Turkey1991
Romania1996
Bulgary 1997
Establishment of sales companies
Hungary1991
© Alf a Lav al Slide 11 www .alfalaval.com
Manufacturing in Asia and CEE
Russia1995
India1963
China 1994
Japan 1962
Poland2000
© Alf a Lav al Slide 12 www .alfalaval.com
World wide uniform standards –our key to success•• Global Global product catalogues product catalogues and and pricelistspricelists
© Alf a Lav al Slide 13 www .alfalaval.com
BeforeBefore
PricingPricing
NowNowRCPL* RCPL* -- Discount %Discount %
Market Market pricingpricing
*Recommended Customer Price List*Recommended Customer Price List
€
€€
“Transfer Price” x “Transfer Price” x FactorFactor
CostCost++
© Alf a Lav al Slide 14 www .alfalaval.com
•• Global Global product catalogues product catalogues and and pricelistspricelists•• Sales channelsSales channels
World wide uniform standards –our key to success
© Alf a Lav al Slide 15 www .alfalaval.com
Sales Sales cchannelshannels
End Users
Distributors
System Builders
Contractors
Distributors
Distribution in % per type of channelDistribution in % per type of channelEquipment Division, last 12 months June 2003Equipment Division, last 12 months June 2003
18
36
18
28Own sales force
© Alf a Lav al Slide 16 www .alfalaval.com
•• Global Global product catalogues product catalogues and and pricelistspricelists•• Sales channelsSales channels•• Sales Sales & Market & Market planningplanning
World wide uniform standards –our key to success
© Alf a Lav al Slide 17 www .alfalaval.com
CustomersCustomers
How we drive growth
Salesman
Sales Companysegment
Central segmentAL Group GearboxGearbox
AcceleratorAccelerator
ConnectConnect
The The six gearssix gears
Gap Gap analysisanalysis & & TargetsTargets
Key Key growth driversgrowth drivers
CustomerCustomer pyramid & pyramid & gridgrid
Key performance Key performance indicatorsindicators
ActivitiesActivities & & CompetenceCompetence
© Alf a Lav al Slide 18 www .alfalaval.com
•• Global Global product catalogues product catalogues and and pricelistspricelists•• Sales channelsSales channels•• Sales Sales & Market & Market planningplanning•• Performance Performance measurementsmeasurements
World wide uniform standards –our key to success
© Alf a Lav al Slide 19 www .alfalaval.com
Financial performance measurements
Continuous improvements of rolling twelve months’ valuesContinuous improvements of rolling twelve months’ values
Country performanceCountry performance
•• Total orders Total orders received received per countryper country•• Profit Profit factor factor = = ConsolidatedConsolidated gross gross marginmargin / /
Local costLocal cost•• Net Net DSO = DSO = Outstanding Outstanding A/R less A/R less advancesadvances
in no of in no of days days of of invoicinginvoicing
© Alf a Lav al Slide 20 www .alfalaval.com
SalesPerson
Segments
Activity measurementsActivity measurements
No 7: order No 7: order volumevolume
No 6: hit No 6: hit ratioratio
Sales Productivity
No 3: # of No 3: # of ordersorders
No 1: # of No 1: # of customerscustomers
No 2: # of No 2: # of quotesquotes
Expand Customer Base
No 5:# of orders/No 5:# of orders/# of # of customerscustomers
No 4: order No 4: order volumevolume/ # / # of of customerscustomers
Increase Customer Share
© Alf a Lav al Slide 21 www .alfalaval.com
•• Global Global product catalogues product catalogues and and pricelistspricelists•• Sales channelsSales channels•• Sales Sales & Market & Market planningplanning•• Performance Performance measurementsmeasurements•• Competence developmentCompetence development
World wide uniform standards –our key to success
© Alf a Lav al Slide 22 www .alfalaval.com
Alfa Laval UniversityOne Mission
Three Faculties
Management
Manufacturingand Logistics
IS/IT
Research & Development
Technology Sales & Marketing
Products and applications
Selling Skills
Sales & Marketing
Management
To optimise our employees’ competence. Time and time again.
© Alf a Lav al Slide 23 www .alfalaval.com
•• Global Global product catalogues product catalogues and and priceslistspriceslists•• Sales channelsSales channels•• Sales Sales & Market & Market planningplanning•• Performance Performance measurementsmeasurements•• Competence developmentCompetence development•• IS / ITIS / IT
World wide uniform standards –our key to success
© Alf a Lav al Slide 24 www .alfalaval.com
•• Standardisation Standardisation and and centralised centralised management & management & operation of hardware and systemsoperation of hardware and systems
•• Similar data definitions, processes and system Similar data definitions, processes and system configurations for ERP in each countryconfigurations for ERP in each country
•• Common data warehouses for analysisCommon data warehouses for analysis•• CRM in the pipelineCRM in the pipeline
IS/IT Standardisation
© Alf a Lav al Slide 25 www .alfalaval.com
What is next?
© Alf a Lav al Slide 26 www .alfalaval.com
Hyundai
© Alf a Lav al Slide 27 www .alfalaval.com
Geographical splitGeographical split
Distribution of shipbuildingDistribution of shipbuilding
0,00,0
20,020,0
40,040,0
60,060,0
80,080,0
100,0100,0
19701970 19751975 19801980 19851985 19901990 19951995 20002000 20052005
Perc
ent
Perc
ento
fofC
GT
CG
T
JapanJapan
South KoreaSouth Korea
ChinaChinaWestern Europe
Eastern EuropeOther World
Trends and Medium Term Forecast Trends and Medium Term Forecast Source: MSR May 2003Source: MSR May 2003
© Alf a Lav al Slide 28 www .alfalaval.com
“Business is moving east”•• CustomersCustomers in in AsiaAsia and Central & Eastern Europe and Central & Eastern Europe willwill
set new set new productproduct standards standards -- productproduct management and management and R&D in the region?R&D in the region?
•• ProductionProduction and and engineeringengineering in in AsiaAsia and Central & and Central & Eastern Europe Eastern Europe -- closercloser to to customerscustomers and and lower costlower cost
•• New global New global competitors will emergecompetitors will emerge with with domestic domestic basebase in China, in China, IndiaIndia, South Korea and , South Korea and RussiaRussia