XTRA POWER ENERGY SYSTEMS

Transcription

1 XTRA POWER ENERGY SYSTEMS JMSB CONSULTING ELLIOTT ALTILIA MATTHEW BECK SIMON FOUCHER LYSIANE PROULX

2 Supply? Demand? Relationships? HOW CAN XTRA POWER RECONFIGURE ITS SUPPLY CHAIN TO ENSURE LONG TERM SUCCESS? Growth? Profit? Staffing?

3 RECONFIGURE CLOSED-LOOP SUPPLY CHAIN Address logistics issues Investment: Improve Rs 42M Staff retailer relationships Rs 100K ERP Rs 200K Marketing Partner with DLSP Integrate Dolphin Power materials Partner with Harley in Y3 Leverage ERP for orders/pickups Benefit: Timeline: 3 IT Years platform for on-going feedback Retailer program for recycling Profit: Rs 585M Prepare for increased production capacity Increase plant staffing Integrate ERP (leverage partners) Government relations SWITCHING LOGISTICS IS ESSENTIAL TO ADDRESSING THE MARKET

4 KEY FINDINGS

5 HIGH DEMAND LEADS TO HIGH MARKET GROWTH AND COMPETITION 25% Market Demand is greater then supply Price Efficient Logistics Competitive Split Market After Sales Service XTRA POWER NEEDS TO BETTER LOGISTICS TO COMPETE

6 THE CLOSED LOOP SYSTEM IS CURRENTLY BROKEN Galaxy Plastic Casting Lead Terminal Cretto Logistics Xtra Manufacturing Plant (assembly) Cretto Logistics Retailer Customers Avani International Lead Plate Battery Acid Cretto Logistics ABILITY TO CLOSE THE LOOP EFFICIENTLY WILL

7 PARTNER EVALUATION: LOGISTICS Cretto 8 year relationship One of largest provider in India 20% MS in Delhi Network of retailers Volume player Complaints, little responsiveness DLSP No relationship ERP usage Reliable, consistent Condition: sole provider of lead plate & electro. Cretto DLSP Lead time (days) 12 (one of highest) 4 (lowest) RS /kg of load/km travelled

8 PARTNER EVALUATION: ACID AND LEAD PLATES Avani Long-standing relationship Supply 2 most imp. components Negligible inbound logistics cost Decreasing market shares Dolphin Power Limited No relationship Reduced lead time Dolphin Power: fast growth, top 10 supplier Synergies with DLPS Avani DPL Cost of supplies (Rs / cell) to 1800 Lead time Industry average: Distance 63Km 36km A 40% REDUCTION IN LEAD TIME WILL DOUBLE THE EFFICIENCY

9 PARTNER EVALUATION: LEAD TERMINALS AND PLASTIC CASINGS Galaxy Relationship Quality supplies Negligible inbound logistics cost Harley Power No relationship Reduced lead time Galaxy Harley Power Price Rs / unit Lead time 6 4 Distance from plant 2.9km 2.7km 2/3 LEAD TIME LEADS TO 25% INCREASE IN EFFICIENCY

10 PRIMARY BATTERY EXPENSE COMES FROM LEAD PLATES AND ACID Lead Plates: 28kg Avani or Dolphin Power Limited Terminal: 1kg Average Battery: 43.6kg Acid: 11.5kg Plastic: 3.1kg Galaxy or Haley REDUCTION IN DISTANCE TRAVELLED CAN OFFSET COST INCREASE

11 XTRA POWER HAS THE PRODUCT BUT NEEDS THE SUPPORT High Quality Product Short Production Time High Product Demand Low Reconditioned Sales High Reconditioned Margins Retailer Recommendations Retailers only customer touch point The product is able to address market need Necessary to fix closed loop system Retail relations are essential to brand strength A NEW PARTNER IS NEEDED TO SUCCEED

12 FINANCIALS

13 Y/Y SALES GROWTH PER CATEGORY 30% 25% 20% 15% 10% 5% 0% -5% -10% Growth Market Growth EXCEPT FOR OPEN SHIELD BATTERIES, NOT MEETING MARKET GROWTH

14 SAVINGS IN PACKAGING COUNTERED LOSSES IN LOGISTICS 300% y/y changes in direct costs 200% 100% 0% -100% Raw Materials Packaging Logistics -200% LEAD DOES NOT SEEM TO BE A SIGNIFICANT CONCERN

15 WHAT IF ANALYSIS EXCLUDING PACKAGING SAVINGS Total Sales Raw Materials Packaging Logistics Total Direct Costs Other Costs Total Profits (M INR) Total Profits PROFITABILITY DROPPED BY 70% IN ONE YEAR

16 ESTIMATION OF QUANTITY SOLD AND RECYCLED Sales (M INR) Low High Heat Shield 89.9 Open Shield Reconditionned 17.8 Unit price Heat Shield Battery Open Shield Reconditionned Qty Sold High Low Heat Shield Barrety 9,772 4,495 Open Shield 13,717 5,048 Reconditionned 3,787 1,695 WITH LOSSES, ASSUME 4000 BATTERIES REPURCHASED

17 ASSUMPTIONS ON TRANSPORTATION TO/FROM RETAILERS Northern Delhi Region % Trips Breakdown 59% 41% Average Distance Travelled (km) WEIGHED AVERAGE DISTANCE PER TRIP - INBOUND

18 INBOUND TRANSPORTATION COSTS Cretto # repurchased Recycled batteries 4,000 DLSP Average weight (in kg, dry) 32 Average Distance 62 Cost/(kg.km) Total Cost to Pickup 12,737,280 18,707,880 DIFFERENCE OF 6M INRS BETWEEN PROVIDERS

19 OUTBOUND TRANSPORTATION COSTS Cretto DLSP # batteries shipped Average distance / trip 62 Average weight / battery (kg, wet) 43.6 Cost/(kg.km) Total Costs of Delivery 77,852, ,345,360 ADDITIONAL 36M INRS; FOR A TOTAL OF 41M INRS

20 ALTERNATIVES

21 ALTERNATIVES COSTS PER COMPONENTS Avani / Galaxy Avani / Haley DLSP / Galaxy DLSP / Haley Terminals/ lead Acid/Plated

22 COSTS OVERALL Avani / Galaxy Avani / Haley DLSP / Galaxy DLSP / Haley Terminals/lead Acid/Plated Transportrtation Total

23 Avani / Galaxy Avani / Haley DLSP / Galaxy DLSP / Haley % Market # Batteries Sales (M INRs) Costs Additional Costs Profits

24 SITUATIONAL SYNOPSIS Strategy Distribution Through Retailers Premium Quality Closed Loop Core Competency Short-Lead Time Refurbishment Demand > Supply Market Highly Competitive Price & Seasonally Sensitive SUPPLY CHAIN IMPROVEMENTS REQUIRED TO MEET DEMAND

25 OPTIONS Decision Criteria Status Quo Haley Alone DLSP Full Change Ability to Meet Demand 25% 32% 53% 60% Revenue Profit Relationships with Retailer At Risk At Risk Improve Improve

26 SITUATIONAL SYNOPSIS Risks Mitigations Contingencies Impact of retailer relationships Improved experience Faster lead times Over change management compensation Staffing of manufacturing plant Comprehensive HR Plan Leverage supplier network

27 RECONFIGURE CLOSED-LOOP SUPPLY CHAIN Address logistics issues Improve retailer relationships Partner with DLSP Integrate Dolphin Power materials Partner with Harley in Y3 Leverage ERP for orders/pickups IT platform for on-going feedback Retailer program for recycling Prepare for increased production capacity Increase plant staffing Integrate ERP (leverage partners) Government relations

28 IMPLEMENTATION

29 3 YEAR TIMELINE June 2013 Year 1 Year 2 Year 3 Logistics issues DLSP DLSP logistics Components from Dolphin Power From Galaxy to Harley Power Retailer relationships Prepare for production capacity

30 CLOSED-LOOP SUPPLY CHAIN Galaxy Plastic Casting Lead Terminal Cretto Logistics Xtra Manufacturing Plant (assembly) Cretto Logistics Retailer Customers Avani International Lead Plate Battery Acid Cretto Logistics

31 CLOSED-LOOP SUPPLY CHAIN Galaxy Plastic Casting Lead Terminal DLSP Logistics Xtra Manufacturing Plant (assembly) DLSP Logistics Retailer Customers Dolphin Power Lead Plate Battery Acid Cretto DLPS Logistics START BY ADDRESSING THE LOGISTICS ISSUES

32 CLOSED-LOOP SUPPLY CHAIN Harley Power Plastic Casting Lead Terminal Customers DLSP Logistics Xtra Manufacturing Plant (assembly) DLSP Logistics Retailer Dolphin Power Lead Plate Battery Acid Cretto DLPS Logistics MOVE FROM GALAXY TO HARLEY POWER IN YEAR 3

33 3 YEAR TIMELINE June 2013 Year 1 Year 2 Year 3 Logistics issues DLSP DLSP logistics Components from Dolphin Power From Galaxy to Harley Power Retailer relationships Increase reps visits platform for order / pick-up Reconditioned battery campaign Prepare for production capacity

34 RECONDITIONED BATTERY CAMPAIGN FOR RETAILERS Proprietor Mr. Dutta Marketing Manager (Mr. Nanda) Sales Manager Operations Managers (Mr. Sheik) Reps in contact with retailers Develop Savings for you and the planet sales kit Provide retailers with sales kits (flyers, posters, displays) PROMOTING RECYCLING SHEDS YOU FROM FLUCTUATING LEAD PRICES

35 RETAILER RELATIONSHIPS CAN BE IMPROVED WITH DLSP More frequent representative visits Place orders DLSP Platform Client feedback Retailers Feedback training Consumers Schedule pickup XTRA POWER CAN LEVERAGE THE ERP EXPERTISE OF DLSP

36 3 YEAR TIMELINE June 2013 Year 1 Year 2 Year 3 Logistics issues DLSP DLSP logistics Components from Dolphin Power From Galaxy to Harley Power Retailer relationships Increase reps visits Launch platform for order / pick-up Prepare for production capacity Double plant staff size Approach government for subsidy (recycling) Leverage DLSP IT expertise

37 PLANT STAFF MUST BE ADJUSTED Proprietor Mr. Dutta Marketing Manager (Mr. Nanda) Sales Manager Operations Managers (Mr. Sheik) DOUBLE plant staff size over 2 years Use ERP system to manage CLSC LEVERAGE SUPPLIER NETWORK TO STAFF PLANT

38 RECONFIGURING XTRA POWER SUPPLY CHAIN WILL NOT ONLY INCREASE ITS BOTTOM LINE BUT ADDRESS AN ESSENTIAL NEED OF THE MARKET