CFO s Perspective on Fast Data Ralph Balestriere, EVP & CFO Red Wing Shoe Company
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Company Profile Founded 1905 Red Wing, MN Revenue greater than $600 M 2,300 employees world-wide 3 USA Factories Manufacturing Partners China / Vietnam Dominican Republic Strong Distribution Capabilities 50 States / 110 Countries
Global Work
Industrial
Work Garments
Heritage
Outdoor Vasque / Irish Setter
USA Manufacturing
SB Foot Tanning
Distribution Centers
St. James Hotel
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An Innovative History 1905 1920 1934 1940 1953 2009 2013+ Founded Oil King Steel Toe Mobile Pecos Garments Multichannel
Perfect Storm 2009-2010: Economic Global Recovery = Higher Demand Issues: High backorders / Poor service levels to customers High inventory / wrong inventory Poor supplier relationships Lack of E-commerce capabilities Insufficient financial information SWOT Team Formed: Over 200 pain points identified
Response: Strategic Solutions Multichannel E-Commerce CRM Point of Sale Demand Planning Warehouse Management System Financial Capabilities Roadmap
Multi-channel Drivers Accommodate Retail Store Growth Key Drivers Fill Competitive Gap for Industrial Account Offering Fill Competitive Gap for Consumer Buying Options Implement CRM For Multichannel Customer Management 2013 Copyrighted Material
Multi-channel Benefits
Multi-channel Solution 2013 Copyrighted Material
Multi-channel Business Impacts Top-line Drivers: Digital channel expansion new B2B, B2B2C, and B2B online storefronts Brick & mortar expansion new Red Wing stores Cross-channel access to inventory will improve working capital Two $20 million tenders honored in the Middle East through a portal Bottom-line Drivers: Contact Center Insights Improve product & service offerings by analyzing customer cases in Saleforce.com Field Personnel Access - Providing cases information to field personnel on mobile devices Order to Cash sped up by two weeks through Middle East portal
+ CRM =
CRM: Centralized Hub for Customer Information 360 view of customers Efficiencies in processes, reporting and communication Integration to ERP, POS and e-commerce platforms Improve the RWS Customer Experience Create a feedback loop for product information One master file for account information
CRM: Business Value Delivered Top Line Lead Tracking Corporate Account Reports Business Development Bottom Line Vendor Compliance Distribution Realignment Shipping Issues Cartons vs. Shrink wrap
CRM: Metrics 5,000 Contacts added (Safety Directors, Buyers, etc.) 2,600 incremental Leads added 28,000 Cases added 1,766 Shipping Cases lead to root cause & solution 683 - Shipping Shortage /overage 110 - Wrong label 382,000 Activities added
Demand Planning Background Complex product lines servicing 6 brands Explosion of SKU s Styles SKU s Footwear 1,300 27,800 PPE Garments 2,100 239,000 Accessories 900 2,000 Fashion factor Multiple distribution sites 4,300 269,400
Demand Planning Issues Poor inventory management Highly manual heavy volume in 500 page spreadsheet Inaccurate forecasting Turns close to 2X (Industry Average = 4X) Excess discontinued / close-outs Limited backorder visibility Significant cash drain
Demand Planning Response Investment Implemented in 2012 6 months implementation / training $700k investment Productivity Better revenue forecasting capabilities Discrete planning for big box customers Speed to market
Demand Planning (Value Delivered) Financial Benefit Inventory turns doubled 17% or $35 million reduction in inventory Backorders reduced 50% Debt reduction Strategic Benefit Acquisition in Scotland Investment in Product Development
Financial Capabilities - Vision Graphic Source: Accenture - Transforming the finance function for high performance
Financial Capabilities - Roadmap - Roadmap - 2014 Foundational Improvements 2015 Scale & Advance 2016-2017 Foresight Automation & Agility Advanced Analytics Advanced Business Advisory Data Governance Long-Range Capabilities Plans Platform Analyses Common Calendar Continue Automation Platform Upgrades Advanced Scenario Planning Advanced Portfolio Mgmt. Talent Development Talent Development Talent Development
Financial Capabilities - Solution 2014-2016 Upgrade ERP System Upgrade Financial Consolidation System or Research new solution
Results Average sales growth 2010 2013 = 11% Record profits 2012 Stock price increase CAGR 10% Debt reduction Acquisitions
Summary Faster receipt of data with integrity Faster, more educated financial decisions Happier customers and employees
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