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Georgia Tech February 4, 2003

Georgia Tech February 4, 2003. Go Dawgs !!!. “ Our Mission is to be the Reseller’s Preferred Source of Business Products and Services through Leadership in Operational Excellence, Customer Support, and Integrity”. S.P.Richards Sales Results. 2001 $1,379,859,000 + 3.2%

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Georgia Tech February 4, 2003

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  1. Georgia Tech February 4, 2003

  2. Go Dawgs !!!

  3. “Our Mission is to be the Reseller’sPreferred Source of Business Products and Servicesthrough Leadership inOperational Excellence,Customer Support,and Integrity”

  4. S.P.Richards Sales Results • 2001 $1,379,859,000 + 3.2% • 2000 $1,336,500,000 +10.5% • 1999 $1,218,367,000 + 9.0% • 1998 $1,122,000,000 + 3.4% • 1997 $1,081,000,000 + 4.4% • 1996 $1,035,000,000 + 9.2% • 1995 $ 948,000,000 +11.9%

  5. S.P.Richards History • Established in 1848 • Over 150 years of experience in the Office Products Industry • Oldest continuouslyoperating business in Atlanta, Georgia • Purchased by Genuine Parts Company in 1975

  6. GPC Overview Sales Results 1995-2000 7,981,687,000 8,369,857,000 8,220,668,000 6,614,032,000 5,720,474,000 6,005,245,000 5,261,904,000

  7. GPC Overview • Automotive Parts Group ( NAPA ) • Industrial Parts Group ( Motion Industries ) • Office Products Group ( S.P.Richards Co. ) • Electrical/Electronic Materials Group ( EIS ) • Common to all divisions is expertise in warehousing and distribution 2001 Sales

  8. GPC Overview • NAPA - Automotive Parts Group • Motion Industries - Industrial Parts Group • S.P.Richards - Office Products Group • EIS - Electrical/Electronic Materials Group 2001 Operating Profit

  9. S. P. Richards Competitive Overview • National wholesaler - United Stationers • Regional wholesalers • Computer supplies wholesalers • Furniture wholesalers

  10. How Our Customers Compete • Mega Dealers ( Office Depot, Corporate Express ) • National scope ( National contracts ) • Next day delivery • Purchasing control • Low price • Independent Reseller • High service • Next day ( or same day ) delivery • Internet Reseller • Ease of ordering • Quick delivery

  11. How Our Customers Use Us • Items resellers don’t stock • The smaller the reseller, the fewer items they stock • Economic decision • Expand selection • Their catalog • Our catalog • Backup during transitions ( new catalogs ) • Backup for temporary out-of-stocks • Can be huge volume • Impossible to forecast

  12. How Our Customers Use Us • Business relationship with S. P. Richards and United • No such thing as a backorder • Missed order is lost business • Most orders are for pre-sold merchandise • End user order to our customer • Item they don’t have • Wrap & Label • Consumer packaging • To: End User • From: Office Depot • Approximately 77% of our orders

  13. - Charlotte - Atlanta

  14. Trends Favoring Wholesale Distribution • Inventory reduction • Traditional resellers • Stockless resellers • Total Fulfillment • E-commerce • “Pure Play” Internet resellers ( No“Bricks or Mortar” ) • Resellers expanding beyond their geographic reach • Nationwide drop shipping • Niche specialists seeking to provide a complete business product offering

  15. S.P.Richards Strengths • 36 full stocking Distribution Centers • 2 Furniture DC’s • 3 Horizon USA ( Data Supplies ) DC’s • Broad inventory offering • 22,336 catalogued items featured at every DC. • Over 30,000 total items in inventory • 1% - 2% list price advantage over our major competitor • Best service • Fastest delivery • Highest service levels • Fewest errors • Lowest cost structure

  16. S.P.Richards Competitive Advantage • Intense focus on our customers • Highly personalized service • Flexible - Do anything they need us to do to further their business • Physical delivery • Information Systems • Best customer relationships in the industry “Every customer is our only customer”

  17. S.P.Richards Competitive Advantage “At S. P. Richards,We make money the old fashioned way”… Manually

  18. Disclaimers • The information presented here represent the views of the presenter, not necessarily that of S. P. Richards Company • You can’t improve without looking at your weaknesses • “… it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time.” - Winston Churchill • S. P. Richards might look like a poor distributor, except in comparison to all the others.

  19. * Excludes restructuring charge

  20. * Excludes restructuring charge

  21. Virtual Tour - Atlanta

  22. Virtual Tour - Atlanta

  23. Virtual Tour - Atlanta

  24. Virtual Tour - Atlanta

  25. Virtual Tour - Atlanta

  26. Virtual Tour - Atlanta

  27. Virtual Tour - Atlanta

  28. Virtual Tour - Atlanta

  29. S.P. Richards Logistics Challenges • Rapid Delivery • Business began as same day order picking, next day delivery • S. P. Richards moved the industry to “same night” deliveries 20 years ago • Everyone wanted the first AM delivery • Allowed resellers to deliver earlier to their customers • Deliver more rapidly than the competition • Unattended; key access • All customers have merchandise at the start of the next business day • Required reduced cycle times for S. P. Richards

  30. S.P. Richards Logistics Challenges • Rapid Delivery • No pre-planning of orders • “Real-time” • Constantly adjusting • Difficult to plan quantity and timing of labor • Statistically based • Tuesday, Wednesday, Thursday are heaviest shipping days • Housekeeping Monday and Friday • Managing overtime a challenge • Adjust and stagger starting times as appropriate • Part time labor a huge plus where available • Continuous manual expediting • More flexible than systems driven prioritization

  31. S.P. Richards Logistics Challenges • Rapid Delivery - Examples: • Corporate Express - Whippany, NJ • Shipped from: Moorestown, NJ • Order cutoff: 6:30 PM • Truck departs: 7:00 PM • Delivery: 8:00 PM • Staples - Ontario, CA • Shipped from: Mira Loma,CA • Order cutoff: 5:00 PM • Truck departs: 5:45 PM • Delivery: 6:00 PM

  32. S.P. Richards Logistics Challenges • Rapid Delivery - Examples: • Lindy Office Products - Los Angeles, CA • Shipped from: Mira Loma,CA • Order cutoff: 6:00 PM • Truck departs: 8:00 PM • Delivery: 9:00 PM • Independence - Cleveland, OH • Shipped from: Pittsburgh, PA • Order cutoff: 6:00 PM • Truck departs: 7:00 PM • Delivery: 11:30 PM

  33. S.P. Richards Logistics Challenges • Rapid Delivery • WMS Implications • Order prioritization is paramount • Multiple picking zones • Different travel times through system • Order completion needs to be prioritized, not order initiation • How do you maintain the same degree of responsiveness with an automated system that you had with a manual one? • Accuracy vs. Cycle time

  34. S.P. Richards Logistics Challenges • Stockless Fulfillment • USA Express • EDI transmissions • 70% of orders • Another 15% remotely entered by our customers • Real-time acknowledgement • Auto-routing by zip code • Out-of-stocks routed to alternate facilities • Wrap and Label • Order up until 3:00 PM, UPS shipment same day • Order tracking

  35. S.P. Richards Logistics Challenges • Stockless Fulfillment • USA Express • Can ship to 96% of the US population next-day UPS ground • Still a small percentage of the overall business • All 36 Distribution Centers must be small package experts • Enforcing consistency a challenge • Premium on high order fill rate from one DC • Minimizes number of boxes • Consistent delivery times • Developed a system that allows customer to prioritize: • Quickest shipping • Fewest packages • Automated with the EDI transmission

  36. S.P. Richards Logistics Challenges • Service Levels • Don’t get a second chance - order lost if out of stock • Demand often not statistical • “Random hits” • Different DC’s • Different items • Different times • Communications important • Learn more about customer’s business • Collaborative inventory management?

  37. S.P. Richards Logistics Challenges “Forecasts are always wrong, and planners are always surprised” - George Plossl

  38. S.P. Richards Logistics Challenges • FIFO • LIFO • FISH

  39. S.P. Richards Logistics Challenges • Service Levels • Developed SPRinter network • Same night service from other DC’s • Raises fill rates 1% to 2% to customers • Wrap and Label • Efficient merging for resellers • Creates extra box(es) for consumers

  40. S.P. Richards Logistics Challenges • What I didn’t mention • Transportation • Most deliveries on our private fleet • Every stop every night

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