Brammer Invend TM > Convenience & simplicity > Reduce - - PowerPoint PPT Presentation

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Brammer Invend TM > Convenience & simplicity > Reduce - - PowerPoint PPT Presentation

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Brammer Invend TM > Convenience & simplicity > Reduce consumption > Lower inventory costs > Improve productivity 28 th July 2015 Agenda What is Invend? Benefits for Brammers customers Benefits for Brammer

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Brammer Invend

TM

> Convenience & simplicity > Reduce consumption > Lower inventory costs > Improve productivity

28th July 2015

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Agenda

  • What is Invend™?
  • Benefits for Brammer’s customers
  • Benefits for Brammer
  • Progress to date
  • Brammer Invend™ for Key Accounts
  • Brammer Invend™ Infrastructure
  • Financial model
  • Brammer’s competitive advantage

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What is Invend™?

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What is Brammer Invend™?

A fully managed industrial vending service that reduces consumption of fast moving industrial products, lowers inventory costs & improves productivity

Fully managed service: We handle everything from installation to re- stocking No up-front investment: No need for the customer to invest in machines & software, he only pays for the products used plus a monthly software/data management fee Easy installation and

  • peration:

All the customer needs to get started is an internet connection and power supply Provides control over usage and access: Gives the customer real- time visibility and control of end user and cost centre usage

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We help the customer select the right lines from our Invend™ product range and agree stock levels We configure the machine to suit the chosen products We deliver and install the machine

How It Works: Machine set-up and installation

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We show the customer how to set-up and manage end users

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We help the customer to select product lines & agree stock levels then manage machine delivery, installation & training

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End users enter their unique code using a keypad or scanning a barcode label – if authorised, the required product is dispensed An automated process means we know when the stock in the machine is running low Our local branch restocks the machine & invoices for the items the customer has used

How It Works: Restocking and reporting

01 02 03

Invend™ provides the customer with a range of reports to keep him in control of usage

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End users have convenient and controlled access to products whilst an automated process allows us to replenish items when required

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Brammer Invend™: Product choice

Invend™ can stock a broad range of fast moving industrial consumables:

  • ver 30,000 certified vendable products

01 05 02 06 03 07 04 08

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Invend™ Machine Overview

InvendTM Coil Ideal for hand tools, cutting tools, abrasives, adhesives & PPE items such as gloves and safety glasses > Manage up to 60 individual products > Easy to use touch screen interface & bar code Scanner > High levels of control over item issues > Visibility of products through glass front

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InvendTM Carousel Ideal for a wide range of industrial consumables such as hand tools, cutting tools, abrasives, adhesives & PPE such as gloves, glasses & ear protection > Manage up to 560 individual products > Flexibility to carry a wide range within small footprint > Easy to use touch screen user interface > High levels of control over item issues

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InvendTM Locker Suitable for large items or bulk issues of expendable items such as lubricants and boxed gloves > Operates in combination with the InvendTM Coil or Carousel > Manage up to 12 individual products > Visibility of products through glass front

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Invend™ Technology

Ethernet Invend

TM

Server Internet Invend

TM

Machine

Customer Firewall Firewall

Port 80 & 443

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Benefits for Brammer’s customers

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Why Brammer Invend™?

Invend™

  • ffers:

Reduced product

  • consumption. By controlling

the use of fast-moving industrial consumables, a customer can typically cut spend by 25 to 40%

Reduced replenishment costs and simplified

  • processes. We handle re-

stocking, saving the customer money and reducing wasted staff time

Health and Safety

  • Compliance. The

customer knows what has been vended when, and to whom.

Lower inventory costs, greater efficiency, and improved productivity. The customer

  • nly pays for the items he uses, removing the

need to carry the cost of inventory. Products are available when and where the customer needs them, allowing the customer’s staff to use time productively, instead of visiting stores to restock

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Who Benefits? 24/7 availability across the customer’s business

Production and Maintenance

  • Improves control and

availability of required products

  • Reduces wasted walk

and waiting time associated with visits to stores

Purchasing

  • Reduces consumable

MRO usage by 25-40%

  • Reduces suppliers and

total cost of ownership

  • Improves usage

reporting by user and cost centre

Health and Safety

  • Only approved PPE

equipment is available

  • n the shop floor
  • Audit trail of issued

health and safety items

Stores

  • Saves wasted staff time

by removing the need to

  • rder, replenish and

raise paper work for fast moving MRO items

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Benefits for Customers

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Benefits for Brammer

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Invend™ Direct and Indirect Growth

1. Invend™ generates DIRECT GROWTH

– Direct growth is the revenue generated through the machine – Almost all of the business transacted through the machine is new business to Brammer – Mainly PPE and TGM: NOT cannibalising existing business

2. Invend™ generates INDIRECT GROWTH

– Through better customer engagement and visibility the customer sites with Invend™ machines grow faster than the rest of the business – Indirect growth is the additional revenue attributable to the Invend™ presence at customer site outside of the vending machine – Indirect growth is across ALL product ranges

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Indirect Growth

  • In selling Invend™ we have engaged with:

– Health and Safety Managers – Purchasing Managers – Production Managers – Maintenance Managers – Factory Managers

  • Multiple critical customer collisions during pre-sales process
  • Post-installation, Brammer is “front of mind” through:

– Invend™ machines are a very visible Brammer presence on the customer site – Direct access to customer site for replenishers – we are a trusted part of the customer’s supply chain

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Comparison of Product Mix – H1 2015 vs H1 2014 like for like sales across 317 sites

  • We sell more of ALL product groups to customer sites with vending

machines

YTD J UNE DIR E C T S AL E S MIX TG M 85% C HE MIC AL S 8% OTHE R S 7% 100% YTD J UNE 2014 2015 GR OWTH GR OWTH % MIX BE AR ING S 1,550 1,849 299 19.3% 8.3% L INE AR MOTION 310 326 16 5.1% 1.5% POWE R TR ANS MIS S ION 3,823 3,884 60 1.6% 17.4% FL UID POWE R 4,424 4,945 521 11.8% 22.1% C HE MIC AL S 685 998 313 45.8% 4.5% FAS TE NE R S 379 414 35 9.2% 1.8% TG M 3,384 6,382 2,998 88.6% 28.5% S E AL S 962 1,102 139 14.5% 4.9% S E R VIC E S 438 600 163 37.1% 2.7% OTHE R S 1,223 1,865 643 52.6% 8.3% 17,178 22,366 5,188 30.2% 100.0% INVE ND C US TOME R TOTAL S AL E S

All values in €000s 17

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Progress To Date

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Cumulative Number of Machines Signed in Agreements

  • Agreements have now been signed for 1,206 machines

200 400 600 800 1000 1200 1400 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

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Updates – Quarter on Quarter

Q1 Q2 Q3 Q4 Machines S igned 2015 237 304 2014 111 97 110 188 2013 11 34 28 86 Q1 Q2 Q3 Q4 Machine Installations 2015 172 194 2014 65 104 105 135 2013 1 13 30 71 Q1 Q2 Q3 Q4 Machines L ive 2015 658 845 2014 178 278 370 501 2013 1 14 44 115

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Updates – Quarter on Quarter

Q1 Q2 Q3 Q4 T

  • tal Account S

ales 2015 10,370,694 11,995,246 for sites with vending machines 2014 3,092,425 4,756,445 6,708,560 8,237,585 2013 8,766 134,608 615,162 819,711 Q1 Q2 Q3 Q4 Invend G rowth R ate 2015 37.2% 24.7% 2014 74.0% 47.5% 62.1% 48.4% 2013

  • 243.2%

35.9% 106.5%

Q2 two days shorter than Q1 All values in €uros

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Invend™ Update - June

  • Signed 136 machines in June
  • Installed 74 machines in June
  • Live machines 845
  • Pipeline of 316 machines to install
  • 117 people directly involved in InvendTM

YTD

  • 541
  • 366

Total

  • 1,206

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Key Accounts vs Regional Accounts (2015 June YTD)

Regional Base Business Key Accounts Number Customers 161 83 Number of sites 168 149 Number of Machines end Q2 378 439* Number of machines end Q1 295 336* Average Machines per site 2.3 3.0 H1 2015 a/c Growth 63% 24% H1 Account Sales €4,595k €17,771k

*Excludes 28 machines at Alcoa in the Nordic region. Related sales numbers also excluded for consistency.

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Brammer Invend™ for Key Accounts

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Invend™ and the Brammer Value Proposition

Reduce your total acquisition costs Improve your production efficiency Reduce your working capital

01 02 03

Reduced Consumption Completely automated process

Brammer has a unique cost savings program that helps you save money

All saving definitions and calculation methodologies are captured and agreed in a cost saving overview document

Three key focus areas

Walk and wait time saving 24/7/365 availability Stock owned by Brammer until dispensing

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Invend™ saves costs for our customers

  • 74 Cost Savings already logged
  • 22 Cost Savings forms signed off by

customers for a total value of € 175 k

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Invend™ for Key Accounts

50 100 150 200 250 300 350 400 450 500 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

# MACHINES AT KEY ACCOUNTS

  • 83 customers
  • 149 sites
  • 439 machines live

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Quarterly Invend™ sales

100 200 300 400 500 600 700 800 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2

QTR INVEND SALES

  • Current annual direct sales run

rate > € 3m

  • Accelerating trend

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Some Customer References

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Rapid deployment within large European customers

  • Nine Key Account customers already have InvendTM machines live in

more than one country

  • Most advanced customer has 79 machines installed on 32 sites across 4

countries … and more to come!

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The Brammer Invend™ Infrastructure

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Specialist Invend™ Team

  • Total annualised spend of £6 million
  • Our business development efficiency has increased consistently in each of the last 6

quarters – the number of staff has plateaued but the number of agreements per person per month has increased significantly

  • We have capacity in place to win 300 agreements per month, as efficiency continues to

improve

R es

  • urc

e s ummary Dec '13 Dec '14 J an '15 Feb '15 Mar '15 Apr '15 May '15 J une '15 Nb Invend Attack Vans 10 21 21 21 21 21 21 21 INVE ND MANAG E R 5 11 11 11 11 11 11 11 INVE ND S AL E S E XE C UTIVE S 15 26 26 24 23 21 19 20 PR OPOS AL S C OOR DINATOR 7 18 18 19 20.5 20.5 19.5 19.5 INS TAL L ATION C OOR DINATOR 3 8 10 10 10.5 10.5 10.5 10.5 DATA & PR IC ING /DE MAND C OOR DINATOR 1 5 5 5 5 5 5 5 S UPPOR T/R E POR TING 1 6 6 6 8 8 9 10 TOTAL FTE (excl Telesales) 32 74 76 75 78 76 74 76 Additional (telesales, Installation, Helpdesk, Team leaders) 8 32 32 32 31 31 31 32 C entre Team 8 10 10 10 10 9 9 9 TOTAL FTE 48 116 118 117 119 116 114 117

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Infrastructure

  • 117 people
  • 21 Invend™ Attack Vans
  • Order book across 15 countries
  • ‘Invend™ Certified’ Product Database –

30k+

  • Fully integrated into ERPs

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Benefits for Brammer – the Financial Model

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Total Sales to Invend™ Customer Sites

All values in €uros

  • Solid growth and steady

margins, consistent with Brammer’s average

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Invend™ Modelling – profitability per machine

Model Assumptions

  • First full year annualised Direct Growth = €8k by year end
  • First full year annualised Indirect Growth = €16k by year end
  • Both Direct and Indirect Growth increase further over time
  • Gross Profit similar to Brammer’s current average
  • “Drop-through” after Incremental SDA = 10% Trading Profit
  • Average machine cost = €8k
  • ROCE = 30% per annum
  • Machine life > 10 years
  • Depreciation 7 years straight line
  • Machine inventory turns > 12 times
  • Funded from cash flow and existing facilities

These assumptions have been proven

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Brammer’s Competitive Advantage and Barriers to Entry

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Competitive Advantage

  • Differentiator from our competitors

– “purchase your PPE and use the Invend™ Service for control”

  • Customers with Invend™ are buying new product ranges from Brammer

(TGM & PPE)

– No cannibalisation of existing Brammer business, even though customer consumption of vended items reduces

  • “Machine behind the machine” is a differentiator. It is complex to

consistently deploy 100s of machines across Europe

– Large investment – We have so far spent over £10 million of S,D&A solely on developing the vending concept – Difficult for others to replicate – 15 countries live (UK, IE, IS, NO, PL, ES, FR, BE, NL, DE, CZ, IT, CH, AT, PT)

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Barriers to Entry

  • It is complex to deploy consistently

– Our “One Brammer” approach to Best Practice (Synergies) has come into its own:

  • Marketing
  • Sales process
  • Quotation process
  • Machine configuration
  • Machine installation
  • IT infrastructure and Customer reporting
  • Product development
  • Replenishment process

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Economies of Scale – Brammer specific competitive advantage

  • The “Machine behind the machine” - huge investment made
  • Breadth and capability of the supply chain

– Inventory & Infrastructure - warehousing, branch network, purchasing

  • Relationship with Suppliers – and bargaining power

– 27,000 suppliers – significant growth with TGM & PPE suppliers

  • Access to existing customers

– Over 100,000 customer sites in 23 countries – Only 200 customers and 317 customer sites have so far adopted vending – 0.3% of customer sites, but these customers now represent 5% of revenues and are our fastest growing group of customers – Access to existing Key Accounts!! Sell once, win dozens of machines….. – We become further embedded at the customer

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Barriers to Entry – Capital Requirements

  • €8000 investment per machine
  • Customer is charged a monthly software fee

– The machine is free to the customer

  • Returns are generated from direct and indirect sales

growth

  • Indirect growth is double direct growth
  • To get indirect growth you need the full product range

– PPE – TGM – Bearings – Mechanical/Electrical Power Transmission – Fluid Power

  • Model does not work without full product range

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The Machine behind the Machine…

Packaging Local Sales Force Product Templates Regional Build Centres Support & Training Local Branch Fulfilment

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Potential Upsides

  • Product substitution with Brammer own-brand products will increase

margin significantly – - – -

  • Faster development of PPE/TGM spend leading to better pricing and

rebates

  • SDA efficiency improvements linked to machine density

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Summary

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Summary

  • Invend™ is a great solution for customers

– Productivity, Availability, Consumption reduction, Compliance

  • Invend™ is complementary to, and leverages our Key Account and TGM

growth drivers

  • Invend™ delivers proven profitable growth for Brammer:

– Direct sales growth and Indirect sales growth, in a ratio of 1:2

  • Customer sites with Invend™ are proven to grow faster than the rest of

the business

  • The industrial vending market is an undeveloped channel to market,

represents a huge opportunity, and has high barriers to entry

  • Brammer is Number One in Europe, and we will extend our lead

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Questions

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