Brammer Invend
TM
> Convenience & simplicity
> Reduce consumption
> Lower inventory costs
> Improve productivity
28th July 2015
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
2
What is Invend™?
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 restocking
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
operation:
All the customer needs to
get started is an internet
connection and power
supply
4
Provides control over
usage and access:
Gives the customer realtime visibility and control of
end user and cost centre
usage
How It Works: Machine set-up and installation
01
We help the customer select the right lines from our
Invend™ product range and agree stock levels
02
We configure the machine to suit the chosen products
03
We deliver and install the machine
04
We show the customer how to set-up and manage end
users
5
We help the customer to
select product lines & agree
stock levels then manage
machine delivery, installation
& training
How It Works: Restocking and reporting
01
End users enter their unique code using a keypad or
scanning a barcode label – if authorised, the required
product is dispensed
02
An automated process means we know when the stock
in the machine is running low
03
Our local branch restocks the machine & invoices for
the items the customer has used
04
Invend™ provides the customer with a range of reports
to keep him in control of usage
6
End users have convenient
and controlled access to
products whilst an
automated process allows
us to replenish items when
required
Brammer Invend™: Product choice
Invend™ can stock a broad range of fast moving industrial consumables:
over 30,000 certified vendable products
01
02
03
04
05
06
07
08
7
Invend™ Machine Overview
1
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
2
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
3
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
8
Invend™ Technology
Ethernet
Firewall
Customer Firewall
Internet
TM
Invend
Machine
Invend
Server
TM
Port 80 & 443
9
Benefits for Brammer’s customers
Why Brammer Invend™?
Invend™
offers:
Reduced product
consumption. By controlling
Health and Safety
Compliance. The
the use of fast-moving
industrial consumables, a
customer can typically cut
spend by 25 to 40%
customer knows what
has been vended
when, and to whom.
Reduced replenishment
costs and simplified
processes. We handle restocking, saving the
customer money and
reducing wasted staff time
Lower inventory costs, greater efficiency,
and improved productivity. The customer
only 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
11
Who Benefits?
24/7 availability across the customer’s business
Purchasing
•
Reduces consumable
MRO usage by 25-40%
•
Reduces suppliers and
total cost of ownership
•
Improves usage
reporting by user and
cost centre
Production and
Maintenance
•
Improves control and
availability of required
products
•
Reduces wasted walk
and waiting time
associated with visits to
stores
Stores
•
12
Saves wasted staff time
by removing the need to
order, replenish and
raise paper work for fast
moving MRO items
Health and Safety
•
Only approved PPE
equipment is available
on the shop floor
•
Audit trail of issued
health and safety items
Benefits for Customers
13
Benefits for Brammer
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
15
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
16
Comparison of Product Mix –
H1 2015 vs H1 2014 like for like sales across 317 sites
YTD JUNE
YTD JUNE
TGM
CHEMICALS
OTHERS
DIRECT SALESMIX
85%
8%
7%
100%
BEARINGS
LINEARMOTION
POWERTRANSMISSION
FLUID POWER
CHEMICALS
FASTENERS
TGM
SEALS
SERVICES
OTHERS
INVEND CUSTOMERTOTALSALES
2014
1,550
310
3,823
4,424
685
379
3,384
962
438
1,223
17,178
2015 GROWTH GROWTH %
1,849
299
19.3%
326
16
5.1%
3,884
60
1.6%
4,945
521
11.8%
998
313
45.8%
414
35
9.2%
6,382
2,998
88.6%
1,102
139
14.5%
600
163
37.1%
1,865
643
52.6%
22,366
5,188
30.2%
• We sell more of ALL product groups to customer sites with vending
machines
All values in €000s
17
MIX
8.3%
1.5%
17.4%
22.1%
4.5%
1.8%
28.5%
4.9%
2.7%
8.3%
100.0%
Progress To Date
19
• Agreements have now been signed for 1,206 machines
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Cumulative Number of Machines Signed in Agreements
1400
1200
1000
800
600
400
200
0
Updates – Quarter on Quarter
Q1
Q2
Q3
Q4
Machines Signed 2015
2014
237
304
111
97
110
188
2013
11
34
28
86
Q1
Q2
Q3
Q4
Machine Installations 2015
2014
172
194
65
104
105
135
2013
1
13
30
71
Q1
Q2
Q3
Q4
Machines Live 2015
2014
658
845
178
278
370
501
2013
1
14
44
115
20
Updates – Quarter on Quarter
Q1
Q2
Total Account Sales 2015 10,370,694 11,995,246
for sites with vending machines 2014 3,092,425 4,756,445
2013
8,766
134,608
Q1
Invend Growth Rate 2015
2014
2013
Q2
Q3
Q4
6,708,560
8,237,585
615,162
819,711
Q3
Q4
37.2%
24.7%
74.0%
47.5%
62.1%
48.4%
243.2%
35.9%
106.5%
-
Q2 two days shorter than Q1
All values in €uros
21
Invend™ Update - June
• Signed 136 machines in June
YTD
Total
• 541 • 1,206
• 366
• Installed 74 machines in June
• Live machines 845
• Pipeline of 316 machines to install
• 117 people directly involved in InvendTM
22
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
63%
24%
€4,595k
€17,771k
H1 2015 a/c Growth
H1 Account Sales
*Excludes 28 machines at Alcoa in the Nordic region. Related sales numbers also excluded for consistency.
23
Brammer Invend™ for Key Accounts
Invend™ and the Brammer Value Proposition
Brammer has a unique cost savings program that helps you save money
Three key focus areas
01
Reduce your total
acquisition costs
Reduced Consumption
Completely automated
process
02
Improve your
production efficiency
Walk and wait time saving
24/7/365 availability
03
Reduce your
working capital
Stock owned by
Brammer until
dispensing
All saving definitions and calculation methodologies are captured and agreed in a cost saving overview document
25
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
26
Invend™ for Key Accounts
• 83 customers
# MACHINES AT KEY ACCOUNTS
500
450
400
350
300
250
200
150
100
50
0
• 149 sites
• 439 machines live
2013 2013 2013 2013 2014 2014 2014 2014 2015 2015
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
27
Quarterly Invend™ sales
• Current annual direct sales run
rate > € 3m
QTR INVEND SALES
800
700
600
• Accelerating trend
500
400
300
200
100
0
2013 2013 2013 2013 2014 2014 2014 2014 2015 2015
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
28
Some Customer References
29
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!
30
The Brammer Invend™ Infrastructure
Specialist Invend™ Team
Dec
'13
10
5
15
7
3
1
1
32
8
8
48
Resource summary
Nb Invend Attack Vans
INVEND MANAGER
INVEND SALESEXECUTIVES
PROPOSALSCOORDINATOR
INSTALLATION COORDINATOR
DATA & PRICING/ DEMAND COORDINATOR
SUPPORT/ REPORTING
TOTAL FTE(excl Telesales)
Additional (telesales, Installation, Helpdesk, Team leaders)
Centre Team
TOTALFTE
Dec
'14
21
11
26
18
8
5
6
74
32
10
116
Jan
'15
21
11
26
18
10
5
6
76
32
10
118
Feb
'15
21
11
24
19
10
5
6
75
32
10
117
Mar
'15
21
11
23
20.5
10.5
5
8
78
31
10
119
Apr May June
'15 '15 '15
21
21
21
11
11
11
21
19
20
20.5 19.5 19.5
10.5 10.5 10.5
5
5
5
8
9
10
76
74
76
31
31
32
9
9
9
116 114 117
• 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
32
Infrastructure
• 117 people
• 21 Invend™ Attack Vans
• Order book across 15 countries
• ‘Invend™ Certified’ Product Database –
30k+
• Fully integrated into ERPs
33
Benefits for Brammer – the Financial Model
Total Sales to Invend™ Customer Sites
• Solid growth and steady
margins, consistent with
Brammer’s average
All values in €uros
35
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
These assumptions
Machine life > 10 years
have been proven
Depreciation 7 years straight line
Machine inventory turns > 12 times
Funded from cash flow and existing facilities
36
Brammer’s Competitive Advantage and Barriers to Entry
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)
38
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
39
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
40
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
41
The Machine behind the Machine…
Local Sales
Force
Regional Build Centres
Packaging
Support & Training
Product Templates
42
Local Branch Fulfilment
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
43
Summary
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
45
Questions
46