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SED/GA TECH PRESENTATION September 10, 2012. SED International Holdings, Inc. (Amex: SED). Who We Are. Our Differentiation. We enjoy an exceptional customer retention rate which results in a high level of recurring revenues .
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SED/GA TECH PRESENTATIONSeptember 10, 2012 SED International Holdings, Inc. (Amex: SED)
Our Differentiation We enjoy an exceptional customer retention rate which results in a high level of recurring revenues. Niche leadership positions us to grow and scale over time as we seek to be the Distributor of Choice in the markets we serve. Award- winning customer service and logistical support to our customers has enabled double-digit historical sales CAGR. Leadership positions in: Underserved markets Latin American markets Retail channels Ecommerce fulfillment Small business segments (SMB) Housewares market
Where We Fit In The Chain Path to Market: Ensure seamless & efficient route from manufacturer to end-user VAR’s Retailers End-User E-Commerce DMR’s Superior Service * Customized Attention * Quick & Accurate Shipping VAR = Value-Added Reseller; DMR = Direct Market Reseller
Partner and Solutions-Oriented Approach Best-in Class Service Provides High Customer Retention
Key Customers andIndustry Partners Key Vendors Major Vendors, Customers and Partners Over 10,000 customers and 200 vendor partners and growing No single vendor or customer accounts for more than 10% of revenues
Diverse Product Mix Top Categories include: • Notebooks / PC’s • PC Components • Televisions • Digital Cameras • Small Appliances • Housewares • Accessories Over 17,000 products across major technology & electronics categories The Latest Products From The Best Names in the Business * YTD F2012: July 2011 – March 2012
Diverse Customer Mix Percentage of Revenue -- 2011 Latin America* U.S. Domestic 24% Other 24% Retailer 14% DMR 23% VAR
Geographic Diversification 2012 YTD Revenue Mix U.S. Domestic: 60.5.% Exports: 16.1% Latin America: 23.4% New Jersey (US Distribution) Atlanta (US Distribution) Los Angeles (US Distribution) Miami (US Distribution/Caribbean and Latin Am. Export) Dallas (US Distribution) Bogota ( Latin Am. Distribution) Buenos Aires (Latin Am. Distribution)
Strategy Map: Operations Achieve $0.25 Avg/Order DC Cost Reduction TO BE DISTRIBUTOR OF CHOICE To Implement Continual Process Improvements at the Distribution Centers To be the Distributor of Choice Meaningful reporting of metrics related to achieveing 15% ROIC Best in Class NI as a % of Sales by effective monitoring & visibility B A A C C B Vision Vision Implement processes & controls to achieve competitive cost structure Achieve Competitive Cost Structure D D Provide efficient transaction processes Distribution Center Optimization & Rationalization Manage working capital components related to the achievement of 15% ROIC Best in Class Industry Delivery Performance Engineered Work Methods Improve accounting processes to support internal & M&A growth Mission G G E E I I Viable Capex Plan for Improving DC Productivity Ensure accurate and timely reporting Exceed Customer Expectations for Accuracy Provide metrics and analytics key to managing net income improvements Inventory Control & Accuracy Support global accounting and tax opportunities J H H F F J Review Methods & Costs Associated with Pick Paths Optimize Distribution Center Space Complete WM9 Implementation and Enhancements Identify Process Improvement Equipment Key Drivers N L K M Design Structured Training Plans to Build Bench Strength Consolidate Companywide Logistics within Operations Improve Returns Process to Meet Customer SLA & Improve Inventory Turns Implement Process Improvement Teams R Q O P
To be the Distributor of Choice To be the distributor of choice as measured by being the top supplier to customers or customer to vendors in each market we operate while still achieving a competitive cost structure. To implement continual process improvement at the Distribution Centers The Distribution Centers goal is to reduce the average cost per order by $0.25 by implementing productivity, engineering, and capital improvements. To implement continual process improvements at the distribution centers thru advanced engineering methods, Capex process improvements, teams and team building. The overall goal is to create exemplary customer satisfaction. Achieve $0.25 Average Order Distribution Center Cost Reduction Achieve Competitive Cost Structure By focusing the Operations department of goals and methods to measure improvements, costs will be driven down by continual improvements by the team. Strategic Goals Description: Vision A B C D
Manage working capital components related to the achievement of 15% ROIC Best in Class Delivery Performance Finance will design additional analytics used for managing working capital components. In addition, a management structure will be established in order to review and determine actions required to reaching the 15% ROIC. Complete and enhance the WM9 implementation. This will further drive increased accuracy of shipments and reduce the cycle time to process (PP&S) orders. Distribution Center Space Optimization & Rationalization Provide efficient transaction processes Exceed Customer Expectations for Accuracy Provide metrics and analytics key to managing net income improvements Processes flowing in and out of the accounting and finance area will be evaluated to determine if there are more cost effective and efficient processes that can be implemented. Some initial examples are credits/ claims and accounts payable invoice processing. Finance will work closely with other departments providing information and support to manage net income goals. The initial work will include more specific metric requirements. Analyze space utilization, future needs and customer needs for Plano and Miami and provide recommendation of any changes at least 8 months prior to existing lease expirations. Also, with sales input complete analysis of a potential Midwest location, either a 3PL or lease. Examine surveys and focus on metrics that drive outbound shipping accuracy. Ensure accurate and timely reporting Viable Capex Plan for Improving DC Productivity Implement cost/customer service justified CAPEX plan by location to reduce labor or cycle time to fulfill an order. Also review all energy requirements and any potential to “upgrade” to more energy efficient equipment. Finance will assist in providing critical information in a timely manner. Once key reports have been defined and created, distribution dates will be assigned to ensure timely delivery. Improve accounting processes to support internal and M&A growth Engineered Work Methods Utilizing MOST time study methods, determine most feasible methods to PP&S orders, including stock rotation of high velocity items, WM9 pick paths for all locations, returns, etc. Once completed create where possible variance reports by function. Once completed these results will be part of current published KPI’s Finance will ensure there are proper procedures and processes to support growth from both internal and M&A activity so that such growth will not be impeded by the limitations within the finance and accounting area. Support global accounting and tax opportunities Inventory Control & Accuracy Finance will develop and maintain additional oversight both for the U.S. and international operations. Thru data collection determine causes for “over committed” issues, updating to WDS, sales order errors, purchasing PO adjustments, etc. Strategic Goal Descriptions: Mission E E F F G G H H I I J J
Optimize Distribution Space Review space optimization plans and determine the best stocking methods to deploy considering delivery and freight cost considerations. Complete WM9 Implementation & Enhancements Identify Process Improvement Equipment Work closely with IS to deploy WM9 enhancements to all Distribution Centers. Review equipment to determine if off-the-shelf equipment purchases maybe employed to drive productivity improvements or if custom built equipment could be designed and deployed which would give a competitive advantage to the competition. Review Methods & Costs associated with Pick Paths Review inventory stocking planning to determine if more productive racking or placement of product could increase pick pack productivity. Strategic Goals Description: Key Drivers K L M N
Improve Returns Process to Meet Customer SLA & Improve Inventory Turns Improve process within the Returns Department to meet Customer SLA return requirements and manage return inventory. Implement Process Improvement Teams Begin training of key operations personnel to learn Lean concepts to facilitate cross functional process improvement teams. Logistics currently handled by purchasing will be moved to Operations to optimize freight and inventorymanagement. Consolidate Companywide Logistics within Operations Train personnel both internally and externally to increase employee knowledge which will lead to quicker implementations of productive systems and processes. Design Structured Training Plans to Build Bench Strength Strategic Goal Descriptions: Key Drivers O P Q R
ATLANTA DC DATA • 74,000 SQ FT TOTAL • 52,000 SQ FT DISTRIBUTION & RETURNS • PALLET LOCATIONS Pallet LocationsBlue BinsShelf BinsFlow Rack Slots 1669 381 258 182 • DOCK DOORS , SHIPPING , RECEIVING—14 • WORK STATIONS • AUTO LINE, “BATCH ORDERS” --- 1 • MANUAL LINES “BATCH ORDERS”--- 2 • PACK/SHIPPING STATIONS--- 8 • RECEIVING STATIONS--- 2
WHAT WE WANT TO ACCOMPLISH • AN ASSESSMENT OF CURRENT OPERATING PROTOCOLS • DETERMINE QUANTITIES TO STORE FORWARD • CHOOSING SKU’S FOR FORWARD PICK LOCATIONS • LABOR EFFICIENCY GAINED BY UTILIZING FORWARD PICK LOCATIONS • ANALYSIS OF CONVEYOR EXTENSION – GO/NO G0-IF GO, LABOR SAVINGS • LABOR ANALYSIS • LABOR $/SHIPMENT UNITS + RECEIPT • LABOR $/LINE PICKED + RECEIVED • ETC.
