XTRA POWER ENERGY SYSTEMS · 2015-10-19 · xtra power energy systems jmsb consulting elliott altilia matthew beck simon foucher lysiane proulx . how can xtra power reconfigure its

XTRA POWER ENERGY SYSTEMS

JMSB CONSULTING ELLIOTT ALTILIA MATTHEW BECK SIMON FOUCHER LYSIANE PROULX

HOW CAN XTRA POWER RECONFIGURE ITS SUPPLY

CHAIN TO ENSURE LONG TERM SUCCESS?

Supply? Demand?

Relationships?

Growth? Profit?

Staffing?

RECONFIGURE CLOSED-LOOP SUPPLY CHAIN

•  Partner with DLSP •  Integrate Dolphin Power materials •  Partner with Harley in Y3

Address logistics issues

RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

SWITCHING LOGISTICS IS ESSENTIAL TO ADDRESSING THE MARKET

•  Leverage ERP for orders/pickups •  IT platform for on-going feedback •  Retailer program for recycling

Improve retailer

relationships

•  Increase plant staffing •  Integrate ERP (leverage partners) •  Government relations

Prepare for increased

production capacity

Investment: Rs 42M Staff

Rs 200K Marketing Rs 100K ERP

Timeline: 3 Years

Benefit: Profit: Rs 585M

KEY FINDINGS

HIGH DEMAND LEADS TO HIGH MARKET GROWTH AND COMPETITION

↑25% Market

Split Market Competitive


XTRA POWER NEEDS TO BETTER LOGISTICS TO COMPETE

Demand is greater then supply

Price

Efficient Logistics

After Sales Service

↑25% Market

Split Market Competitive

THE CLOSED LOOP SYSTEM IS CURRENTLY BROKEN

Cretto Logistics

Xtra Manufacturing

Plant (assembly)

Cretto Logistics Retailer


ABILITY TO CLOSE THE LOOP EFFICIENTLY WILL

Galaxy

Avani International

Cretto Logistics

Customers

Plastic Casting Lead Terminal

Lead Plate Battery Acid

Cretto Logistics

PARTNER EVALUATION: LOGISTICS

Cretto

•  8 year relationship • One of largest provider in India •  20% MS in Delhi •  Network of retailers •  Volume player •  Complaints, little responsiveness

DLSP

•  No relationship •  ERP usage •  Reliable, consistent •  Condition: sole provider of lead

plate & electro.


Cretto DLSP Lead time (days) 12 (one of highest) 4 (lowest) RS /kg of load/km travelled 1.6 2.35

PARTNER EVALUATION: ACID AND LEAD PLATES

Avani

•  Long-standing relationship •  Supply 2 most imp. components •  Negligible inbound logistics cost •  Decreasing market shares

Dolphin Power Limited

•  No relationship •  Reduced lead time •  Dolphin Power: fast growth, top

10 supplier •  Synergies with DLPS


Avani DPL Cost of supplies (Rs / cell) 400-1450 535 to 1800 Lead time Industry average: 7

8 4

Distance 63Km 36km

A 40% REDUCTION IN LEAD TIME WILL DOUBLE THE EFFICIENCY

PARTNER EVALUATION: LEAD TERMINALS AND PLASTIC CASINGS

Galaxy

•  Relationship •  Quality supplies •  Negligible inbound logistics

cost

Harley Power

•  No relationship •  Reduced lead time


2/3 LEAD TIME LEADS TO 25% INCREASE IN EFFICIENCY

Galaxy Harley Power Price Rs / unit 200 220 Lead time 6 4 Distance from plant 2.9km 2.7km

PRIMARY BATTERY EXPENSE COMES FROM LEAD PLATES AND ACID RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

REDUCTION IN DISTANCE TRAVELLED CAN OFFSET COST INCREASE

Lead Plates: 28kg

Acid: 11.5kg

Plastic: 3.1kg

Terminal: 1kg

Avani or Dolphin Power Limited

Galaxy or Haley

Average Battery: 43.6kg

XTRA POWER HAS THE PRODUCT BUT NEEDS THE SUPPORT High Quality

Product Low Reconditioned Sales

Retailer Recommendations

Short Production Time

High Reconditioned

Margins

Retailers only customer touch

point


A NEW PARTNER IS NEEDED TO SUCCEED

The product is able to address

market need

Necessary to fix closed loop

system

Retail relations are essential to brand strength

High Product Demand

FINANCIALS

Y/Y SALES GROWTH PER CATEGORY RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

EXCEPT FOR OPEN SHIELD BATTERIES, NOT MEETING MARKET GROWTH

-10% -5% 0% 5%

10% 15% 20% 25% 30%

2012-2013 Growth

Market Growth

SAVINGS IN PACKAGING COUNTERED LOSSES IN LOGISTICS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

LEAD DOES NOT SEEM TO BE A SIGNIFICANT CONCERN

-200%

-100%

0%

100%

200%

300%

Raw Materials Packaging Logistics

y/y changes in direct costs

WHAT IF ANALYSIS – EXCLUDING PACKAGING SAVINGS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

PROFITABILITY DROPPED BY 70% IN ONE YEAR

2012 2013 Total Sales 328 360 Raw Materials 84 90 Packaging 74 74 Logistics 26 95 Total Direct Costs 183 258 Other Costs 71 80 Total Profits 74 22

0

20

40

60

80

2012 2013

Total Profits (M INR)

ESTIMATION OF QUANTITY SOLD AND RECYCLED RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

WITH LOSSES, ASSUME 4000 BATTERIES REPURCHASED

Sales (M INR) Low High Heat Shield 89.9 Open Shield 126.2 Reconditionned 17.8 Unit price Heat Shield Battery 9200 20000 Open Shield 9200 25000 Reconditionned 4700 10500 Qty Sold High Low

Heat Shield Barrety 9,772 4,495

Open Shield 13,717 5,048

Reconditionned 3,787 1,695

ASSUMPTIONS ON TRANSPORTATION TO/FROM RETAILERS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

WEIGHED AVERAGE DISTANCE PER TRIP - INBOUND

Delhi Northern Region

% Trips Breakdown 59% 41% Average Distance Travelled (km) 35 100

INBOUND TRANSPORTATION COSTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

DIFFERENCE OF 6M INRS BETWEEN PROVIDERS

Cretto DLSP # repurchased Recycled batteries

4,000

Average weight (in kg, dry) 32

Average Distance 62

Cost/(kg.km) 1.6

2.4

Total Cost to Pickup 12,737,280

18,707,880

OUTBOUND TRANSPORTATION COSTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

ADDITIONAL 36M INRS; FOR A TOTAL OF 41M INRS

Cretto DLSP

# batteries shipped 18000

Average distance / trip 62

Average weight / battery (kg, wet) 43.6

Cost/(kg.km) 1.6

2.4

Total Costs of Delivery 77,852,160

114,345,360

ALTERNATIVES

ALTERNATIVES – COSTS PER COMPONENTS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Avani / Galaxy

Avani / Haley

DLSP / Galaxy

DLSP / Haley

Terminals/lead 7150 7150 8172 8172

Acid/Plated 1000 1050 1000 1050

COSTS OVERALL RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Avani / Galaxy

Avani / Haley

DLSP / Galaxy

DLSP / Haley

Terminals/lead 0 0 18 18

Acid/Plated 0 1 0 1

Transportrtation 0 0 41 41

Total 0 1 59 60


Avani / Galaxy Avani / Haley

DLSP / Galaxy DLSP / Haley

% Market 0.25 0.32 0.53 0.6

# Batteries 18000 23040 38160 43200

Sales (M INRs) 359 459.52 761.08 861.6

Costs 87 111.36 184.44 208.8

Additional Costs 60.0 76.8 99.4 67.9

Profits 212.0 271.4 477.3 584.9

SITUATIONAL SYNOPSIS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

SUPPLY CHAIN IMPROVEMENTS REQUIRED TO MEET DEMAND

Market

Demand > Supply Highly Competitive Price & Seasonally Sensitive

Core Competency

Short-Lead Time Refurbishment

Strategy Distribution Through

Retailers Premium Quality Closed Loop

OPTIONS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Status Quo

25%

At Risk

Haley Alone

32%

At Risk

DLSP

53%

Improve

Full Change

60%

Improve

Ability to Meet Demand

Revenue

Profit

Relationships with Retailer

Decision Criteria

SITUATIONAL SYNOPSIS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Impact of retailer

relationships

Improved experience Faster lead

times

Over change management compensation

Staffing of manufacturing

plant Comprehensive

HR Plan Leverage

supplier network

Risks Mitigations Contingencies

RECONFIGURE CLOSED-LOOP SUPPLY CHAIN

•  Partner with DLSP •  Integrate Dolphin Power materials •  Partner with Harley in Y3

Address logistics issues


•  Leverage ERP for orders/pickups •  IT platform for on-going feedback •  Retailer program for recycling

Improve retailer

relationships

•  Increase plant staffing •  Integrate ERP (leverage partners) •  Government relations

Prepare for increased

production capacity

IMPLEMENTATION

3 YEAR TIMELINE RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Year 1 Year 2 Year 3 June 2013

DLSP Logistics issues

Retailer relationships

Prepare for production capacity

DLSP logistics

Components from Dolphin Power

From Galaxy to Harley Power

CLOSED-LOOP SUPPLY CHAIN RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

Cretto Logistics

Xtra Manufacturing

Plant (assembly)

Cretto Logistics Retailer

Galaxy

Avani International

Cretto Logistics

Customers



Cretto Logistics


START BY ADDRESSING THE LOGISTICS ISSUES

DLSP Logistics

Xtra Manufacturing

Plant (assembly)

DLSP Logistics Retailer

Galaxy

Dolphin Power

Cretto Logistics

Customers



DLPS Logistics


MOVE FROM GALAXY TO HARLEY POWER IN YEAR 3

DLSP Logistics

Xtra Manufacturing

Plant (assembly)

DLSP Logistics Retailer

Harley Power

Dolphin Power

Cretto Logistics

Customers



DLPS Logistics



DLSP

platform for order / pick-up

Logistics issues



DLSP logistics


Increase reps visits


Reconditioned battery campaign

RECONDITIONED BATTERY CAMPAIGN FOR RETAILERS RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

PROMOTING RECYCLING SHEDS YOU FROM FLUCTUATING LEAD PRICES

Proprietor Mr. Dutta

Marketing Manager

(Mr. Nanda) Sales Manager

Reps in contact with retailers

Operations Managers (Mr. Sheik)

Develop “Savings for you and the planet” sales kit Provide retailers with sales

kits (flyers, posters, displays)

RETAILER RELATIONSHIPS CAN BE IMPROVED WITH DLSP RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

XTRA POWER CAN LEVERAGE THE ERP EXPERTISE OF DLSP

DLSP Platform

Retailers Consumers

Place orders

Feedback training

Schedule pickup

Client feedback

More frequent representative visits



DLSP

Launch platform for order / pick-up

Double plant staff size

Logistics issues



DLSP logistics


Increase reps visits

Approach government for subsidy (recycling)

Leverage DLSP IT expertise


PLANT STAFF MUST BE ADJUSTED RECOMMENDATION ANALYSIS FINANCIALS ALTERNATIVES IMPLEMENTATION

LEVERAGE SUPPLIER NETWORK TO STAFF PLANT

Proprietor Mr. Dutta

Marketing Manager

(Mr. Nanda) Sales Manager

Operations Managers (Mr. Sheik)

DOUBLE plant staff size over 2 years Use ERP system to manage CLSC

RECONFIGURING XTRA POWER SUPPLY CHAIN WILL

NOT ONLY INCREASE ITS BOTTOM LINE BUT ADDRESS AN ESSENTIAL NEED OF THE

MARKET

Documents

XTRA POWER ENERGY SYSTEMS · 2015-10-19 · xtra power energy systems jmsb consulting elliott altilia matthew beck simon foucher lysiane proulx . how can xtra power reconfigure its