More Related Content Similar to Leader in value-adding services - Juha Silvennoinen (20) More from Metso Group (20) Leader in value-adding services - Juha Silvennoinen1. © Metso
The leader in value- adding services
Juha Silvennoinen
President, Services business area 2. © Metso
1.
Services today
2.
Services market outlook
3.
Services strategic priorities
4.
Conclusions Metso Capital Markets Day 2014:
2 Services by Juha Silvennoinen
© Metso 4. © Metso
Metso Services business area today Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
4
A leading supplier of value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes
•
Cost-per-ton contracts and life-cycle services
•
In-depth knowledge of customer technology and processes
•
Solid operational ability to optimize the use of customers’ assets
•
36% of Services business area’s net sales
•
35% of Services business area’s net sales
•
29% of Services business area’s net sales
Performance services
Wear solutions
Spare parts
Net sales 2013: EUR 1,386 million Personnel ~6,500
2,000 field service engineers working close to the customer operations improving customer productivity on a daily basis.
•
Regional and local inventory ensures availability and fast delivery times
•
Optimized wear parts throughout plant life cycle
•
The use of original equipment manufacturer (OEM) parts assures optimal performance and equipment availability, resulting in a lower production cost per ton. 5. © Metso
Serving our customers close to their operations
Services business area net sales rolling 10/2013-9/2014
Metso Capital Markets Day 2014:
5 Services by Juha Silvennoinen
28%
11%
27%
19%
15%
Europe
North America
South America
Asia-Pacific
Africa and Middle East
24%
19%
25%
22%
9%
Europe
North America
South America
Asia-Pacific
Africa and Middle East
27%
28%
19%
15%
11%
Aggregates
Mining/Copper
Mining/Iron
Mining/Gold
Mining/Other
Net sales by customer segment
Net sales by geographic area
Employees by geographic area 6. © Metso
Services orders continues to grow
Services business area orders received, rolling 12 months Metso Capital Markets Day 2014:
6 Services by Juha Silvennoinen
With constant currencies
0
200
400
600
800
1,000
1,200
1,400
1,600
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2012
2013
2014
EUR million
•
High utilization rates at customer mines create demand for services
•
Large installed base and strengthened service center network
•
Proactive sales approach and productization of services 7. © Metso Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
Services provides stable profitability
Services business area net sales and GP-%*,rolling 12 months** 7
* Before non-recurring items ** Fixed currencies
•
Leaner operating model
•
Manufacturing footprint and sourcing improvements, especially in foundry operations
•
Increased share of value-adding services
•
Efficient pricing management 0
20
40
60
80
100
120
140
0
200
400
600
800
1 000
1 200
1 400
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2013 2014
EUR million
Services net sales, rolling 12 months GP -%, Indexed 9. 9 © Metso
37
39
2008
2007
47
44
Latin America
50
2011
2012
38
42
63
2013
54
2016
2015
58
Europe
China
2017
2014
Africa & ME
Rest of APAC
2010
North America
4-6%
2009
36
2018
4%
63
Crushed stone production output value (USD bn)
-3%
7%
18%
10%
-4%
4%
1%
6%
25%
11%
5 %
7 %
Global aggregates production expected to grow ~5 % p.a. driven by emerging markets
2007-12 CAGR
2012-17 CAGR
Source: Construction Intelligence Center, Sep 2014 Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
10. 10 © Metso
Source: Raw Materials Group, March 2014
8,5
2010
8,0
2012
2011
8,2
7,5
2009
7,0
2008
6,6
2007
6,0
2,8
Iron
Copper
Gold
2,4
3,2
2,8
2,9
3,0
3,4
3,0
2,9
2,9
2,9
1,3
2,4
1,6
1,7
8,8
2017
2016
8,7
2015
8,6
2014
8,4
2,4
1,6
5%
1,6
2%
2013
1,2
1,7
1,6
2,5
1,2
1,7
2,7
1,4
3,6
3,7
3,8
3,9
4,0
4,1
4,2
Global ore production by commodity (000 Mt)
5%
-1%
7%
2%
3%
2%
Global mining production expected to grow ~2 % p.a. but dynamics are different by commodity
2007-14 CAGR
2014-17 CAGR
3-4%
1%
2%
Grade erosion Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
11. © Metso
High or low market – Good services are always in demand Metso Capital Markets Day 2014:
11 Services by Juha Silvennoinen
Infrastructure spending
Commodity prices
Minerals consumption
New business models and installed base
Demand LOWER than production capacity LOWER capacity utilization
Demand HIGHER than production capacity HIGHER capacity utilization
CAPEX impact
Green field projects
Brown field projects
More exploration
Plant modernization
OPEX impact
Maximize capacity
Delivery
Availability
Utilization
More people
CAPEX impact
−
No green field
−
Minimal brown field
−
Reduced exploration
Maintenance capex
OPEX impact
Operational efficiency
Cost reduction
Repair and rebuild
Improved planning
−
Less capital spares 13. © Metso
Key principles
Global services approach
Delivered efficiently
Global sourcing
Efficient utilization of global production footprint
World-class availability
Close to customers
Strategic partnership with selected customers
Local sales & technical support for all markets
Local service delivery capabilities
Global offering
Installed base mgmt
Easy-to-sell productized service offerings
Expand offering to meet customers’ process needs 13
Common enablers
People, processes and tools
Dedicated service product development
Investments and acquisitions Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
Value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes 14. © Metso
Key principles
Global services approach
Delivered efficiently
Global sourcing
Efficient utilization of global production footprint
World-class availability
Close to customers
Strategic partnership with selected customers
Local sales & technical support for all markets
Local service delivery capabilities
Global offering
Installed base mgmt
Easy-to-sell productized service offerings
Expand offering to meet customers’ process needs 14
Common enablers
People, processes and tools
Dedicated service product development
Investments and acquisitions Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
Value-adding services to improve productivity and reduce operational cost throughout the total life cycle of customer’s processes 15. © Metso
Peñoles lead-zinc mine in Mexico
A life-cycle of improved results
Metso Capital Markets Day 2014:
15 Services by Juha Silvennoinen
Today Metso supplies all mill linings and spare parts to this site. We also replaced two crushers to improve their production.
We started with mill inspection contracts.
Cooperation was later expanded to crushers. Customer was very satisfied
very little spare & wear business in the first years
2007
2 years ago we focused on one of their seven sites Process Optimization and Integration project to help improve their operations
2012
2014
We are now in their second plant and there is potential for 3 more. 16. © Metso
•
Detailed analysis of historical plant data to define bottlenecks in the plant
•
Ore characterisation testing based on samples from blast audits
•
Development of blast fragmentation and comminution models
•
Simulations to evaluate performance improvement opportunities Metso Capital Markets Day 2014:
16 Services by Juha Silvennoinen
Metso’s PTI Group offers a unique way to offer value-adding services to our customers
100110120130140150160170180190100012001400160018002000220024000.25 kg/m3135 mm30% 65 mm0.41 kg/m3135 mm30% 65 mm0.41 kg/m3110 mm30% 65 mm0.41 kg/m3110 mm0% 65 mm0.41 kg/m3110 mm0% 75 mm Overall P80, μmThroughput, tph Medium Coarse OreSPI:125 mins, Axb:33.9, BBMWi:19.3 kWh/t, ThroughputOverall P803.6 %6.2 %10.8 %13.3 % Powder FactorPrimary Crusher GapPebble Crusher BypassSAG Mill Grates
Case example:
•
Potential benefit >13% increase in comminution circuit throughtput
•
Further opportunity with more aggressive operational mode
•
Additional benefit from optimised control 17. © Metso Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
Targeting increased market share
Proactive installed base management
•
Use existing installed base information to define “as-is” share of customer’s OPEX spending
•
Set customer specific targets for increased share of wallet
•
Develop and package service offerings to match more aggressive sales approach
•
Define and follow-up KPI’s to support sales growth 17
Installed base data available for sales and services professionals
Knowing customer’s process and current production levels
Targeted service suggestions through understanding customers needs
Increased services sales: sale at every customer visit 18. © Metso
Targeting increased market share
Huge untapped potential in installed base Metso Capital Markets Day 2014:
18 Services by Juha Silvennoinen
* Figures 1,000 USD
•
Metso has delivered thousands of crushers over the years
•
Market share of own installed base ~ 30%
•
With optimized service packages Metso can provide increased throughput, improved energy efficiency and guaranteed up-time
39%
15%
7%
30%
1%
8%
Wears
Spares
Direct manpower
Energy
Lubrication & hydraulic fluids
Straight-line depreciation cost
Example: Annual operating cost estimate for a large mining crusher ~ USD 1 million 19. © Metso
Productized services: Full comminution offering
Wear solutions have direct impact to productivity 19
Full comminution offering
Services
•
Equipment installation
•
Maintenance and upgrades
•
Process optimization Wear parts
•
Grinding media
•
Crusher wears
•
Metallic mill linings
•
Rubber/polymet mill linings Spare parts
•
Mill heads and shells
•
Suspension bearings
•
Other spare parts Capital equipment
•
Grinding mills
•
Crushers
•
Other equipment Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
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Integrated performance
•
Total cost of operation reduced
•
Simpler package, approval by mid-management
•
No price/Kg discussion
•
Single point of responsibility
•
Multi-product, integrated margin
•
Simpler procurement
Benefits 20. © Metso
Increasing customer value and share-of-wallet
Performance Services evolution
Development journey with our offering, market areas & customers
Metso Capital Markets Day 2014:
20 Services by Juha Silvennoinen
Services in alpha phase
Services 1.0
Services 2.0
Services 3.0
Optimize customers operations (solution business)
•
Performance based Life Cycle Services
•
Process performance agreements
•
Long-term consultancy services
Optimize equipment total cost of ownership
•
Preventive maintenance agreements
•
Remote support agreement
•
Extended warranty services
•
Upgrades and modernizations
•
On-off consulting projects
•
Device management services
Break-Fix Support
•
Spares and wear parts agreements
•
Repair services
•
Maintenance services
•
Software license sales
•
Service enter or spare and wear parts distributor
No local presence
•
Spare and wear parts on-demand
•
Agent or no local Metso presence 21. © Metso Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
Targeting increased market share
Easy-to-sell productized service offerings
•
Pre-defined inspection programs, upgrade kits, installation work and maintenance programs
•
Simplify LCS sales approach with step- by-step training programs, argumentation kits and sales tools backed up by real-life examples
•
Launch productized service offerings to sales teams
-
Predefined launch schedules in all MA
-
Specs, sales tools and training programs
-
Sales ramp-up plans for each sales unit
-
Follow-up growth success with KPIs
•
Engage front-end sales teams in the development work of new productized offerings
•
Share best practices between MAs
Bronze bushing inspection
•
Metso Service engineer inspection of the HP500 crushers at maintenance interval
•
Recommendation to ensure safe and reliable use of the crushers
Bronze package options
•
Option 1: Eccentric –package
•
Option 2: Head –package
•
Option 3: Countershaft –package
•
Option 4: Socket liner –package
Proposal of comprehensive service including
•
Part package option
•
Installation service
•
Competitive package pricing 21
22. © Metso
Service center expansion close to customers continues
•
Metso has the industry-leading services center network with more than 50 service centers globally.
•
The expansion of the network continues: 5 new service centers inaugurated in 2013- 2014 or currently under construction:
-
Antofagasta, Chile, 2013
-
Arequipa, Peru, 2014
-
Cananea, Mexico, 2014
-
Arizona, USA, 2015
-
Labrador City, Canada, 2015
•
Constant evaluation of footprint and local customer needs as the basis for further network expansion. Metso Capital Markets Day 2014:
22 Services by Juha Silvennoinen
23. © Metso
Improved availability with less inventories
Creating a global virtual inventory Metso Capital Markets Day 2014:
23 Services by Juha Silvennoinen
•
Improved availability and service capability with increased inventory turns and lower capital cost
•
Global distribution center network managed as one entity with full visibility to all local inventories
-
Right location and close to customers
-
Ensured availability for high volume items
-
Visibility to lower volume items for capital gains, inventory transfers instead of new purchase orders
•
Healthy inventory is an essential element to meet our ROCE targets 24. © Metso
•
Intensified focus to commodity management will drive substantial savings
•
Presently only <20% of external materials sourced from low cost countries Metso Capital Markets Day 2014:
24 Services by Juha Silvennoinen
Improved sourcing through global supply base
Savings target for 2014 1.1% of total spend Achieved so far: 1.0% of total spend
Savings target for 2015:
3.2% of total spend
Savings achieved through:
•
Global sourcing from lower cost base countries
•
Significant reduction of single source supplier situations
•
Stronger interaction between Product lines and Category management 25. © Metso
Continuous improvement of our own global manufacturing base Metso Capital Markets Day 2014:
25 Services by Juha Silvennoinen
•
Better utilization of lowered cost base in our global foundry footprint
-
Fast ramp-up of Quzhou (China) and Ahmedabad (India) 2014 impact > EUR 5 million
-
Decision on Tampere foundry in 2015
•
Continuous operational improvements in all foundries and rubber plants
-
Strong day-to-day operational management
-
Operational savings in 2014 > EUR 10 million
•
Medium to long term development of lower cost internal supply base
-
Expansion in China & India
•
Long-term development of rubber supply chain 27. © Metso
Conclusions
Capital Markets Day 2014 Metso Capital Markets Day 2014:
Services by Juha Silvennoinen
27
•
Metso’s services business in minerals market is a steadily growing EUR ~1.4 billion business
•
Strong demand for good services even during low investment cycles
•
Customer value creation through performance services and solutions
•
Proactive approach to grasp the untapped potential in the installed base
•
Strong push for easy-to-sell productized services offerings
•
Continuous improvement of cost base through global sourcing and better use of our own global footprint
•
Significant improvement in inventory turns