The document discusses Klöckner & Co SE's new warehouse structure in Germany. It summarizes that the company is consolidating its warehouse network from 36 locations in 2000 to 18 locations in 2009. The new structure establishes regional and central warehouses to optimize inventory levels across locations. Products will be classified as A, B, or C articles and stored based on sales volume, with fast-moving A articles kept locally, B articles regionally, and low-selling C articles not stocked. The aim is to improve inventory turns while maintaining a full product assortment for customers. Stainless steel and aluminum products will be consolidated in a new regional warehouse in Frechen, Germany.
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SAP PP stands for Production Planning. In SAP domain, SAP PP works as an integral part of logistics modality and it is integrated with other SAP modules like Materials Management (MM) and Plant Maintenance (PM). As production planning is an essential part of a company’s supply chain, SAP PP certified professionals are in great demand. Global Online Trainings conducts online SAP PP training for professionals willing to explore their career in SAP production and planning stream.
ExpertSoft provides best SAP ewm 9.1 online training for USA, UK, Australia, New Zealand and Singapore students with our industry experienced professionals. Fore more details, Please visit our website
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1. October 6, 2009
Dr. Oliver Falk
CFO KSM
Klöckner & Co SE
Capital Market Days –
German operations and new warehouse
structure
2. 2
Disclaimer
This presentation contains forward-looking statements. These statements use words like “believes”, “assumes”,
“expects” or similar formulations. Various known and unknown risks, uncertainties and other factors could lead to
material differences between the actual future results, financial situation, development or performance of our
company and those either expressed or implied by these statements. These factors include, among other things:
Downturns in the business cycle of the industries in which we compete;
Increases in the prices of our raw materials, especially if we are unable to pass these costs along to customers;
Fluctuation in international currency exchange rates as well as changes in the general economic climate
and other factors identified in this presentation.
In view of these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We
assume no liability whatsoever to update these forward-looking statements or to conform them to future events or
developments.
This presentation is not an offer for sale or a solicitation of an offer to purchase any securities of Klöckner & Co SE
or any of its affiliates ("Klöckner & Co").
Securities of Klöckner & Co, including, but not limited to, rights, shares and bonds, may not be offered or sold in the
United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the
U.S. Securities Act of 1933, as amended (the "Securities Act")) unless registered under the Securities Act or
pursuant to an exemption from such registration.
4. 4
Organizational structure
Country organization Germany
Sales branches managed by a regional sales manager
Manager processing & services for all branches
Product management separated from sales organization
Centralized administration
Managing Directors
CEO / CFO
Central functions
Kassel
Landsberg
Bremen / Hamburg
Osnabrück
Hagen
Duisburg
Frechen
Personnel
Controlling
Logistics / QM
IT coordination
Poland
Rumania
MSC Vienna
Czech Republic, Prague
Bulgaria
Edelstahlservice
SBZ Mágocs, Ungarn
SBZ Stuttgart
Mannheim
Zweygart Stahlhandel
Würzburg
Nuremburg
Regensburg
Munich
Zwickau
Sales coordination
Taxes / Legal Affaires
SBZ Velten
MSC Neumarkt
Accounting
Region North Region South Service & Processing Product Management
S & P all warehouses
Eastern Europe
5. 5
Sales split by industry and product
Klöckner Stahl- und Metallhandel GmbH
Producer-independent steel and metal distributor in Germany
Decentralized sales organization with strong connection in local markets
Industry split KSM with less focus on construction and higher involvement in the machinery
industry in comparison to KlöCo
Logistic network with 18 warehouses in Germany
Klöckner & Co Group Sales split by product
In 2008
Sales split by industry
In 2008
Construction; 42%
Industrial machinery
and equipment;
24%
On-sellers; 10%
Appliances/
durable goods
manufacturers; 7%
Automotive;
6%
Other; 11%
Tubes; 10%
Quality
steel/stainless
steel; 9%
Aluminum;
6%
Other; 12%
Long products/
sectional steel;
32%
Flat products; 31%
6. 6
Competition in Germany
Competition structure
Market share by competitor1)
(steel distribution industry)
Market in Germany is highly fragmented
63%
15%
Others1
Competitor 4
Competitor 3
Competitor 2
KSM
Competitor 1
6%
6%
5%
5%
● Two competitors are mainly represented
in the „big-volume“ business only
● Products are highly substitutable
● High customer loyalty in case of
customized assortment, reliable
delivery, good personal relationship and
competitive prices
Consolidation of German market expected
1) % of sales in Germany, source: Company estimates
Sales market shares in %
7. 7
Strategic elements
Klöckner Stahl- und Metallhandel GmbH
Suppliers Sourcing
Products
and services
Logistics/
Distribution
Customers
Business process analysis
IT & communication
High priority in 2008/ 2009 besides restructuring acc. to Wave 1 and 2:
Implementation of a new SAP-System
Optimization of warehouse structure
8. 8
New SAP standard master template developed
Implementation of completely new developed SAP ERP 6.0 system in a 12-month
project
Go Live on July 1, 2009 in Germany and Netherlands
International team of about 50 users (sales, logistics, purchasing, accounting,
controlling) of the KlöCo Group designed best in class processes
Customizing and programming done through Group IT with limited support from
external consultants
Blueprint
Customizing
Programming
Testing
Migration
After Go Live
Support
04/200907/2008 10/2008 07/2009
Go Live
SAP template, developed from Germany and Netherlands for KlöCo Group
9. 9
Advantage of new SAP – International purchasing
High data quality through centralized maintenance of material and supplier master data
Strengthening of negotiation power through bundling of purchasing volumes
Optimization of stocks
- Distribution of purchasing volumes to the countries
- Enforcement of intercompany business
- Optimal stock level with minimum slow mover and stock-outs
- Analysis, definition and controlling of quantity targets
Supplier performance measurement
International product catalogue and unified supplier master data offer significant
improvement for the KlöCo International Product Management:
Efficiency improvement for the KlöCo International Product Management
10. 10
Advantage of new SAP – International material exchange
The new SAP system uses one article number for one
article in all countries - international product catalogue
The description of the articles is done in the respective
languages, match codes are defined country specific
as well – easy search for sales people
Regional or national stocks of the countries can be
used for countries in the neighbourhood
Potentials
- Germany and Netherlands
- Germany and France
- Germany and Poland, Czech Republic and
Austria
International product catalogue offers international usage of warehouses
11. 11
Advantage of new SAP – Customer profitability
Pilot for France and Spain using the “Prodacapo” tool
- Independent from the ERP system in use
- Ex post analysis of customer profitability for single or all orders
SAP ERP 6.0
- Integrated order calculation with standard cost and PBT information, visible for all
sales persons during sales process for each sales position
- Cost accounting shows identical cost and PBT information – monthly figures are
accumulated figures generated out of previous sales processes
- PBT information on profit center, product and customer level available
- Analysis of all orders of the customer in SAP Business Intelligence
Customer profitability on basis of standard costing during sales process available
12. 12
IT-Projectmanagement – SAP ERP 6.0 roll out map
Germany/ Netherlands
Bulgaria: end of 2009
Romania: end of 2009
Switzerland: first quarter 2011
Spain: end of second quarter 2010
UK: end of third quarter 2010
France: end of 2010
Belgium: first quarter 2010
14. 14
Turnover Germany Remarks
Turnover 2008: the darker the colour, the
higher the turnover in the respective region
Highest turnover in the area of Papenburg in
north Germany, following the Ruhrgebiet
area, then Kassel, Leipzig, Würzburg,
Nuremberg until Regensburg
Strongest volumes are achieved in Weser-
Ems with shipyard business
The south west and partially the north
eastern parts of Germany offer additional
market potential
Basically, we need to know, where we sell in
order to decide where to set up logistic
facilities
Customer concentration
15. 15
Year 2000 Summary
Decentralized Setup in 2000
3 sales regions with 36 branches
thereof
- 20 multi metal distributors
- 1 processing center
- 15 specialized distributors
No separation between sales and product
management
No material exchange between warehouses
of one region
Aggregation of highly independent
profit centers
Decentralized Setup in 2000
16. 16
Year 2004 Summary
Regional material exchange 2004
Tightening of the warehouse structure
through closure of 12 locations
No. of sales regions reduced to 2 with
- 19 multi metal distributors
- 2 processing centers
- 3 specialized distributors
Introduction of the “star concept” for a daily
material exchange between the warehouses
of one region
HUBs are in Hanover and Nuremberg
17. 17
Example: southern region
Nuremberg
City 2
City 6
City 3
City 5
City 4
City 1
daily
daily
daily
4 x week
daily
daily
Star concept
48 hours delivery time to customers
Nuremberg warehouse used as HUB with
unloading and loading of trucks during the
night
Direct deliveries to customers starting with
an order level higher than 10to
Customer related material bundling with
complete deliveries to the customer
Cost allocation to the profit center
Principles
18. 18
One layer distribution structure
until 2008
Two layer distribution structure with
satellites starting 2009
All warehouses offer a complete assortment to local
customers
Optimization of stock only possible on warehouse
level
Simple and direct delivery system
Steel mill
Full
assortment
warehouse
Customer
New warehouse structure 2009
Optimization of stock for all warehouses of one
region
A-articles (= fast mover) are available in local
warehouses
Regional or central stock offer a complete
assortment
Transport through intelligent logistic system
Cross-
Dock
Regional or central
warehouse with A-
and B-articles
Steel mill
Local warehouse
with A-articles
Customer
19. 19
Year 2009
Warehouse network 2009
Sales regions unchanged
Further logistical improvements through
shutdown of smaller warehouses in Coburg
and Bamberg near the bigger plants in
Würzburg and Nuremberg
Remaining 18 locations
- 13 multi metal distributors
- 2 processing centers
- 3 specialists
Establishing of regional and central
warehouses
Implementation of a central product
management organization
Summary
20. 20
Assortment and warehouse usage
ABC - classification Summary
A-article, stored locally, e.g. KTR 450
- More than 40 sales positions per
warehouse and year, broader customer
structure assumed, limited slow mover
risk
- More than 100 to turnover per profit
center and year, one purchase order in
each quarter realistic, no risk of stock
deprecation due to price declines
B-articles are stored in regional warehouses,
if the number of sales positions is higher than
10 in the case of KTR 450
C-articles are not part of the assortment, with
exception of products with high gross margins
and customer specific material
Overall goal: High inventory turn rate
with minimum one purchase order
each quarter
B-article C-article
Product group
(KTR)
No. of sales
positions
per branch
and year
Turnover
in to per
branch and
year
No. of sales
positions
per region
and year
No. of sales
positions
per region
and year
450 ≥ 40 Pos. 100 to > 10 Pos. ≤ 10 Pos.
A-article
21. 21
Locations with stainless assortments
High number of warehouses
with stainless steel assort-
ment in Germany
ABC analysis shows
bundling possibilities, one of
them is the setup of a
regional warehouse in
Frechen
22. 22
Locations with aluminium assortments
Lower number of
warehouses with aluminium
assortment in Germany in
comparison to stainless
steel assortment
Due to similar product
related logistical handling
procedures, a regional
warehouse for aluminium
will also be located in
Frechen
23. 23
Our symbol
the ears
attentive to customer needs
the eyes
looking forward to new developments
the nose
sniffling out opportunities
to improve performance
the ball
symbolic of our role to fetch
and carry for our customers
the legs
always moving fast to keep up with
the demands of the customers