Scott Strategy for FY2020 onwards
Quote:
Originally Posted by
forest
Scott themself seem to think model needs to change.
Part of todays SCT announcement.
The past five years has been a period of rapid acquisition growth for the company, resulting in a diverse reach across sectors, customers and geographies. With a new leadership team in place and given the changing operating environment, Scott is now moving to streamline its business and will focus on leveraging core strengths and expertise which offer profitable sustainable growth and margins.
The company’s new strategy will build on five pillars – Customer Partnerships, Leading Edge Technology, One Global Team, Operational Excellence and a Robust Global Platform. In particular, Scott will be increasing its focus on repeat, profitable sales of developed and proven technology, products and services which are core to the Scott Group; and increasing its service and support offering for customers. New project design & development will be carefully risk assessed and R&D activities will become highly focused on core technologies, with additional, carefully targeted strategic projects aimed at delivering positive commercial growth opportunities.
The most interesting change for Scotts going forwards is highlighted on p11 of the HY2020 results presentation.
"Pivot the Project/Product/Service mix from 60/20/20 to 40/30/30 to drive growth and margins, while reducing risk."
These three business categories are further defined as follows:
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Project: Bespoke customer solutions focused on areas of expertise to reduce risk, improve customer delivery and generate higher margins.
Products: Repeat, profitable sales of developed and proven technology, products and systems which are core to the Scott Group and offer strong margins.
Service: Structured long-term support and servicing of products and technologies, driving safety, performance and efficiency at customer sites.
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What makes this interesting is the current break down of Project/Product/Service work to be found under note 2 of the HY2020 accounts. I have adjusted these to percentages to make it easier to compare the current positions with JK's targets.
|
Project |
Product |
Service |
Targets |
40% |
30% |
30% |
Australasia Manufacturing {1} |
47% |
32% |
21% |
Americas Manufacturing {2} |
44% |
24% |
32% |
Asia & Europe Manufacturing {3} |
75% |
14% |
11% |
Total Manufacturing {1}+{2}+{3} |
57% |
23% |
20% |
As a whole, the company is quite a long way from where it is targeting to be. 'Standard' products in Australasia must include 'Bladestop' Band Saws and the standard sample analysing equipment built at Rocklabs in Auckland. That puts Australasia 'above target' in Standard products. But the 'rest of the world' is way below where it should be. And that drags down the Standard total to well below target levels.
Asia and Europe looks to be the most off target. They look to be pretty much geared to one off 'materials handing' (Europe) or 'appliance line manufacturing' (Asia) projects.
Only the Americas are on target to meet the service work goals. I guess this category includes the 'Robotworx' second hand robot trading operation which has since expanded to Australia. Short of carrying out a lot more servicing that customers don't need, are we going to see Robotworx expand into Asia and Europe too?
I tend to think about growing to meet JKs business category targets. But another way would be to reduce the number off one off 'Project' jobs undertaken and 'right size' (i.e. sack) various parts of the existing organisation. Will JKs term as CEO become known as 'the era of the big shrink'?
SNOOPY