3rd supply chain leaders forum 2014 case from danfoss power solutions

Danfoss Power Solutions September 2014 | 1

3rd Supply Chain Leaders Forum 2014 Case from Danfoss Power Solutions

powersolutions.danfoss.com


Danfoss in brief

80 years of experience within energy-efficient technologies

Solutions ready to combat climate and power challenges

Global competence center for energy efficiency – rooted in Southern Denmark

The Bitten and Mads Clausen Foundation holds the majority of shares in Danfoss


Danfoss facts and figures

Sales - 2013 33,628m DKK

Number of employees globally 22,463

EBIT 10.8%

Free Cash Flow 3,527m DKK

Equity 11,443m DKK

Factories, globally 59 in 18 countries

Sales companies, globally 58 in 46 countries

Top 3 Markets U.S., Germany & China


DBS

Business structure - Group


Danfoss Business System (DBS)

Programs and Cross Program Activities

DBS Programs

FPP – Procurement

DPP – Production

SMP – Sales & Marketing

PDP – Product development

Cross Program Activities

Complexity Reduction

Lead Time Reduction

Up to 20% Reduction of supply chain

complexity since 2011

Up to 38% Reduction of supply chain

lead time since 2013


The DBS Approach We believe in the close relation between practice and performance – therefore we want to share best practices across the company

The DBS approach is to set the directions, build the needed capabilities in the organization and follow-up to ensure results are sustained


Cross program activities

Standard set-up of governance structure for initiative development and roll-out

Divisional roll-out

Team of Corp. DBS and Div. Rep.

DBS

Corporate project team

Functional Board

Divisional management

Reference team

Div. Subject matter experts and managers

Executive committee

Initiative


3rd Supply Chain Leaders Forum 2014 Case from Danfoss Power Solutions

powersolutions.danfoss.com


Business segment

Danfoss Power Solutions

Danfoss Power Solutions is a world leader in hydraulic components and electronic controls that power and propel the equipment that builds our world. We provide know-how in motion across a wide array of industries – including construction, agriculture, material handling and more

From Opportunity to Order

<1 day

Our product configurator provides:

- fast configuration

- spare part price and lead time

- feasibility check


Hydrostatic transmissions

Orbital motors

© Blue Graphics Concept Danfoss

Electronic components

Steering solutions

PVG

Open circuit axial piston pumps

Know-how in products


Danfoss Power Solutions factories

Sales - 2013 10,989m DKK

Number of employees globally ~6,300

Top 3 Markets U.S., Europe & China

Easley, SC

Nordborg, Denmark

Haiyan, China

Považská Bystrica, Slovakia


The market

Global OEMs driving trend in machine industry

High efficiency, specialized products/innovation and “Best in Class” Supply Chain

Distribution channel – Availability and flexibility is key

“Traditional” industry

Forecast up to 1 year out

Order lead time typically around 6-12 weeks

OEMs carry significant parts inventory

Total 6B DDK

$534; 46%

$355; 30%

$85; 7%

$200; 17%

Total LISV Market in 2013

Europe Americas APAC China


Customer Values

Value for Distributors and Specialists

Flexible and configurable platform of options

Short Lead Time

Responsive sales processes in the market

Value for large OEMs

Efficiency/Productivity

Innovative Systems

Product Lifecycle Management

“We do business the same way you do”

Competitive price

Common Value

Product Lifecycle Management/Support for after market business

Application know-how

Quality

On time delivery


Cases

Innovate to Differentiate

Customer example - Palfinger


Most sold Proportional Valve in the world

Danfoss PVG

PVG platform design launched in April 1988

Platform allows for continuous improvement of value proposition

Global market +6bn DKK

Danfoss market share +20% - Clear market leader in most segments

Load Independent Spool Valves

The valve is designed to manage different pressure and flow needs at the same time

Lifting and turning with a crane at the same time


GMM 2014

Interfaces are the heart of any platform

They must be:

Defined to support the customer’s need for variants and our need to differentiate

Strictly managed

Stable over time

Clear differentiation – One platform – Modular build


One platform – Modular build – Late dedication

Sold as parts - Distributors

End customer lead time = 1 day

Sold as complete valves – OEMs

Individually configured

End customer lead time = 10 days


Global accounts and

large OEMs

Small and

medium size OEMs

Distribution

Strong value proposition for all customers

Best machine controllability and best cost

Short lead time and high on time delivery - no customer inventory

Cost optimized valve solutions

Wide product portfolio

Reduced fuel consumption and increased work efficiency

GMM 2014

http://www.cat.com/cda/layout?m=240904&x=7


Sales & Marketing:

• Platform allows 1/3 of PVG sales to be modules for distributor assembly

• High flexibility to provide new valve configurations

Operations:

• High volume on key modules - 50% of material value from Low Cost Countries

• High quality & short lead times

• Maintenance simplified due to modular design

New Product Development:

• One global platform

• Highest performance in the market

• Lower risk projects & faster time to market

Platform/modularity

Benefits across the value chain

GMM 2014


33%

67%

Distribution

OEM Sales


BU PVG Sales 2013 – Distributors with own Assembly


Cases


Customer example - Palfinger

Danfoss Power Solutions September 2014 | 22 | 22

3rd supply chain leaders forum 2014 case from danfoss power solutions

Engineering