philips consumer electronics entertainment and services ‘any time, any place, any where’ luis...

Philips Consumer ElectronicsEntertainment and Services ‘Any Time, Any Place, Any Where’

Luis Bellver Mei Han Rafo Luis Bellver Mei Han Rafo Helguero Johannes Mueller-Leiendecker Jeffrey Nie John WangHelguero Johannes Mueller-Leiendecker Jeffrey Nie John Wang

2

Agenda

• Company BackgroundCompany Background

• Consumer Electronics OverviewConsumer Electronics Overview

• Distribution – Distribution – Strategy, Supply Chain and ExecutionStrategy, Supply Chain and Execution

• Distribution – Distribution – Recent DevelopmentsRecent Developments

• SummarySummary

3

Agenda





• SummarySummary

4

Sales in 2003 €29 billion

Employees 164,300 (in more than 70 countries)

5 Product Divisions consumer electronics, lighting, domestic appliances, semiconductors, and medical systems

Global leader color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products

Reach 30% of offices around the world are lit by Philips Lighting, which also lights 65% of the world's top airports, 55% of major soccer stadia, and 30% of hospitals

Company Background

One of the world’s largest electronics companies (#1 in Europe)

5

Agenda





• SummarySummary

6

CE Industry Analysis

Trends• Multiple industries are converging• Internet is driving the content revolution• Globalization

Threats• Changing competitive landscape• Increasing retail power• Short product lifecycles and commoditization

Opportunities• Growth markets• Value added partnerships• Lifecycle management

7

CE Division

• #1 in Europe and #3 in the world in a wide range of products

• Every second, more than 5 CE products are sold to consumers worldwide

• Every minute more than 20 TV’s, 5 DVD players, 4 Audio home systems, 7 monitors, 10 phones, 3 portable CD players and 25 headphones are sold

Key Financials

• Sales in 2003: €9.6B (32% of Group)

• Net Income: €230M (51% of Group)

• Number of Employees: 19,830

Key Statistics

8

CE Products

Home entertainmentProductivity

Personal ExpressionTargeting young, mobile consumers with a natural affinity with

today’s Internet-centric technologies.

Targeting innovators, people who want to access content that changes their at-home experience.

Targeting consumers and businesses.

9

Kids’ Room Bedroom

Living Room Study

WirelessBase Station

SL300i MC-i250

MX6000i (built-in module)

DesXcapeiPronto

USB adapterHome PC

Broadband Internet

‘Connected Planet’ Vision

10

Vision to Distribution

Marketing

‘a world where consumersenjoy great entertainmentexperiences & serviceswhenever and wherever

they want‘

Distribution‘Deliver superior customer service

through an integrated, demand-driven supply chain’

11

Agenda





• SummarySummary

12

Supply Chain

Providing total supply chain visibility from

suppliers to customers

Reducing planning lead times and increasing

speed of reaction

Improving the new product introduction

process

Developing realistic plans based on known

constraints

Integrated, demand-driven supply chain

13

Differentiated distribution channels

Focus on mass merchants

Explore new channels

Direct Model

Leverage the internet Build global e-platform

Establish on-line brand

Support B2B sales

14

Partnerships with major retailers

Develop close relationships with leading retailers to take advantage of retail ‘muscle’

Retail power of mass merchants increases due to combination of growth and concentration

Top retailers in Europe and US strengthen their positions in the market

15

Building European Telco alliances network with leading telecommunication companies

Marketing easy-to-install internet products including broadband, wireless home networks and connected entertainment

Bringing the entertainment and services ‘Any Time, Any Place, Any Where’ concept to life

Innovative alliances and new channels

Telco alliances

16

Innovative alliances and new channels

Entering new markets through

alliances and partnerships

□ Philips – Nike (Sports)Philips – Nike (Sports)

□ Philips – MTV (Entertainment)Philips – MTV (Entertainment)

□ Philips – IKEA (Furniture)Philips – IKEA (Furniture)

□ Philips – Visa (Payment Philips – Visa (Payment

Transactions)Transactions)

□ Philips – DirecTV (Set Top Philips – DirecTV (Set Top

Boxes)Boxes)

Global partnering deal with Yahoo to

develop and deliver content and

internet services

17

Enhanced Supply Chain Capabilities

Simplify the Supply Chain

• Use global product concepts

• Obtain standard components

• Standardize manufacturing processes

• Continuous flow manufacturing

• Optimize distribution structure

Improve Supply Chain Planning

• Collaborative planning (Filocity)

• Synchronized re-planning cycles

• Integrated processes and systems

18

Agenda





• SummarySummary

19

North American Division of Philips CENorth American Division of Philips CE

• $2 billion annual turnover

• Customers (Wal-mart, Best Buy, The Good Guys, etc.) set high and encompassing standards for delivery performance

• Consumer Electronics Products:• short life spans• “hot” demand hard to predict• large, heavy and fragile• high-value and easy to sell on street so

theft a constant concern

• Lack of end-to-end supply chain management produced a result which was neither consistent nor dependable

• Needed a change!

Recent Developments: Logistics Outsourcing

20

Recent Developments: Logistics Outsourcing

Philips CE N.A.Philips CE N.A.

RyderRyder

a new 756,000 ft2 warehouse

total visibility to its shipments through Ryder’s online tracking system, RyderTrac

48-hour lead time

2 million units/month

2005 Organization Goals□Outsourced, shared

service centers□Outsourcing of

consumerservice

• a combination of in-house tools and optimization software from i2 Technologies

• a combination of cameras, door alarms and actual security guards

ShipDelivery

Note

OptimizeCost-effectiveTransportation

CarriersPick/Pack

And Loading

DeliveryEDI

Messageto Philips

InventoryAccuracy

80% → 99%

21

Recent Developments: RFID Introduction

RFID (Radio Frequency Identification)

• Silicon-based electronic identification tags, consisting of a tiny processor, memory, and antenna

• RFID tags can be read and written wirelessly and the data is transformed through a wired connection to PCs

Tag Host ComputerReader

Antenna BaseStation

2.5/3G Air Interface

Wired Connection

22

New Developments: Bar Code vs. RFID

Individual item scanning line of sight required

Exposed labels may become unreadable

Product-level identification only

Static information Bar code must have

minimum size and be visible

• Simultaneous multiple detection, multi-directional, line of sight not required

• Embedded tags less susceptible to damage

• Individual unit identification• Potential for read / write

capabilities• In the long-term, the

identification will be invisible

Bar CodeBar Code

RFIDRFID

23

Recent Developments: RFID in action

Reduce inventory Detect shrink Detect counterfeit Improve compliance capabilities Labor efficiency / accuracy Checkout, returns / warranty

authentication

2003 January – produce RFID tags

2003 May – added “off-switch”

2004 January – jointly develop RFID

system for supply chain with IBM

Supply Chain BenefitsSupply Chain Benefits

Philips & RFIDPhilips & RFID

24

Agenda




• Distribution – Distribution – Recents DevelopmentsRecents Developments

• SummarySummary

25

Philips and Consumer ElectronicsPhilips and Consumer Electronics

Supply Chain, Strategies and ExecutionSupply Chain, Strategies and Execution

Advancements and New DevelopmentsAdvancements and New Developments

How important is distribution for Philips?How important is distribution for Philips?

Summary

philips consumer electronics entertainment and services ‘any time, any place, any where’ luis...

Documents

demanddriven supply

targeting consumers

ce division

philips lighting

distribution marketing

mobile consumers

group number of employees

dvd players