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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
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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
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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
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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)
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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
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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
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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
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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.
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Kids’ Room Bedroom
Living Room Study
WirelessBase Station
SL300i MC-i250
MX6000i (built-in module)
DesXcapeiPronto
USB adapterHome PC
Broadband Internet
‘Connected Planet’ Vision
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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’
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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%
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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
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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
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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
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Agenda
• Company BackgroundCompany Background
• Consumer Electronics OverviewConsumer Electronics Overview
• Distribution – Distribution – Strategy, Supply Chain and ExecutionStrategy, Supply Chain and Execution
• Distribution – Distribution – Recents DevelopmentsRecents Developments
• SummarySummary
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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