Mohawk ... intelligence for crises time
1 like434 views
Mohawk Industries, the world's largest flooring supplier, was significantly impacted by the housing crisis starting in 2007. With net sales and operating income declining, management conducted an intelligence exercise analyzing customer, financial, and operational data. They decided to close 9 manufacturing locations that were suffering the most, moving production to more efficient sites. This downsizing reduced staffing by 18% and cut $100 million in working capital. While resulting in $30 million in restructuring charges, the closures were expected to improve performance over the next two years as the market recovered. Management utilized dashboards to visualize business results and determine which locations to close based on customer trends, efficiency, and financial outcomes.
Mohawk ... intelligence for crises time
- 1. April 27, 2009 2 MOHAWK INDUSTRIES INC. 1 Intelligence f C i I t lli for Crises Ti Times Presented by Ossama El Badawy
- 2. CONTENTS Ap 27, 2009 Company O i t ti C Orientation pril Summary Profile Vision Milestones Market Organization Business Intelligence & Decision Making Automation Intelligence Factors Affecting Decision Making g g Problem and Solution Problem Identification Decision: Intelligence Design Choice Implementation & Results I l i R l 2 Used DSS Tools
- 3. COMPANY ORIENTATION: SUMMARY PROFILE April 27 2009 7, World number one flooring supplier 36,200 employees More than 30,000 business Customers More than 229 Sales Centers More than 250 distribution locations More Than 1000 Trucks More Than 80 W h M Th Warehouses 3 Source: Mohawk Ind. Inc., Annual Reports
- 4. COMPANY ORIENTATION: VISION April 27 2009 7, “Becoming the Total Flooring Becoming Company in North America, and p y , afterwards all over the Globe” 4 Source: Mohawk Ind. Inc., Annual Reports
- 5. COMPANY ORIENTATION: MILESTONES April 27 2009 7, 1992 to 2000: Focus on soft surface acquisitions 2000: Added hard surface sales force with sourced products 2002: Acquired Dal-tile –leading ceramic flooring position 2005: Acquired Unilin –leading laminate flooring p q g g position 2007: Acquired Columbia Wood Flooring –leading wood flooring position 5 Source: Mohawk Ind. Inc., Annual Reports
- 6. COMPANY ORIENTATION: MARKET (1/2) April 27 2009 7, By Market Segments 2008 6 Source: Mohawk Ind. Inc., Annual Reports
- 7. COMPANY ORIENTATION: MARKET (2/2) April 27 2009 7, By Product Segments 7 Source: Mohawk Ind. Inc., Annual Reports
- 8. COMPANY ORIENTATION: ORGANIZATION 8 Source: Mohawk Ind. Inc., Annual Reports
- 9. BI AND DSS: AUTOMATION April 27 2009 7, Purchasing E-invoicing Shop Floor Automation Virtualization Commercial Projects Management E-commerce Others … 9 Source: Vendors’ Published Customer s’ Case studies
- 10. BI AND DSS: INTELLIGENCE (1/3) April 27, 2009 7 DI Atlantis Solution 10 Source: Vendors’ Published Customer s’ Case studies
- 11. BI AND DSS: INTELLIGENCE (2/3) April 27 2009 7, According to Howard Hughes ; Mohawk, IT Project Manager … an example of DI Atlantis was mentioned as follows: • “The purpose of our sales models is to improve efficiency by helping us make better sales decisions. For example; with just a few clicks of the p ; j mouse, we can analyze our data and know who are the customers we need to contact based on whether their sales are up or down. • “From our inventory models, we can access the position of warehouse inventory levels by categories and subsets of that inventory data, such as quantity of a particular roll-length, at a specific warehouse”. tit f ti l ll l th t ifi h ” • "Using the claims model, we are able to look at claims information to determine where the majority of claims are coming from.” j y g 11 Source: Vendors’ Published Customer s’ Case studies
- 12. BI AND DSS: INTELLIGENCE (3/3) April 27 2009 7, Key advantages in DI Atlantis as mentioned by Mohawk executives: • Drilling-down: Mohawk’s staff can narrow it down to a regional area that has a majority of claims, or narrow it down to districts claims • Presentable: Detailed reports and graphs are easily created • Accessibility: Data models are then viewed from the desktop, using the DI-WebDiver client • User Friendly: Users with varying degrees of technical experience are able to “dive” into the models and easily retrieve i bl “di ” i h d l d il i answers to the questions that are critical to their department or region 12 Source: Vendors’ Published Customer s’ Case studies
- 13. BI AND DSS: DSS TECHNOLOGIES April 27 2009 7, Two main types of DSS tools are used in Mohawk: • Dashboards • Alerts 13
- 14. BI AND DSS: FACTORS AFFECTING DECISION MAKING April 27 2009 Several f S l factors affect d i i making and planning i M h k Ind., the main factors ff decision ki d l i in Mohawk I d h i f 7, are stated in the official filings by the company and include: Environmental factors: ‐ Changes in economic or industry conditions ‐ Regulations and Trade Regimes ‐ Currency Fluctuation Environmental Factors ‐ Interest rate and cost of capital Boundaries Inputs Process Outputs ‐ Competition Dynamics Outcomes from Plan environmental factors ‐ Consumer Trends and boundaries Source Deliver ‐ Raw material and energy costs Make ‐ Suppliers’ business developments Assumptions 14
- 15. PROBLEM & SOLUTION: PROBLEM IDENTIFICATION April 27, 20 009 Mohawk Ind. Started to feel the 9,000 8,000 effects of the current crises starting 7,000 6,000 6 000 5,000 4,000 2007 especially considering that the 3,000 2,000 1,000 crises began from the US 0 -1,000 -2,000 housing, and then the company was 2004 2005 2006 2007 2008 Net Sales 5,880 , 6,620 , 7,906 , 7,586 , 6,826 , completely affected in 2008. Gross Profit 1,624 1,768 2,231 2,115 1,738 Operatin Income 639 672 839 750 -1,124 Net sales down Operating loss including one time one-time charges Excluding these charges, operating 15 income was also down Source: Mohawk Ind. Inc., Annual Reports
- 16. PROBLEM & SOLUTION: DECISION MAKING, INTELLIGENCE Ap 27, 2009 pril Management team had gone through an intelligence exercise to completely understand the problem and its root causes with view to organizational objectives and external environment dynamics. Intelligence was mainly based on three categories of analytics: CRM Analytics (and to a great extent it’s assumed to include all market and competition dynamics also) Financial Analytics Operational Analytics ( and to a great extent it’s assumed to include supplier and general sourcing analytics) l i ) 16 Assumptions
- 17. PROBLEM & SOLUTION: DECISION MAKING, DESIGN Ap 27, 2009 pril Management realized that the only possible way out of the critical situation faced by the company is to downsize the operations This means unlimited number of alternatives given the huge size of the company. However, However according to management team staments, two main general rules: Meeting the customer trends by stopping the most suffering products (demand trends) ff i d t (d dt d ) Moving production to more efficient and profitable locations 17 Assumptions
- 18. PROBLEM & SOLUTION: DECISION MAKING, CHOICE Ap 27, 2009 pril 9 manufacturing locations were closed during 2008 : Closure Product Dahlonega, Ga Filament Yarn Dillon Spun Yarn Fort Oglethorpe Synthetic Fiber Georgia Carpet Tufting and Finishing Dalton Carpet Tufting Armuchee Carpet Tufting Hiwassee Carpet Tufting Shannon Synthetic Fiber Lavender Drive Carpet Tufting 18 Source: Floordaily.com Hometextilestoday.com
- 19. PROBLEM & SOLUTION: D ECISION MAKING, IMPLEMENTATION & RESULTS Ap 27, 2009 pril The immediate results of the implemented closures are: Reduced staffing 18% - 6 000 FTE 6,000 Eliminated 1.25 million sq ft of warehousing Reduced working capital approximately $100 million (immediate injection to cash flow) $30 million restructuring charges However, However the implemented closures are foreseen to have positive impacts over the coming two year especially as the market not showing signals of y g g recovery 19 Source: Mohawk Ind. Inc., Annual Reports
- 20. PROBLEM & SOLUTION: USED DSS TOOLS Ap 27, 2009 Management team utilized the DI d hb M ili d h dashboards d pril Dashboards facilities in order to visualize – with high accuracy and timely information – the business results across diff different b i t business units, thi could enable it this ld bl the management team to: Determine which location suffering the most during the crisis (impact of customer trends through CRM Analytics). Determine which has the lowest efficiency levels (e.g. utilization ratios through operation analytics) Determine which location achieves the worst financial outcomes (e.g. profitability through financial analytics) 20 Assumptions
- 21. April 27, 2009 p Thank You for Your Time 21