Resources & relationships
Employees
Premier Farnell is essentially a service business. Consistent excellence in service delivery relies on high levels of contribution and performance from all employees.
Employees throughout the Group receive feedback on their performance through the annual Group Performance Review Process. This clarifies responsibilities and objectives, addresses employees’ development needs and helps match individuals’ career development aspirations with the business needs of the Group.
The Group places strong emphasis on individual and team performance. In the year, in addition to normal incentive plans for sales personnel, almost half of non-sales staff had an element of their remuneration related to performance.
During the year, the Group continued to invest in training and in particular through the investment in an on-line performance management system to ensure alignment of objectives throughout the business and to build skills and capability. Further expansion of content was made available through the Premier Farnell OnLine Learning Centre with both internally developed materials and content sourced in partnership with a leading business school. Over the last 12 months there has been a particular focus on robust talent management processes and on leadership development with the use of competency-based interviewing techniques to improve the effectiveness of external recruitment.
All parts of the Group are focused on reducing the cost and disruption associated with high levels of staff turnover and excessive absenteeism, particularly in distribution centres and call centres where turnover has historically been highest. During the year most areas of the business exhibited improvements.
The Group actively encourages open communications. Management teams are expected to host formal business updates for employees at least quarterly, following the Company’s quarterly results announcements. The Group has a well established European Employee Forum which has been in operation since 1999. The development in the year of a Group-wide intranet gives all employees timely access to news, information and communication from the CEO and leadership team.
In 2007 the Group organised the first global on-line engagement survey to seek the opinions and ideas of all employees about their experiences of working in the business and this has provided insight to shape the priorities to harness the commitment and high performance of all employees into the future.
Market position and reputation
The Marketing and Distribution Division trades through several major brands including Farnell and Newark. As their product portfolios and customer bases are diverse, the precise market positions of these brands are hard to quantify. The roots of these major brands are all over 70 years old and have high recognition and prominence within their particular markets. They are true multi-channel operations with online and paper-based product information and marketing programmes. The success of these programmes within their key market segments, as well as their brand reputations, is reviewed through regular market surveys.
Customer relationships
The MDD businesses have a customer base comprised of some 2,000,000 customer contacts. Contacts are typically design, production and maintenance engineers or procurement specialists. They represent a diverse spectrum of private and public organisations, covering all industries and areas of commerce. No single customer represents more than 2% of Group sales.
The Group has customer relationship management (CRM) systems within its key MDD businesses. These are adding to a growing understanding of customers’ needs and enabling the business to offer specific customers the services that they most value.
The MDD businesses manage relationships with customers through multiple channels including catalogues, websites and conversations with customers, both by phone and face-to-face.
Supplier relationships
The MDD businesses work with over 2,500 suppliers, stock approximately 400,000 products, and offer access to more than 4,000,000 other products. The Division’s attraction to suppliers is directly related to its ability to seed new products to market, to drive customer acquisition across its global customer base and to drive multi-channel solutions-based technology marketing.
The supplier base is balanced to offer customers around the globe a breadth of products from many different suppliers, while also offering deeper product ranges from some key suppliers with whom the Division has strategic alliances and improved commercial terms.
Across Farnell and Newark, the portfolio of suppliers is managed by an international team. The largest suppliers within this portfolio include many global premium brands for whom integrated, go to market strategies are developed. During the year, the Division continued to build its proposition to design engineers, securing new distribution agreements to fill technology gaps and securing territorial extensions with existing suppliers to support our emerging businesses in Asia Pacific.
Elsewhere within the Division, supplier relationships are managed at a business level, enabling specific customer needs to be met by sourcing, for example, locally branded products, or value-for-money products from Asia.
Distribution network and inventory
The Marketing and Distribution Division has sales offices in 24 countries. These are supported by a network of distribution centres that enable the Division to ship products anywhere in the world within one to three days. Almost all orders are dispatched on the day they are placed.
The network is comprised of seven primary distribution centres:
US – Gaffney (South Carolina) and Springboro (Ohio)
UK – Leeds and Preston
Mainland Europe – Liège (Belgium)
Asia – Singapore
Australia – Sydney
These are supplemented by satellite warehouses in other locations including Mexico, Brazil and China. Collectively, this network typically handles over 20,000 orders per day and stocks some 400,000 products. Technology systems are therefore central to delivering high service. The network is managed by a global supply chain team that shares best practice between locations and drives a programme of continuous improvement in accuracy, efficiency and service.
At the year end the Group held £155 million of inventory in its businesses, of which £135 million was in the MDD businesses.
Inventory is managed on a line-by-line basis, utilising best in class forecasting and stock monitoring IT systems. The re-ordering of most products is automated, enabling purchasing teams to manage order quantity, delivery or demand exceptions. Order fill rates are among the highest in the industry, in line with the Group’s commitment to service excellence. The Division aims to increase stock turns through the use of ever more intelligent systems, seamless supply chain integration with suppliers, and elimination of any non-moving stocks.
The Division uses a variety of third-party carriers to ship orders. It has a strategic relationship with UPS, its principal carrier, responsible for approximately two-thirds of its worldwide deliveries each day.