Page 5 - CUTTING EDGE NEWSLETTER - 1

should be no surprise to anyone that
efficiency is one of our key pillars. You
have undoubtedly been affected by our
efforts here. Perhaps your branch has
experienced a lean event with our oper-
ational excellence team. Maybe you’ve
witnessed jobs evolve, or even certain
tasks be automated. You’ve definitely
seen our drive for digitalization, both in
the sales process, but also in our back
office and administrative work. While
we understand that efficiencies can
mean change, and that change can be
uncomfortable, becoming more efficient
is essential to our sustainability as an
organization. We must leave no stone
unturned as we continuously search
for ways to improve processes, create
efficiencies, and increase productivity
across the company. gross margin dollars that will flow
directly to the bottom line. Addi-
2. tionally, as we create more efficient
Product Mix. Our profits are directly processes, we will create even more
impacted by the margins of the various capacity, which in turn can drive
products we sell. This is what I refer even greater financial gains. You may be
to as the “Mix Effect.” Every Kloeckner
branch needs to capitalize on their 4. wondering,
strengths, while also leveraging higher Inventory Velocity. Traditionally, ser-
value added products and services. As vice centers have held ample, if not why start a
an organization, we’re striving to hit excessive, inventory on hand. It may newsletter?”
upward of 40% of our gross profit to be feel safe to have a lot of material
driven by higher value-added business “just in case we need it.” And Kloeck-
(HVAB). By focusing on HVAB, we will ner has formerly held that same
not only increase our average margins, belief. But, that is an unnecessarily
but we can also reduce exposure to the expensive way to do business and is
market price volatility that continues to an extremely risky proposition when
run rampant in our business. If you’re operating in a volatile price environ-
unfamiliar with some of the products ment. The fact is, we have already
and services offered by different branch- made incredible progress in manag-
es, I encourage you to reach out to TEAM ing our inventories more efficiently
members in those locations or to one of than we ever have in the past. The
our many product experts around the resulting increase in inventory turn
company. rates have dramatically reduced our
market price risk while, at the same
3. time, improving our return on in-
Capacity Utilization. What’s more costly vested capital. But we can’t be satis-
than an unused truck on the lot, an fied with our past success and must
underused machine taking up a bay, or continue to challenge ourselves to
a talented employee with nothing to take it to the next level. Good to
do? The answer is simple: very little! We Great. We will do this by improving
must ensure that we are using all of our our internal processes even further,
capacity – equipment and people – to partnering with our mill suppliers to
its absolute fullest. By implementing a increase delivery reliability, and by
tactical commercial strategy that focuses leveraging technology in order to
specifically on filling unused capacity, better optimize inventory planning
we will generate accretive volume and by significantly improving demand
forecasting methodology.

KMC NEWSLETTER 5