avnet analyst day 2010 presentation 2 path to premier
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Accelerating Your Success™1 Accelerating Your Success™
Avnet Analyst Day 2010
Performance & Potential
Avnet, Inc.
December 15, 2010
Accelerating Your Success™2 Accelerating Your Success™
The Path to Premier
Rick Hamada
President and COO
Accelerating Your Success™3 Accelerating Your Success™
Executing to Avnet’s Vision
• Avnet’s Strategic Framework
• Our Enterprise Priorities & Initiatives– Value Based Management (VBM)
• Portfolio Management & Performance
– Operational Excellence
– Employee Engagement
– Customer Engagement
• Global Infrastructure Scale & Scope
Accelerating Your Success™4 Accelerating Your Success™
Avnet effectively manages the complexity of the
technology supply chain in a cost-efficient manner,
delivering value to suppliers and customers.
Vital Link in Global Technology Supply Chain
IT Original
Equipment
Manufacturers
Non-IT Original
Equipment
Manufacturers
End Users
EMS / ODM
Resellers, ISVs
and
System
Builders
Semiconductors
Interconnect
Passive &
Electro-
mechanical
Devices
Subsystems
Software &
Services
Vendors
EM TS
Accelerating Your Success™5 Accelerating Your Success™
1. Integrity 2. Customer Service 3. Accountability 4. Teamwork 5. Innovation
Performance and Values Based Culture of Excellence
Strategic Framework
Be the preferred partner to our customers
and suppliers
Profitable
Growth
Attract, develop and engage the best employees
People
Development
Consistently strive for flawless execution and
process innovation
Operational
Excellence
Deliver Industry-Leading Economic Profit
Premier Technology, Marketing, Distribution and Services Company, Globally
Accelerating Your Success™6 Accelerating Your Success™
Enterprise Performance: Balanced Scorecard
Metric Type Global Objectives Avnet KPMs
ShareholderDeliver industry-leading
economic profit.
Economic Profit $ Growth
ROCE ≥14.0% / ROWC ≥ 30.0%
Customer & SupplierBe the preferred partner to our
customers and suppliers.
Customer Loyalty/
Customer Retention
Gross Profit $ Growth
Operational ExcellenceConsistently strive for flawless
execution and process innovation.
Operating Expense to NGP/
GP $ Per Employee
Working Capital Velocity
EmployeeAttract, develop and engage the
best employees.
On Time Performance Appraisals
with Development Plans
Employee Engagement Index
Accelerating Your Success™7 Accelerating Your Success™
Enterprise Initiatives – Enhancing Avnet’s Culture
Value-Based Management / Profitable Growth
Operational Excellence
Employee Engagement
Customer Engagement
Accelerating Your Success™8 Accelerating Your Success™
Business Portfolio Composition
FY ‘10 Revenue
Americas $3.4B
EMEA $3.7B
Asia / Japan $3.9B
Avnet
Electronics
Marketing
$11.0B
Avnet
Technology
Solutions
$8.2B
FY ‘10 Revenue
Americas $4.9B
EMEA $2.3B
Asia $1.0B
Accelerating Your Success™9 Accelerating Your Success™
Portfolio Performance
29.6%24.2%
49.9% 50.5%
26.4%
64.0%
15.8%
21.3%
25.7%25.1%
17.8%
27.0%
10%
15%
20%
25%
30%
0%
10%
20%
30%
40%
50%
60%
70%
80%
FY05 FY06 FY07 FY08 FY09 FY10
% o
f A
vnet
port
folio
(by r
evenue)
at
or
above long-t
erm
RO
WC
goal
Avnet R
OW
C
Accelerating Your Success™10 Accelerating Your Success™
12.5%
Avnet’s Value-Based Management Journey
ROCE
Revenue
($B)
5%
10%
$5 $10 $15 $20
FY07
FY06
FY08
FY04
FY05
WACC
Drivin
g V
alu
e
Driving Growth
FY10
14%
16%
FY09
12.5%
Accelerating Your Success™11 Accelerating Your Success™
Measuring Operational Excellence
78.0%
72.8%
66.5% 67.6%
75.7%
71.0%
20%
40%
60%
80%
100%
FY05 FY06 FY07 FY08 FY09 FY10
Avnet 5-year Gross Profit Dollar CAGR = +9.3%
Avnet 5-year Operating Expense CAGR = +7.3%
Avnet 5-year Operating Profit CAGR = +15.5%
Q4 FY10
66.4%
Op
era
ting E
xpense a
s a
% G
P$
Accelerating Your Success™12 Accelerating Your Success™
Customer EngagementEmployee Engagement
“Putting the Service-Profit Chain to Work,” Heskett, et al.,
- Harvard Business Review
Thoughtful organizational development strategies lead
to a more productive and engaged workforce, a more
loyal customer base, and higher shareholder returns.
The Power and Impact of Engagement
People
PracticesEmployee
Engagement
and
Organizational
Climate
External
Service
Value
Customer
Satisfaction
Customer
Loyalty
Profitability
Revenue
Employee
Retention
Employee
Productivity
Accelerating Your Success™13 Accelerating Your Success™13
Employee Engagement / Enterprise Performance
(1) Excluding restructuring, integration and other items.
$1.04
$1.39
$1.87
$2.76
$3.18
$1.92
$2.77
65%
68%
70%
73%
75% 75%
60%
62%
64%
66%
68%
70%
72%
74%
76%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
FY04 FY05 FY06 FY07 FY08 FY09 FY10
US companies reported
employee engagement
on average declined ~9%
2008 vs. 2009*
*Towers Watson and WorldatWork 2009/2010 U.S. Strategic Rewards survey
Avn
et E
mp
loye
e E
ng
ag
em
en
t
Avnet E
PS
Total
Employees9,900 9,800 10,900 11,700 12,800 12,900 14,200
Accelerating Your Success™14 Accelerating Your Success™
Avnet’s Customer Engagement Evolution
High Risk Trapped
Accessible Truly Loyal
AT
TIT
UD
E
BEHAVIOR
• Key metrics: Loyalty and Retention
• Formal survey process
– 89,000 customer contacts surveyed
• Regional analysis & action plans
• Understanding drivers of engagement
• Ongoing “Voice of the Customer”
activities
– Day-to-day relationship
management, focus groups,
advisory councils and
online communitiesWalker Loyalty Matrix
Satisfaction(early 2000’s)
Loyalty(2006)
Engagement(2010)
Accelerating Your Success™15 Accelerating Your Success™
Avnet Global Logistics Scale & Scope
• ~ 2,500 employees
• Global footprint
~ 3 million sq. ft.
• Manage ~ 500,000
SKUs globally
• 99+% same day ship
• ~ 70% include value-add– Program 200+ million
devices
– Integrate 760,000+ systems
– 19.4+ million
cable assemblies
• Quality performance
currently exceeds
5 σ standards*7.1
8.07.9
8.6
7.7
9.1
6.5
7.0
7.5
8.0
8.5
9.0
9.5
FY05 FY06 FY07 FY08 FY09 FY10
Total Lines Shipped (in millions)
* Five Sigma = 233 defects per
million opportunities
Accelerating Your Success™16 Accelerating Your Success™16
Avnet Global IT Scale & Scope
776 terabytes of storage
405 software applications
~ 3,600 virtual servers
~ 29,270 visitors to website daily
~ 700 IT professionals
As of Q1 FY’11
95% spam filtered from 6 million e-mails daily
68 integrations executed since 1991
Accelerating Your Success™17 Accelerating Your Success™
Executing to Avnet’s Vision
• Strategic framework, planning and review process
supporting world-class execution
• Enterprise initiatives drive performance-based
culture of excellence
• Our global scale and scope positions us for
continued profitable growth
• Avnet team is committed to shareholder value creation
Accelerating Your Success™18 Accelerating Your Success™
Thank You
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