Appendix 1: Sikkens Vision Statement Source: Car Refinishes Carnet (Intranet)

Appendices

Appendix 1: Sikkens Vision Statement Source: Car Refinishes Carnet (Intranet)

http://carnet2000.sas.intra./sites/communication/4.asp

Our (internal) Vision of the future is that we will be ‘the people who are best at enabling bodyshop profitability’. This is what we will strive to be for our customers. It will be the source of our competitive advantage and the foundation on which we will build our future business. We commit ourselves to making this Vision reality.

People: Because we make the difference

Best: Because we must be better than our competition Bodyshop: Because bodyshops are our customers

Profitability: Because profit is the ultimate goal of our customers

Principles

In order to achieve our Vision we will strive to live by the following principles:

Ambition and Leadership: We do not accept that we can only be as good as our competitors. We set ourselves the challenge of being the very best, especially in having the best paint, and specifically in enabling bodyshop profitability.

Innovation and Creativity: We will achieve leadership through innovation, not only in products but also in

service. We will get ahead of competitors and set the pace in the market. We will be the first, new and

different. And we will harness the creativity of our entire organization to achieve this.

From Paint Manufacturer to Wholesaler ²

Continues Improvement: We will always strive to do better. We will monitor and measure our service to bodyshops continually. We will set targets to improve our performance. And we will devise creative and ambitious plans to exceed those targets.

Developing People: We will continually strive to develop and grow the abilities and performance of our people, through continues training, delegation and empowerment, recognizing and rewarding

achievement, and active career development.

Teamwork: We will work together as one global team, irrespective of country and function, committed to

bringing the full power of our whole organization to the service of our customers. We will share knowledge.

Appendix 2: Definition Non-paint products within Akzo Nobel Car Refinishes

The following generic groups are mentioned in the organization as being non-paint:

• Equipment

• Consumable & disposable products

• Color documentation

• Promotion material

• HAWA’s (primers, putties and other third party paint)

Correspondence on the exact definition of non-paint products does not exist in the organization. For the purpose of this research the following division is made. The definition is primarily based on the definitions used in the different local sales organizations because they are more involved in non-paint than the Sassenheim organization.

This distinctio n is chosen based on the following arguments:

• HAWA’s are paint products, sold in a similar way as ANCR produced products.

• Equipment CR related, color documentation and promotion material are products supporting paint or the paint process. Often these products are sold free of charge or below cost price. Countries treat these products in different manners, but they can be seen as indirect selling cost.

• Furthermore, in general a European approach and coordination is already arranged for HAWA’s, CR related equipment, color documentation and promotion material.

Note that for the original equipment category the distinction is made between CR related and not-CR related. CR related equipment is equipment like mixing machines, mixing sticks and the accompanying spare parts. Not CR related equipment is equipment like spraying guns, sanding machines etc.

Paint Non-Paint Services

HAWA’s (third party paint) Equipment not ANCR related Equipment ANCR Related Consumable & disposable

products

Colour documentation

Promotion material

From Paint Manufacturer to Wholesaler ⁴ Appendix 3: Confidential

Source: TOP document (Three Year Operational Plan)

Appendix 4: Confidential

Source: Car Refinishes Carnet (Intranet)

Confidential

Confidential

Appendix 5: Hughes’s Matrix

Source: Hughes, J.M.R., Michels, B, 1998

Combining the complexity of the supply market and the complexity of the buyer market, four scenarios were found:

• Generic items (standardized commodities)

• Mass customization, tailored items produced through flexible technology

• Proprietary products, strong brand names, provide high availability with standard specifications

• Custom design

Leverage Proprietary

Tailored Custom Design

Amount of buyers form supplier’s perspective

Amount of Suppliers Many

Many Few

Few

The buyers market from the suppliers’ perspective

From Paint Manufacturer to Wholesaler ⁶ Appendix 6: Average number of products per category per country

Appendix 7: Gross Margin Analysis per country per product group

Confidential

Confidential

Appendix 8: Checklist for visit and interview German sales organization

Motive:

• Non-paint is becoming a larger part of sales because of increasing direct sales.

• Increasing complexity in assortments because of forward integration.

Objective:

• Study the non-paint strategy and policy for the German region

• Explore the supply processes to identify the activities and their cost-drivers involved in non-paint.

Identify activities: Fundamental different activities will probably have different costs, different cost drivers, separable assets, and different personnel involved.

The topic of discussion is (the assortment of) non-paint products and the difference between fast & slow moving products.

Respondents: Mr. Klaus Luckner, product manager non-paint Mr. Michael Stamm, logistical manager

Topics & questions 1. General questions

• What is your function?

• Could you describe the German organization?

• Which activity, you perform on daily basis, takes the most of your time?

• How would you define non-paint?

• What percentage of your time do you spend on non-paint products?

• What percentage of sales is through direct-sales?

• Do you have a strategic plan of policy for non-paint products?

• Could describe the process of non-paint through the organization?

• Where in the processes of non-paint are the highest costs? Which costs? (Maybe a profit & lost or budget statement?)

• Could you name each activity that you, on average, spend at least 10% of your time on?

• Do you make a difference between fast and slow moving products?

From Paint Manufacturer to Wholesaler ⁸

• Are there products outsourced? If yes which activities are outsourced and which activities are still done by the German organization?

• Who is responsible for order selection?

3. Supplier contacts

• How many suppliers of non-paint do you have on average? (between 0-10, 10-20,20-50, 50-100)

• How would you describe your relation with suppliers?

• How often do you have contact with your suppliers?

• On what level is your contact with the supplier organization?

• How do you deal with promotional actions from your suppliers?

• What aspect is, in your opinion, most important in negotiations? (Price, service, information exchange etc.)

4. Ordering

• Who places orders?

• Who is responsible for the order placing activity?

• Is there a difference made between products regularly ordered and irregular? If yes what is that difference?

5. Receiving delivery and inspection

• What activities are performed?

• What cost drivers are used?

• What % of these is used for non-paint products?

• Difference between regular products and irregular? If yes, what kind differences?

6. Warehouse activities

• What warehouse activities do you have defined?

• (What cost drivers are used for the warehouse activities?)

• What % of warehouse activities is used for non-paint products?

• What is the average days-on-hand performance?

• Do you have obsolete stock?

• How much is non-paint (obsolete stock)?

• Difference between regular products and irregular? If yes what?

• What % are you occupied by products not standard stocked?

• Are there more products held in stock than mentioned in the catalogue?

• How often does a non-paint only order placement occur?

7. Financial transactions

• What are the financial activities performed?

• What cost drivers are defined?

• What % of financial activities is used for non-paint activities?

8. Sales & delivery to customers

• What is the value added by selling non-paint?

• Does the customer have the possibility to order every product they like? Are there restrictions?

• Difference between regular products and irregular? If yes what?

• Which of the following aspects is important for a customer?

Service Delivery

Low stock levels Price

Something else….

• What percentage of indirect selling costs is connected to non-paint? What kind of costs is this?

9. Other questions

• Could mention some the positive and negative results of a Europe-wide assortment for your organization?

• Could you see an entire European assortment in the future? Or will there always be a need for a German offer?

• Do you think that there are possible savings for your organization to be made when organizing a

Europe-wide assortment?

From Paint Manufacturer to Wholesaler ¹⁰ Appendix 9: Presentation visit German Sales Organization

Car Refinishes

Project Non-Paint Introduction

Current issues concerning non-paint products within Europe West:

• Increasing percentage of direct sales

• Increasing complexity in non-paint assortments because of wholesaler acquisition

• No clear insights on financial revenues and added value for non-paint (on CREW level)

Project Non-Paint

Stuttgart

January 21nd 2004 Belle Spaan

Car Refinishes Europe West

Car Refinishes

Project Non-Paint Objective

“To advise Car Refinishes Europe West on a coordinated Europe-wide approach for non-paint

products and the organizational consequences”

¾ A coordinated approach is supposed to result in

organizational efficiencies and increased purchase power

¾ The subject of research is the relation between a Europe- wide assortment and costs

Car Refinishes

Purchasing Distribution

& logistics Production

Overhead activity

Purchasing

& ordering

Ware -housing In &

outbound

logistics Overhead Sales

activity

•Sassenheim activities •Country activities

(Non-)paint activities

From Paint Manufacturer to Wholesaler ¹²

Car Refinishes

Cost Pools

Cost Pool

What causes the costs to be incurred?

How can we measure the activity?

= “cost driver”

How much activity is undertaken by one product relative to the other products?

= “weighting”

Two critical factors to be determined cost pool:

•What is the cost driver?

•What is the weighting between fast-moving and slow-moving

non-paint products?

Appendix 10: Visit-report German sales organization Visit report Germany

Confidential

From Paint Manufacturer to Wholesaler ¹⁴

Appendix 11: Questionnaire on Non-paint for the British, Spanish and Dutch sales organizations

Questionnaire project Non-paint February 13th 2004

Introduction

Due to the following issues I was asked by marketing Europe-West and the project Redesign (redesign field force and future distribution) to explore the possibilities of a Europe-wide approach for non-paint products:

1. Paint and non-paint products are supplied to a body-shop by the same supplier. For Car Refinishes this means through independent wholesalers and owned branches. The percentage of CR owned branches (direct sales) is currently increasing.

2. The complexity of the non-paint assortment and their volume complicate the management of the supply process as well as the sales process.

3. No clear insights are available, on CREW level are available on the financial revenues and added value for non-paint.

This project has been introduced to you by an email from Phil Coady and subsequently an email from me containing a summary and scope for this project. The objective of this project is to explore the possibilities of a more standard approach to non-paint for Europe-west. Note that this approach should lead to

organizational benefits; reduced costs and / or increased earnings.

The project has been, in the first place, concentrated on analyzing SAP data on sales and gross margins.

Secondly the organization and management of non-paint has been explored based on interviews and visit to the German organization and the Netherlands.

Objective of questionnaire

The objective of this questionnaire is to explore how non-paint is managed and handled on profit centre level. Therefore the questions are defined around two specific issues:

I. How is the non-paint assortment managed?

II. How are the logistical activities managed for non-paint and influenced by non-paint?

Please note that this research is, in the first place, to explore and identify how non-paint is currently

managed and organized in Europe-west. Secondly, what the general costs and revenues are, not only in a

financial way but also from a marketing and sales perspective. And thirdly the objective is to explore

possible options for synergies in a more standard offer. This will lead to recommendations, which will be

presented to Carin Suurenbroek and Phil Coady.

Questions

I. Assortment related Questions 1. Definition

A) Could you give a definition for non-paint products used in your organization?

B) Does this definition contain the following products groups?

• Colour documentation

• (Mixing) equipment

• Promotion materials

• Third party paints

• Third-party non-paint consumable and disposable products (for example tapes, sandpaper)

• Third-party non-paint equipment

• Other, namely …

Please use this definition when answering the following questions.

2. Who is responsible for the non-paint assortment?

3. Product selection

A) If a branch gets the question to supply a product that is not listed and known in the non-paint assortment, is the branch organization allowed to order the product?

B) Are non-paint products tested before they are added to the non-paint assortment?

4. Purchasing

A) Could you please indicate how many people are in contact with non-paint suppliers? And what roles and responsibilities they have within the organization?

B) Could you provide a list of the suppliers of non-paint your country is doing business with? (An SAP list or Excel file will satisfy)

C) Could please indicate on this list, which of the suppliers represent around 80% of total sales?

D) Could you please indicate on the list of suppliers if a supplier is a wholesaler organization or not?

5. Key figures

From Paint Manufacturer to Wholesaler ¹⁶

II. Logistical activities

6. What would you consider to be the biggest “problem” concerning non-paint?

• Stock level

• Obsolete stock

• Purchase power and purchase price

• Supply conditions

• Complexity of assortment

• Other, namely …

Could you please explain in more detail why you have chosen for a specific aspect?

7. Branch organization

A) How many branch locations (distribution points) do you have?

B) How many people are employed in an average distribution point?

C) If you look at an average stock point. What percentage of stock volume is used for non-paint products compared to paint? (For example; if the total volume is 100 non-paint occupies 35 and paint 65)

D) What is the average value of stocked non-paint items and stocked paint items over 2003?

E) How many man-hours (resources in FTE’s) are consumed by non-paint activities in an average branch?

For example, take the average activities performed in a branch; ordering, order retrieval, warehousing (stocking items) and customer order picking. How much does it cost on average to perform these activities for non-paint? How many man-hours?

The question could also be approached by trying to estimate what the differences would be if there were not any non-paint products in a branch.

III. 3M procurement prices 8. 3M prices

A) In 2001 Koert Kolthof has asked the net prices of a selection of commonly sold 3M products.

Currently it would be interesting to see if and how these prices have changed.

Could you please provide on the following 3M products the net purchase price (invoice price) per item and

the number of items procured over the fourth quarter of 2003?

3M

art. Nr. Description

Nr of art.

Q4-2003 Price / art Comments

318 3M 255P HOOKIT 6 HOLE 150MM DISCS P500

319 3M 255P HOOKIT 6 HOLE 150MM DISCS P400

321 3M 255P HOOKIT 6 HOLE 150MM DISCS P320

322 3M 255P HOOKIT 6 HOLE 150MM DISCS P280

323 3M 255P HOOKIT 6 HOLE 150MM DISCS P240

324 3M 255P HOOKIT 6 HOLE 150MM DISCS P220

325 3M 255P HOOKIT 6 HOLE 150MM DISCS P180

327 3M 255P HOOKIT 6 HOLE 150MM DISCS P120

329 3M 255P HOOKIT 6 HOEL 150MM DISCS P80

6311 3M MASKING TAPE 2328 38MMx50M

6313 3M MASKING TAPE 2328 50MMx50M

7838 3M CLEAR MASKING FILM (4M x 150m)

9678 3M SOFT EDGE MASKING FOAMTAPE (12MM)

C) How is this invoice price accomplished? Is it the list-price minus discounts?

D) Are there any other rebates given based on variables like total turnover? If so could you please

outline the rebate frameworks?