Schneider Electric SA announces “Connect”, the Group’s three-year strategic plan

Schneider Electric South Africa has presented the Group’s strategic ambition and operational priorities under the Connect programme for 2012 to 2014.

May 31, 2012

Specialist in energy management, Schneider Electric South Africa has presented the Group’s strategic ambition and operational priorities under the Connect programme for the period 2012 to 2014.

With “One” – the Group’s 2009 to 2011 strategic programme – Schneider Electric was re-organised into five customer-focused businesses and strengthened its integrated portfolio to establish itself as the global reference in energy management. The Group became a leading provider of high value-added solutions and developed great positions in new economies, which respectively represented 37 percent and 39 percent of Group sales in 2011, a significant jump from 2008. The Group emerged from “One” leaner, simpler and more agile. Under “One”, it simplified its supply chain, reduced the number of its brands and drove operational efficiency.

“Our company programme ‘One’ was a success and a big step forward in the transformation of the Group’s profile. It also laid a very solid foundation for our future: One brand, one company for our customers and employees, one organisation everywhere, and a far higher efficiency than in 2008,” says Carl Kleynhans, country president at Schneider Electric South Africa.

“Our new company programme, ‘Connect’, is another major step in the consistent deployment of our strategy. With ‘Connect’, we will extend the strong foundation of ‘One’ to all our strategic levers: Products and solutions, mature and new economies, our people, while continuing to drive efficiency at all levels.”

The new three-year plan, covering 2012 to 2014, includes four major initiatives: Connect to Customers, Connect Everywhere, Connect People and Connect for Efficiency.

Connect to Customers: Further improve the performance of its business models and be a leader in products and in solutions.

·        Partner excellence: Continue product growth by creating new opportunities for distributors and partners, leveraging the strength of “One” Schneider Electric and leading product innovation. This initiative will further reinforce the Group’s leadership position in the Product Business.

·        Solution excellence: Leverage the Group’s unique value proposition with its solution capabilities, improve equipment cost competitiveness, reinforce execution while being more selective on projects, and boost service sales.  This initiative will temporarily impact the Solution Business’s growth but will raise significantly its profitability and return profile.

·        Tailored supply chain: Bring the supply chain to a new level of excellence by aligning organisation to customer needs and providing differentiated manufacturing and delivery models for each customer segment.  This initiative should lead to higher customer satisfaction and inventory efficiency.

Connect Everywhere: Identify key investment areas in new economies and create new opportunities in mature countries to be a leader in both mature and new economies

·        Grow in new economies: Expand geographical coverage by increasing the Group’s presence in the fast-growing second-tier cities and further penetrate these markets with mid-market segment offerings supported by strong brands with wide local coverage. The initiative will continue to support the long-term growth potential of new economies in Schneider Electric’s portfolio.

·        Grow in mature countries: Grow activities that develop independently from traditional capex trends with a focus on opex-driven opportunities and new businesses. This includes developing installed base and energy management services, capturing the smart grid opportunity while investing in new businesses in areas such as electric vehicle charging infrastructure, home automation and carbon management. With this initiative, the Group aims to create its own growth momentum in the mature countries.

Connect People: Create a culture and an environment for the Group’s employees’ development and performance:

·        Engaged leaders: Train leaders with Schneider Electric University and promote diversity.

·        Engaged individuals: Support employee development via training, empowerment and cross-business mobility.

·        Engaged workplace: Step-up collaboration and communities, regroup locations, ensure safety at work and develop the “Schneider Way”.

Connect for Efficiency: A new chapter in the Group’s history of profitable and responsible growth:

·        Industrial productivity: Raise the bar with tailored supply chain and drive significant industrial productivity through purchasing, footprint optimisation, supply chain flow re-design and transportation rationalisation.  A best-in-class planning process by customer segment and an IT system aligned with supply chain segmentation will support this.

·        Support functions efficiency: Leverage scale to drive savings on support functions through non-production purchases rationalisation, more globalisation of corporate functions, simplification of business and country level set-up, and implementation of acquisition synergies. At the same time, the company will continue to invest in commercial presence and R&D to support future growth.  Total R&D expenses to sales ratio is expected to move towards five percent of sales going forward.

·        Planet and society barometer:  Maintain best-in-class standard in environmental sustainability and social responsibility. Management compensation is partly tied to barometer performance.

With “Connect”, Schneider Electric expects to raise Group performance to a new level of excellence by 2014. The management is confident that Schneider Electric will continue its transformation with “Connect” and emerge from it leaner, more efficient and well positioned to respond to customer challenges in a fast-changing world.