'From good to great': RS intensifies its strategy
17 June 2022
In May 2022, RS Group plc re-branded from Electrocomponents plc, marking the company’s intention to accelerate its performance from a good business into a great one. As RS Group, the business will come together under one brand united behind a common ambition and corporate purpose.
Building on its core competitive strengths and strong performance, RS Group has intensified its strategy with a differentiated business model that aims to deliver best-in-class growth and value over the medium and long term.
The company wants to become the first choice for all its stakeholders, and it plans to do this by:
• Galvanising a high-performance purpose-led culture
• Realising a world-class customer experience
• Extending its wisdom, insight and data, and capitalising on the amount of data that it has
• Accelerating to a solutions-led innovative business
• Transforming its execution capabilities
All of these are powered by systems, processes, technology, and people. The planning, execution and delivery of these goals will be done through a scorecard that sets out the company’s action plan in three key areas:
• Cultural transformation
• Operational efficiency
• Growth accelerators
RS Group is developing a purpose-led culture, which it considers to be its most important asset that differentiates it from the competition. RS has invested and continues to invest in its people and is rewarding high performance.
The group has simplified its management structure and will continue to simplify its structure. It has a retention rate of 90 percent, and has seen its employee engagement scores continue to increase. RS Group believes that its purpose-driven culture is key in driving a strong ESG approach embedded into all that it does. The company’s 2030 ESG action plan, For a Better World, launched in November 2021, is fundamental to its purpose.
RS Group also sees the opportunity from supporting all its stakeholders as they become more sustainable. For example:
• Providing design tools for innovative engineers
• Monitoring energy usage and offering products and services solutions to reduce carbon emissions
• Developing predictive maintenance solutions
• Reengineering supply chains to reduce Scope 1, 2 and 3 emissions
• Consolidating supply chains and deliveries through its integrated supply solution
RS is continuing to invest and drive “world-class execution and scalability evidenced through the work that we carried out in the Asia Pacific, turning the business around; across the Group, utilising our insight and data through Group-shared business services; and investing in distribution centres to improve automation, efficiency, and sustainability.”
The Group’s experience has allowed it to identify supply chain issues in the market early, hence, the investments it has made in inventory during the year. Working closely with its suppliers to secure and invest appropriately in greater levels of inventory provided strength in availability and drove performance of the top line.
RS’s three growth accelerators are product choice; solutions; and being easy to do business with through an omnichannel approach.
Differentiated product offer
The company’s data and insight shape its product offer, including many products with a low inventory turn that are critical in keeping businesses running. Its own brand, RS PRO, offers a value alternative. Many of its products deliver improved efficiency and lower carbon emissions. RS is driving growth in total product numbers and new product development.
RS seeks to solve customers' problems and unlock new opportunities for its customers, suppliers, and RS Group. Its product and services solutions deliver efficiencies across the asset life cycle. It is driving an increase in customer lifetime value through stronger partnerships, which can generate additional and more sustainable revenue. Solutions now account for circa 23 percent of Group revenue and are moving it from a more transactional side of distribution towards developing strategic relationships.
One of RS Group’s highest value-add solutions offer is its business process outsourcing business: IESA and Synovos, which will become RS Integrated Supply. The Group is the only integrated supply provider globally, and has seen strong demand for its offer. There is also additional value from offering integrated supply customers of its IESA and Synovos, the RS range and RS PRO products, and the company is also trialling an integrated supply light offer, called RS Plus, to its core RS customers. RS is really excited about the opportunities, the demand, and the value that RS Integrated Supply brings to the Group.
Being easy to do business with
The Group is omnichannel, and although over 95 percent of its new customer journeys start online, customers want knowledge, experience, and expertise. They want to speak to someone that understands their business and knows what product or solution they may need, meaning the human interaction is key. 38 percent of RS’s revenue is generated offline, so providing an omnichannel approach is a key differentiator and a growth driver. RS is bringing a B2C experience to B2B customers by hiring digital specialists, improving website functionality, and using its insight to spend its marketing more wisely. Ultimately, this is driving improving returns.
The building blocks of its strategy remain unchanged, but the company sees a greater opportunity within its “journey to greatness” through growing volumes to increase the share of customers' wallets, driving better operational efficiency, improving its pricing and procurement capabilities, and developing its solutions offer.
History of resilience: Turning challenges into opportunities
However, the environment in which RS operates today is uncertain, with inflation, supply, and economic pressures. But on inflation, it sees the opportunity to drive margin benefits through utilising detailed pricing tools and using product elasticity models. On the cost side, RS is reengineering its supply routes to offset some of the freight inflation, and its improving labour productivity is helping offset some of the labour pressures.
RS is leveraging its supplier relationships by bringing forward supply orders, increasing safety stocks, offering alternatives where possible, and utilising its global distribution centre network to source, store and deliver to its customers.
“We are proud of what we have delivered to date, but there is still a significant market share opportunity for us to capture, says RS Group. “We have a differentiated business model, but we can be great through focusing on our culture; customer experience; data and insight; solutions; and by executing brilliantly.
“We have a purpose-driven culture and vision with ESG embedded in all that we do. Our journey to greatness will deliver stronger revenue and higher quality profitable growth.”
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