Apex: top of the game

Apex represents an effort to marshal all the high-tech tools and processes available into a single organisation that can then act in a highly agile manner to adapt to changing market conditions, customer plans, and its own internal situation.

Its message to industry: Change is now. In fact, change is yesterday, and if you are not already rethinking all your assumptions, processes and ways of doing business, then you are already behind. This isn’t about catching “the next wave”: it’s about staying afloat long enough to figure out what you need to do next.

An amazing joint-venture between Cooper Tools and Danaher Tool Group, Apex comes close to defining best practice for its sector — and the only reason it doesn’t actually define it is because Apex is virtually inventing a new business model and ways of working as it continues to develop. The background to the joint venture is easy to see. Global markets are shrinking, and with manufacturing moving to high-tech manufacturing centres such as Taiwan as well as to less-developed nations, the tool industry is consolidating (note the merger between Stanley and Black & Decker), and globalisation has moved from being the last boring slide presentation at the end of every industry conference to an actuality that lives and breathes on the other end of a video conference hookup, Skype call or documents shared through Microsoft’ online Office.

Leaving aside the global tool industry for the moment (which is a subject that warrants its own full article), let’s take a close look at the transformations Apex is bringing to the tool industry.

Agile = Know how, know when, know if

“At Apex we focus on having a good service level, quality products and strong innovation,” Peter Reynoldson, managing director for Apex in Australia, tells us. Well, most companies are going to tell you something similar today, aren’t they? But at Apex, there are strong and steady indications that they walk their talk.

Know how

Let’s start with innovation. “We do a lot of innovation in our own business,” Reynoldson declares. Apex has developed a means of measuring that innovation as well. “We call it a Vitality Index,” he explains, “which is an index of the vitality of our new product development.” The good news is that Australia rates highly on that index. “For Australia, it is probably the highest of any of the Apex locations around the world. We really do push it.” This kind of innovation doesn’t happen on its own: it takes a range of tools and techniques to make it work. “Apex has a facility in Taiwan that concentrates on making innovation happen. Apex runs what we call an ‘ideation deck’ through which we funnel new product ideas that we receive from anywhere around the globe. These then become part of the deck we work on, continually feeding these ideas into the funnel so that they can go out to market for our customers. “We have a new products committee that meets regularly. It is always looking for what will be the next innovation, and works with customers to come up with new things to produce for the market.”

Know when

“We regularly run Kaizen focus groups to look at how we do business and how we can do it better. We’ve developed electronic systems to make us more efficient going to market,” — meaning that, according to Reynoldson, the time from product conception to introduction is reduced to as small an interval as possible.

“We have close connectivity to all our facilities around the globe through our IT systems. When we look for something, we can see the holdings of other locations. This kind of visibility enhances the services we can offer our customers. “Our warehouses have been RFID [radio frequency identification tag] enabled for around 15 years. Combined with paperless order and inventory systems, that helps to keep our service levels up. “The Australian operations show service levels among the highest in the world — which is pretty good when you consider that factors such as shipping over water can add 42 days to the delivery lead time.”

Know if

“Apex, globally, had a very good year in 2011 in terms of our sales and performance. In Australia, we’ve been relatively protected from the GFC, but we are starting to see some destabilisation of confidence in consumers because they are hearing bad news all the time. “The uncertainty in government has also had an effect because government spending is seen as wasteful and policies are not adhered to, and so this uncertainty is dragging the global uncertainty with it, with so much talk about new taxes and the increase in electricity prices is having an impact. The consumer confidence level is at one of its lowest points and event lower than during the GFC.”
Business model

One of the hallmarks of Apex is that it has been very flexible when it comes to meeting client needs. “As part of the Apex joint venture, we’ve probably had a different focus globally where we are able to meet the needs of all businesses, whether they want to buy our name-brand products, or they want us to do a house-brand program for them,” Reynoldson explains. “We are one of the largest tool manufacturers in the world, and we create house brands for some of the largest companies around the world. We have some of our own solid brands as well.

“We find having this balance is good for us in terms of maintaining a strong offering and also good, in that we can be a vertically integrated opportunity for a customer that wants to do house branding. “We feel this is better value for us and for our customers because you are not just being the distributor in the chain that is taking the margin. We can offer value because we can make the product and take it to market for them so there is only one margin for the end gain when dealing with us. We look at it as a compelling value proposition. “It’s an important capability to offer, especially during the flat market times to provide this kind of flexibility. I look at our results last year and see that our delivery of new products to market grew by 50 per cent. We had to push it with new brands and so forth, but it is important in tough market conditions to be able to offer our customers something new and different.”

Retail industry

Apex’s position in the market gives it an especially clear overview of the retail market and the moves retailers need to make to stay viable. “I think key suppliers are pretty good to their customers,” Reynoldson suggests, “and these relationships are going to be getting stronger. We have been working with retailers so that they understand the manufacturing side of our business more, and hopefully that will deliver them better value. And if there is innovation that needs to be done or they have ideas that can be implemented, we have more capability to do that as compared to a straight importer or distributor.

“Hand tools are a very traditional range of products but in terms of presentation and quality, sets rather than individual products are a growing trend. Apex can put these packages together better than most suppliers. Our business makes one million sockets a day. “I think the main focus for local retailers will be the GearWrench products because it has a full range of mechanic tools. And we’ve got into motorsport with the GearWrench sponsored car in the V8 series as well. (See http://www.v8supercars.com.au/fujitsuseries/newsarticle/new-sponsors-for-fujitsu-series-leader-at-queensland/tabid/70/newsid/11513/default.aspx and http://www.craiglowndes.com.au/sponsors.html)

“Crescent Tools is involved in another motorsport sponsorship. We’ve been trying to lift the profile of these brands to support the products in customers’ stores. And they need to know that we are putting our money behind the brands.”

Apex is also seeking to expand its online operations. “We have been working with our customers in terms of online product availability, and certainly we have our own catalogues and so forth online,” Reynoldson says. “In terms of providing products online, we tend to work with our customers in that area.“

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