Industrial equipment and components multinational RS Group is on a transformation journey to provide industrial components and logistics solutions for industrial clients.

The group’s robust global supply chain enabled it to meet demand from clients even as global supply chains were disrupted owing to the Covid-19 pandemic, RS Group COO Mike England said during a market update briefing on July 27.

The company had been on a transformation journey over the past seven years but, during the past few years in particular, its business model of focusing on ensuring a robust global supply chain had proven advantageous and it was seeing a change in customer buying behaviour towards digital and omnichannel sales platforms, he said.

More than 75% of RS Group's £2-billion revenue was derived from industrial components and the company aimed to create one culture and one team across all its regional operations, with the aim of further strengthening its market position and ensuring the availability of components for clients across the world, he added.

“We are a business helping our 1.2-million industrial customers design, build and maintain industrial equipment and operations safely and sustainably. We are in a unique position, from an asset lifecycle perspective, to move from a transactional business model to being a solutions provider for our industrial clients,” said England.

The company was also proud of the robustness of its supply chain, despite disruptions experienced over the past few years. It achieved this by focusing on being the first choice of employer for its people, in terms of company culture and nurturing talent, as well as being the first choice for customers as their go-to solutions provider, he stated.

“We have a broad range of products including electrical, automation and control components, maintenance supplies and consumables, and fluid and mechanical power supplies. For our 2 500 suppliers, we similarly aim to be their first choice, which enables us to have dominance in terms of stock availability and the ability to compete,” he said.

The company had also moved into the Financial Times Stock Exchange 100 (FTSE 100) index, which was indicative of its size and the scale of the business, England highlighted.

“Based on our performance, we are pleased with the resilience of the business in what has been some of the toughest trading conditions we have experienced, owing to a combination of the impact of the [Covid-19] pandemic leading to supplier shortages globally. At the heart of what we are aiming to achieve is to become a sustainable business and foster sustainable shareholder value,” he said.

Additionally, the company reacted quickly to inflationary pressures and invested in ensuring stock availability, he pointed out.

Most of its 1.2-million customers were small businesses, but about 75% of its revenue was derived from large, corporate business-to-business customers that were looking to consolidate their direct and indirect spend and were looking for a one-stop shop that provided good digital interaction and experiences, England noted.

“We have invested in our omnichannel platform and about 70% of orders are placed through [the] digital channels,” he added.

Further, the company reports a consistently strong performance in its three operational regions, namely Europe, Middle East and Africa, Asia Pacific and the Americas.

Specifically, Asia Pacific provides only about 10% of the group's revenue, and the company views the region as presenting a strong growth opportunity for it.

“Our revenue performance remains strong. The group’s differentiated proposition continues to resonate with customers owing to our industry-leading product availability, ease of ordering and customer service. Our strategy is to accelerate our organic growth ambitions with high-quality acquisitions that have a compelling strategic, financial and cultural fit,” said RS Group CEO Lindsley Ruth.

“While we remain alert to a difficult macroeconomic environment and increasing inflationary pressures, we have an improved pricing model, strong cost controls, tight inventory commitments and profitable growth initiatives.

“We have transformed and strengthened our group significantly over recent years and our performance has demonstrated our ability to adapt quickly to external pressures, turn challenges into opportunities and outperform,” he said.

Meanwhile, England said market size research had shown there was headroom for the company to grow further.

“We see continued consolidation in the customers and competitors landscape and we are confident we can grow organically and inorganically,” he said.

RS Group was actively targeting three inorganic growth opportunities in the market, which presented a $2-billion opportunity and it had a pipeline of inorganic opportunities that it was investigating, England pointed out.

“Over the next three to five years, we will focus on five key areas to support our Journey to Greatness plan. These include galvanising a high-performance and purpose-led culture, operational efficiency and bringing a business-to-consumer experience to business-to-business transactions,” he said.

Further, the company is also aiming to extend its use of data analytics, data-driven insights and artificial intelligence to drive greater business and process efficiencies.

RS Group was also working with customers and suppliers to accelerate its transformation to a solution-led business because, for many customers, selling products was not enough and they wanted an end-to-end solution for their industrial components, materials and consumables supplies, England noted.

“As a global provider of industrial products, it has never been more true that availability is key. During the past few years, we have seen a significant deterioration in the performance of suppliers and them not being able to maintain products or keep up with demand, or owing to supply or material shortages. While supply was impacted, demand from industrial customers remained strong.

“We have a range of 700 000 stocked products and three-million unstocked products available to our customers. We aim to materially grow this range. We are also building our solutions capabilities. The aim is to grow revenue in terms of serviced solutions and growth in the range of products,” England said.