IN THE HOT SEAT: Man of motion

IN THE HOT SEAT: Man of motion

An international science and technology man to the core, Franco-Italian Richard Freggi landed at Mitsubishi after stints at technology firms including IBM, Seiko Epson and Philips, as well as research and university labs in Canada and the US.

He then came to Australia as a student and tackled a Masters of Computer Science at the University of Wollongong, before being scooped up by Mitsubishi for his background in physics, engineering and technology.

Now, after a year at the helm of Mitsubishi Electric, he has set his sights on new markets like networking and improving sales channel management.

Since taking over as GM for a division, what changes have you implemented?

Richard Freggi (RF): Taking over for a particular division, my feeling is that some things were done really well here at Mitsubishi and there was a high quality base of personnel. But from my experience at Philips and IBM on the operations side, Mitsubishi could make further improvements in efficiency, speed of operation, inventory management and operating costs. We reorganised internally, set up the supply chain and internal processes. So initially I've devoted a lot of attention into improving these areas. We have had great success in reducing costs, improving profits and reducing inventory.

What categories of product are you responsible for?

RF: When I took over, we reorganised the division. We divided the products into three groups: monitors (LCD and CRT); audio visual (projectors including LCD, DLPs and information displays, which are large flat panels in airports, train stations and retail); and digital devices (computer peripherals including keyboards and optical storage). On the sales side, we reorganised according to customer base. We have distribution customers (including Westan, Todaytech and Multimedia, along with regional distributors such as Global Technologies and Impact Systems, for example), system integrators, and AV specialists.

When I came on board I thought we could do better in terms of product quality, so we looked at the whole product range in terms of improving performance and reliability. I'm pleased to see a year down the road our failure rates have dropped significantly for all of the products.

Once the product division was reorganised, what was your next step?

RF: The next thing I did was look at launching product into new and exciting areas, which would keep us at the forefront as a major local vendor. We picked two areas: information displays, which we didn't have previously, which are 30- and 40-inch LCD, plasma monitors; and then entering into the networking side. We recently launched a range of wireless broadband products.

What's on your radar screen for the rest of the year and into 2005?

RF: My major agenda will be to revamp our sales approach and put in place an even better channel management strategy to provide better service to customers. One thing we are focusing on is pricing, which doesn't need to be cheaper, but it needs to be right. We have to provide customers with the prices that allow them to make money and be competitive.

So we are looking at the process by which we determine the price of product, and also at the organisation to provide good coverage to our channel customers, ensuring we have the manpower in place and the right skills set to give them the optimum service in terms of training, information about market trends, competition and service when there is an issue with a product (if they need a replacement or marketing info and samples). We are also looking at some new initiatives to support the channel including promotional activities and funding.

What are some of the hot trends in the consumer electronics world?

RF: In the past on the channel side, most of the sales were through specialist dealers. But since mid-2003 distribution has started to see some revenue in AV, which is good for us because we are strong on both sides. So we have successfully built up the IT distribution business with AV without damaging our traditional AV specialists. This has to do with our marketing approach, our product range, and our support. A year ago, our AV revenue was 95 per cent, while distribution was five per cent; now AV is about 70 per cent, while distribution is about 30 per cent.

We also continue to do well in the AV space because our strength is the local service we provide - and in AV there is a strong need for good service. The products are fairly complex and used in a professional environment - school auditoriums and boardrooms - and users need help with untangling the complexity, training, documentation and follow up regarding tenders and installation proposals.

The other big trend is the emergence of $1000 projectors, which does not affect us directly because although there's a significant growth in this area, we know there's not a lot of money from distributors or AV dealers in that segment. Therefore, we are not targeting this area as our priority. Instead, we have launched new products in the mid- to high-end range (in the home theatre and business and professional arenas) where the distributor or AV can make higher gross margin than in the cheap products. Longer lamp life, higher brigthness and added security features are driving this space.

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