ADT 2003 Annual Report Download - page 11

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Our strategic plan, which we began implementing in 2003,
is to grow Tyco organically
— by increasing business volume,
gaining market share and improving operating efficiency.
Critical to the success of this plan will be a strong focus on our
employees, including enhanced programs in training, leadership
development and communications.
As we look forward, we have a foundation of outstanding
assets, including many prominent brands and truly great
products. To maximize the value of these assets, we will con-
tinue to pursue a number of strategic initiatives to improve
our performance and to generate significant cost savings,
which will help us continue to pay down debt and invest in our
future. Through these initiatives we aim to generate at least
$3 billion in cost savings and working capital improvements by
the end of 2006.
OUR STRATEGY FOR OPERATIONAL EXCELLENCE INCLUDES:
•• Six Sigma and Lean Manufacturing Last year, we began imple-
menting Six Sigma and Lean across Tyco. Six Sigma and
Lean are methods of examining and permanently improving
processes to eradicate waste, defects and variability. Six Sigma
and Lean can be applied to anything from product design to
production workflow to call center operations. Its adoption
has been credited with saving billions of dollars at leading
companies around the world. Equally important, companies
that have implemented Six Sigma and Lean find that it brings
them much closer to their customers
— something we will
never stop striving to achieve at Tyco.
•• Strategic Sourcing With a fundamentally new focus on strate-
gic sourcing, Tyco’s hundreds of business units have already
begun to leverage, for the first time, Tyco’s full buying power.
For example, our sourcing teams will generate significant
cost savings in 2004 by combining purchases in such areas as
telecommunications, transportation and computer systems.
•• Real Estate Management With more than 3,000 manufactur-
ing, sales and distribution properties around the world,
Tyco’s owned and leased space represents a huge cost for the
company. We are in the process of centralizing our real estate
management and rationalizing our manufacturing footprint
to deliver substantial savings.
•• Working Capital Last year, we initiated programs aimed at
better management of accounts receivable and inventory. We
improved cash collections and inventory levels around the
world as we began to apply Six Sigma to all areas of the com-
pany. We expect continued working capital improvements in
2004 as we maximize our efforts to implement best practices
across Tyco.
With these initiatives now building momentum, Tyco’s busi-
nesses have begun to collaborate with one another to share best
practices, something they had rarely done in the past. This
interaction is benefiting both our employees and our customers,
who are experiencing, many for the first time, the power, impact,
and value of “One Tyco”.
I speak for the Board of Directors and the entire leadership
team when I say that Tyco is firmly committed to achieving
the highest standards of performance, transparency, and
integrity, with an even stronger focus on serving our customers
around the globe. Our top priority is to build a solid operat-
ing foundation to support our excellent businesses. In doing
so, we are confident that Tyco will achieve its potential as a
great company
— a company that we can be proud to work for,
invest in and buy from.
To everyone who has been so committed to Tyco’s success,
please accept our most sincere thanks. Because of you, Tyco was
reborn in 2003. And because of you, Tyco is on track for success
in 2004 and beyond.
Edward D. Breen
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
JANUARY 15, 2004