ADT 2004 Annual Report Download - page 44

SEGMENT REVIEW
Q: WHAT ARE YOUR KEY TARGET MARKETS, AND HOW ARE YOU
SERVING THEM?
In total, our segment tracks 24 customer cate-
gories that fall into two primary markets: retail,
including the do-it-yourself market; and indus-
trial or business-to-business.
For both of these primary markets, we’ve estab-
lished strategies and investment plans. For example,
we initiated a new Key Account Management pro-
gram in 2004 that identifies and prioritizes key and
target customer accounts within each market. In
developing these Key Account Management plans,
we also identified the top satisfaction criteria for
each customer. Relying heavily on Six Sigma tools,
we partnered with our customers to develop and
validate their requirements. We’re now focusing our
resources on meeting those requirements to win a
larger percentage of their business.
Q: WHAT WERE YOUR KEY INITIATIVES AND BIGGEST SUCCESSES
IN 2004?
In 2004, we spent the year building a strong manage-
ment team, increasing productivity to improve our
competitiveness, and driving improved cash flow
generation. On all fronts, I’m proud of our results.
Our first task was essentially building a new
leadership team from scratch. All but two members
of our leadership team in Plastics & Adhesives
joined us within the last two years. One important
distinction about our leadership team is that 10 of
us are trained as Six Sigma Green Belts, Black Belts,
or Master Black Belts—a further illustration of our
commitment to operational excellence.
The primary mission of our leadership team
in 2004 was to improve productivity and drive costs
from our businesses, focusing on restructuring,
sourcing, supply chain management, Six Sigma, and
lean. All these initiatives combined to create nearly
$45 million in savings. In terms of cash flow, we
achieved a 14 percent improvement in working
capital days.
Although we have several success stories, I’m
particularly proud of what we achieved through
our restructuring initiative. At the beginning of
fiscal year 2004, we had far too much manufactur-
ing capacity versus market demand, to the point
that our plants on average were operating at only
73 percent of capacity. Through a sustained team
effort, we closed nearly 30 facilities, representing
about 2 million square feet. We also relocated multiple
production lines that handled 100 million pounds
of product. As a result of these projects, we signifi-
cantly increased our plant capacity utilization and
expect to achieve increased savings in the future.
Q: YOUR SEGMENT HAS BEEN FACING ONE OF THE MOST PER-
SISTENTLY TOUGH BUSINESS ENVIRONMENTS IN RECENT
MEMORY. WHAT ARE YOU DOING TO STAY AHEAD OF THESE
CHALLENGES?
Over the last two years, we have faced an unusual
challenge in the form of sustained cost increases
for resin, a critical raw ingredient used to make
WITH A PORTFOLIO OF LEADING PRODUCTS THAT INCLUDES
STRETCH FILMS, PLASTIC SHEETING, GARMENT HANGERS, AND DUCT TAPE, TYCO
PLASTICS & ADHESIVES IS EVERYWHERE. SEGMENT PRESIDENT TERRY SUTTER
AND HIS TEAM ARE BUILDING A PLATFORM FOR SUSTAINABLE GROWTH AND
IMPROVED FINANCIAL PERFORMANCE.
Q&A WITH:
TERRY A. SUTTER
President
Tyco Plastics & Adhesives
TYCO
PLASTICS &
ADHESIVES
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