Graco 2007 Annual Report Download - page 18

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Manufacturing and Sourcing
Our new business model is focused on
achieving the best product cost at the
right quality and service levels, often by
engaging supply partners in low-cost
countries. In the process of making this
transformation, we have rationalized our
manufacturing and sourcing footprint.
By the end of 2008, we expect to have
fewer than 40 company-owned manu-
facturing sites and about half of our
production from sourcing partners. In
addition, we have shifted the majority
of our manufacturing from high- to
low-cost regions, with about 60 percent
expected to be manufactured in low-
cost countries by the end of 2008, as
compared to 16 percent in 2001.
Leveraging One Newell Rubbermaid
Historically, Newell Rubbermaid was
comprised of independent businesses
that provided all of the operations to
be a free-standing unit. In contrast, the
new Newell Rubbermaid recognizes
the power of leveraging the scale of
the total company through shared sup-
port services and common business
practices. As we build these consoli-
dated capabilities, we are striking a
careful balance between centralizing
what is common and maintaining
independence on what is unique.
Activities that are not materially
different from business to business
are our prime candidates for achieving
scale advantage. These activities
include back-ofce shared services,
procurement, distribution, transpor-
tation and information technology.
Distribution Center Optimization
Rationalizing our global distribution
network is helping not only to reduce
transportation costs, but also to improve
shipping efciency and customer service.
During 2007, we took signicant steps
toward leveraging distribution across
the company to achieve low-cost,
logistical excellence. For example, we
completed and opened a new 400,000-
square-foot consolidated distribution
center in Victorville, California. Similarly,
we have announced plans for a new
800,000-square-foot multi-branded
distribution center in Atlanta, Georgia,
to service the Southeast. Within the
next two years, the company’s global
distribution footprint should be reduced
to approximately 50 facilities, nearly
half the number that existed prior to the
start of this global initiative.
Next steps:
Increasing productivity and efficiency
A key part of positioning Newell Rubbermaid for long-term success is optimizing
our cost structure and leveraging the power of one company. We are implementing
numerous initiatives that will achieve these goals and lead to further expansion
of gross margins.
Automation within multi-branded distribution centers is leading to increased productivity and improved
customer service.
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