Graco 2008 Annual Report Download - page 16

14
14
Cohesive Operations That
ENHANCE PROFITABILITY
True transformation must extend from
the top- to the bottom-line in order to
build lasting shareholder value. Accord-
ingly, our brand-building initiatives to
build sustainable sales growth have
been complemented by equally
ambitious programs to become a
more productive and efficient organi-
zation. Simply put, world-class brands
should be capable of producing
world-class profitability.
To date, our efficiency efforts have
been centered around two programs.
Project Acceleration has worked toward
streamlining every component of our
supply chain, from manufacturing
through distribution. In the wake of
a worsening economy, we have
expanded these initiatives even further.
As a result, annualized savings are
expected to reach our target range of
$175 to $200 million when all projects
are completed in 2010.
Our other major initiative, One
Newell Rubbermaid, has sought to
capture our collective expertise and
leverage our scale across the entire
enterprise. We have furthered the
sharing of best practices and the cen-
tralization of many administrative
support functions through our con-
solidation of offices around the world.
For example, the implementation of
a new matrix organization in Europe
allowed a reduction in the number
of operating sites from 65 to 37, thus
lowering costs and improving overall
effectiveness. Our new corporate
headquarters in Atlanta is the epicenter
for all these activities. The consolidation
of our corporate staff and ultimately
three of our 13 GBUs will bring approxi-
mately 700 Newell Rubbermaid
employees together under one roof.
The next area of focus lies in sales
and operations planning. To attain
best-in-class status, we plan to elevate
our forecast planning to generate
more timely, accurate and reliable
information. This will enable us to more
precisely match production to sales,
thereby improving customer service
while also improving our inventory turns
and enhancing our balance sheet.
Strategies to improve planning
include further rationalization of our
supply base, which has decreased
from 25,000 to 18,000 suppliers in
just three years but can go even lower.
We also launched a supplier operations
excellence program to improve lead
times by a minimum of 35 percent
over the next three years. SKU opti-
mization will help us enhance new
product planning and execution.
Finally, the ongoing implementation of
SAP, our enterprise resource platform
of choice, will be an invaluable tool for
all functions throughout the Company.
SAP, which is already operational in
our North American Office Products
business and in the majority of our
Home & Family segment, is scheduled
to be deployed Company-wide
by 2012.
Project Acceleration has delivered
tangible and quantifiable results in
recent years. We expect the program
to be fully complete in 2010.
Measuring
Our Progress
n 2008
n2005
Number of
Manufacturing Facilities
48
80
Sourced Goods as a %
of Cost of Products Sold
48%
27%