Honeywell 2012 Annual Report Download - page 5

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That brings us to our big process initiatives. The first two, Order to Delivery and New
Product Introduction are owned by the General Manager. These two processes are the
biggest drivers of good customer service. Delivering quality product and projects on time and
“wicked great” new products are terrifically valuable to customers. HOS necessarily started as
an “inside the four walls” initiative and has expanded to become a total business opportunity.
With 70% of our operations now at Bronze level, the growth potential is remarkable. The
same is true for VPD. It’s more difficult because it has to allow for the 20% of new product
introduction that requires creativity and business judgment but the principle is the same.
Rapidly developing new products customers really want, that fulfills both expressed and
unexpressed needs, means allowing that creativity and business judgment while standardiz-
ing the 80% of the process that should be the same. Software re-use, standard components,
and simulation are great examples of the benefits of standardization. FT is really just HOS for
staff functions. We think there is another one-and-a-half to two full points of margin expansion
available to us through FT. Standardizing and mechanizing our staff processes will yield
better service at much lower cost. Our continued evolution in these three key Business
Processes will support continued growth in sales, margin rate, income, and cash.
I’m frequently asked what “inning” we’re in for this transformation of Honeywell. We’ve
been working on it for over ten years, and the more we get done, the more opportunity we
can see. It’s an awfully fun ball game we’re still in the midst of playing. So just based on what
we can see today, we’re at best in the third inning of where we can go. That makes for an
exciting future for us and our investors. We look forward to delivering on that opportunity. The
best is yet to come.
DAVID M. COTE
Chairman and Chief Executive Officer