Black & Decker 2014 Annual Report Download - page 37

23
to continue to gain market share and consolidate the tool industry. This combination will result in a change to the composition
of the Company's reportable segments beginning in the first quarter of 2015.
Continuing to Invest in the Stanley Black & Decker Brands
The Company has a strong portfolio of brands associated with high-quality products including STANLEY®, BLACK
+DECKER®, DEWALT®, Porter-Cable®, Bostitch®, Proto®, MAC®, Facom®, AeroScout®, Powers®, LISTA®,
SIDCHROME®, Vidmar®, SONITROL®, and GQ®. The STANLEY®, BLACK+DECKER® and DEWALT® brands are
recognized as three of the world's great brands and are amongst the Company's most valuable assets. Sustained brand support
has yielded a steady improvement across the spectrum of brand awareness measures, most notably in unaided Stanley hand tool
brand awareness. During 2014, the STANLEY® and DEWALT® brands had prominent signage at nine major league baseball
stadiums and 30% of all Major League Baseball games. The Company has also maintained long-standing NASCAR and NHRA
racing sponsorships, which provided brand exposure in over 62 race weekends in 2014. The Company has continued its ten-
year alliance agreement with the Walt Disney World Resort® whereby STANLEY® logos are displayed on construction walls
throughout the theme parks and STANLEY®, MAC®, Proto®, and Vidmar® brand logos and/or products are featured in
various attractions where they are seen by approximately 45 million visitors each year. Additionally, Stanley is “The Official
Tool Provider of the Walt Disney World Resort®.” In 2009, the Company also began advertising in the English Premier
League, which is the number one soccer league in the world, watched weekly by 650 million people. From the beginning of
2012 through the end of 2014, the Company advertised in approximately 500 televised events. Starting in 2014, the Company
became a sponsor of the world’s most popular football club, FC Barcelona, including player image rights, hospitality assets and
stadium signage. The Company advertises in 53 televised Professional Bull Riders events in the US and Brazil, as well as the
The Built Ford Tough Series, which is broadcast in 129 territories and to more than 400 million households globally. The
Company also sponsors three professional bull riders, winning three of the last four world championships. Additionally, the
Company sponsors a team and two riders in Moto GP, the world's premiere motorcycle racing series, and has entered a
partnership with the Chinese Basketball Association (CBA). The Company will continue to allocate its brand and advertising
spend wisely and it currently generates more than 230 billion brand impressions annually.
The Stanley Fulfillment System (SFS)
SFS employs continuous improvement techniques to streamline operations (front end & back office) and drive efficiency
throughout the supply chain. SFS has five primary elements that work in concert: sales and operations planning (“S&OP”),
operational lean, complexity reduction, global supply management, and order-to-cash excellence. S&OP is a dynamic and
continuous unified process that links and balances supply and demand in a manner that produces world-class fill rates while
minimizing DSI (Days Sales of Inventory). Operational lean is the systemic application of lean principles in progressive steps
throughout the enterprise to optimize flow toward a pre-defined end state by eliminating waste, increasing efficiency and
driving value. Complexity reduction is a focused and overt effort to eradicate costly and unnecessary complexity from the
Company's products, supply chain and back room process and organizations. Complexity reduction enables all other SFS
elements and, when successfully deployed, results in world-class cost, speed of execution and customer satisfaction. Global
supply management focuses on strategically leveraging the company’s scale to achieve the best possible price and payment
terms with the best possible quality, service and delivery among all categories of spend. Order-to-cash excellence is a
methodical, process-based approach that provides a user-friendly, automated and error-proof customer experience from intent-
to-purchase to shipping and billing to payment, while minimizing cash collection cycle time and DSO (Days Sales
Outstanding). Other benefits of SFS include reductions in lead times, rapid realization of synergies during acquisition
integrations, and focus on employee safety. SFS disciplines helped to mitigate the substantial impact of material and energy
price inflation that was experienced in recent years.
SFS is also instrumental in the reduction of working capital as evidenced by the 61% improvement in working capital turns for
the Company from 5.7 at the end of 2010, after the merger with Black & Decker, to 9.2 at the end of 2014. The continued
efforts to deploy SFS across the entire Company and increase turns have created significant opportunities to generate
incremental free cash flow. Going forward, the Company plans to further leverage SFS to generate ongoing improvements both
in the existing business and future acquisitions in working capital turns, cycle times, complexity reduction and customer service
levels, with a goal of ultimately achieving 10 working capital turns.
In addition, the Company is embarking on an initiative to drive from a more programmatic growth mentality to a true organic
growth culture by more deeply embedding breakthrough innovation and commercial excellence into its businesses, and at the
same time, becoming a significantly more digitally-enabled enterprise. A new breed of digital technologies is changing the
competitive landscape at unprecedented rates, creating both threats and opportunities, and it is clear that organizations that
stand still will be left behind.