Graco 2007 Annual Report Download - page 27

Newell Rubbermaid Inc. 2007 Annual Report
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Leverage One Newell Rubbermaid
The Company strives to leverage the common business activities and best practices of its business units, and to build one common culture of shared values,
with a focus on collaboration and teamwork. The Company continuously explores ways to leverage common functional capabilities, such as Human
Resources, Information Technology, Customer Service, Supply Chain Management and Finance, to improve efficiency and reduce costs. This broad reaching
initiative already includes projects such as the corporate consolidation of the distribution and transportation function and consolidating Company-wide
purchasing efforts. Additionally, during 2007, the Company streamlined its organizational structure in its move to a consistent GBU structure throughout
the Company. As part of the transition to the new GBU structure, the Company recently created and expanded leadership positions to identify and drive
synergies across business units.
The Company also accelerated the process of creating shared services for the European businesses and is expanding the scope of shared services in
the U.S and Latin America. The transition of services to the Shared Service Center in Europe is approximately 90% complete.
On October 1, 2007, the Company’s Office Products segment successfully went live with the SAP implementation for its North American operations.
This SAP go-live marks the completion of the first major milestone in a multi-year rollout aimed at migrating multiple legacy systems and users to a common
SAP global information platform. This will enable the Company to integrate and manage its worldwide business and reporting processes more efficiently.
Achieve Best Total Cost
The Company’s objective is to reduce the cost of manufacturing, sourcing and supplying product on an ongoing basis, and to leverage the Company’s size
and scale, in order to achieve a best total cost position. Achieving best cost positions in its categories allows the Company to increase investment in
strategic brand building initiatives.
Through Project Acceleration and other initiatives, the Company has made significant progress in reducing its supply chain costs and delivering
productivity savings. Project Acceleration includes the closure of approximately one-third of the Company’s 64 manufacturing facilities, optimizing the
Company’s geographic manufacturing footprint. Since the inception of Project Acceleration, the Company has announced the closure of 16 manufacturing
facilities and expects that approximately eight additional facilities will be closed under this program. Project Acceleration is projected to result in cumulative
restructuring costs of approximately $375 million to $400 million ($315 million to $340 million after tax). Approximately 67% of the costs are expected to
be cash. Annualized savings are now projected to exceed $150 million upon conclusion of the project in 2009. Additionally, the Company has broadened its
supply chain efforts to include the realization of efficiencies in purchasing and distribution and transportation in its move toward logistical excellence. For
example, the Company has consolidated the warehousing and logistics for all product groups in the United Kingdom at a single site near Birmingham,
England and has also opened a new, 400,000 square foot consolidated Newell Rubbermaid distribution center in Victorville, California.
Nurture 360º Innovation
The Company has broadened its definition of innovation beyond product invention. The Company defines innovation as the successful commercialization of
invention. It is a rigorous, consumer centric process that permeates the entire development cycle. It begins with a deep understanding of how consumers
interact with the Company’s brands and categories, and all the factors that drive their purchase decisions and in-use experience. That understanding must
then be translated into innovative products that deliver unique features and benefits, at a best-cost position, providing the consumer with great value.
Lastly, innovating how and where to create awareness and trial use, and measuring the effectiveness of advertising and promotion spending, completes
the process. The Company has pockets of excellence using this expanded definition of innovation, and continues to build on this competency in its effort
to create consumer meaningful brands. Since the beginning of 2007, the Company has launched a number of innovative new products including the
Sharpie® Chisel Tip, Levolor® Roman Shades, Lenox® DiamondTM saw blades, Graco® iMonitor,TM and the Rubbermaid® Premier line of premium food storage
containers. Additionally, the Company’s Baby and Parenting Essentials business launched the Graco Sweetpeace-Newborn Soothing Center in early 2008,
which was developed based on comprehensive research, with moms and pediatric professionals, to understand what works best to calm babies.