Hamilton Beach 2007 Annual Report Download - page 27

products is helping HBB reduce product costs. In May 2007,
HBB completed its transition to third-party manufacturing.
The company realized continued improvements in 2007 as a
result of manufacturing restructuring programs implemented
in 2007 and prior years.
Furthermore, HBB’s ongoing Value Improvement
Program seeks to reduce costs of processes, components and
products at suppliers’ plants. The company’s objective is to
maintain a significant competitive advantage by combining
low-cost, third-party manufacturing capabilities with HBB’s
extensive manufacturing experience. This program provided
significant benefits in 2005 through 2007, and additional
incremental gross margin benefits are expected in future years.
Continuous quality improvement. HBB is committed to
continuous quality improvement throughout all areas of the
company. HBB has made quality a significant focus at key
suppliers in China by providing guidance on specific processes
and techniques to ensure high quality, consistency and
efficiency. These efforts should pay off increasingly as expenses
for implementing this program have already been incurred.
Further improvements in already high levels of quality were
realized in 2007 as evidenced by consistently low product
return rates, and these improvements are anticipated to be
maintained in 2008 and beyond.
Supply chain optimization. HBB’s continued focus on
supply chain management in 2007 resulted in performance
improvements for the company and for HBB’s retail customers.
HBB continues to implement improvement projects at its
Memphis, Tennessee distribution facility, and the company is
increasingly offering customers additional efficiencies through
direct-ship programs, where third-party suppliers route products
directly to retailers’ warehouses. HBB expects to further
improve its capabilities in 2008 through implementation of a
new supply chain software system, which is designed to enhance
collaborative planning, forecasting and replenishment processes
with several key retailers. Benefits from this program are
expected to be realized in 2008 and 2009.
Key Programs to Leverage Innovation
HBB relentlessly pursues innovation in its product
categories through its superior ability to research, create, design,
test, package, promote and launch new product concepts. The
company also strives for environmental responsibility across the
entire value chain. Programs supporting this strategy include:
Product development process. HBB’s product development
process is designed to create a steady stream of innovative
products that exceed current market offerings in features,
performance, style and value. HBB’s goal is to deliver the most
innovative products at the most competitive costs possible and
to bring to market products that represent best-in-class
performance. HBB utilizes in-depth consumer research that
enables the company to develop products with consumer-
preferred features and high rates of market acceptance. HBB’s
engineers in both the United States and China, as well as
engineers at the company’s suppliers in China, all contribute to
the process for designing successful new products. This program
to enhance profitability is an ongoing investment that is
expected to bring both short-term and long-term benefits.
New product introductions. Driven by its consumer-
oriented product development process, HBB has demonstrated
a strong track record in new product introductions. Additionally,
patent protection is vigorously pursued and enforced, when
appropriate, for new products, product features or designs.
In 2007, approximately 40 percent of the company’s U.S.
consumer sales were from products introduced in the previous
three years. The revolutionary Hamilton Beach® BrewStation®
Below left to right: Hamilton Beach® professional stainless steel iron, Hamilton Beach® digital 2-slice toaster, Hamilton Beach® 6-speed classic hand mixer.
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