Building strong foundations for future growth – driving efficiency through simplification

In line with our strategic plan, much of our work in 2015 and during this year is aimed at making a very fragmented and complex business simpler to manage particularly in terms of structure and day to-day operations.

A key part of this simplification process is rationalising our existing product portfolio to reduce waste and complexity, eliminate duplication and create space in the portfolio for new products. In 2015 we launched a project to significantly reduce the number of products in Precision Engineering’s European business. At the start of the project the European product portfolio included 450,000 products of which 13,500 represented 80% of sales. Many products were no longer sold to customers while others were sold in very small volumes. As a result, our portfolio contained a large number of redundant products driving unnecessary complexity and heightened levels of inventory and working capital.

During 2015 excellent progress was made in rationalising the product portfolio. Approximately 295,000 products were eliminated and the division is well on track to remove a further 50,000. Most importantly, this project has been delivered without any material impact on day-to-day business.

Building on the success of the Europe product rationalisation project, similar projects are now being implemented across the division’s North American and Asian operations.