Why Parker Gets It

Parker Hannifin has long been one of my favorite real lean companies.  As a lucky shareholder, yesterday I received their annual report.  The very first large print that you see when you open the cover is:

This year, Parker achieved a major milestone by surpassing $10 billion in revenues for the first time in our history.  What comes next promises to be even more exciting, as we partner with our customers around the world to increase their profitability.  Because when our customers succeed, we succeed.

That's it.  The only statement on that page... the first page.  That says a lot about what they deem most important: the success of their customers.  If they're lucky, other companies talk about what glorious new technologies and products they have and how they're expanding.  If they're unlucky they talk about what a challenge it's been and how next year will undoubtedly be better.

Parker talks about their customers.  In a lean world, creating value from the perspective of your customer is the bottom line. The next few pages include some of the usual mumbo jumbo to keep traditional investors and analysts happy, but then they couldn't resist reiterating what is really important.

Parker strives to be our customers' trusted partner.  These relationships are cultivated by listening closely to our customers and repeatedly providing them with value measured in real dollars: saved time, reduced waste, gained efficiency, expanded output, and increased profitability.

Customer trust is earned first by delivering quality products on time.

Parker's ultimate competitive advantage is serving customers. 

In sum, we follow our customers around the world and do what it takes to engineer their success.

Lean manufacturing and lean enterprise is discussed directly.

Lean Enterprise is the way we operate our company around the world.  Tools such as standard work, value stream mapping, visual controls and error proofing are used to meet objective, measurable goals.  As these tools are applied, inventory levels and capital expenditures go down while productivity, quality, and return on net assets improve.  We continue to see especially dramatic results as we introduce lean to recently acquired companies.  Lean is also taking hold in the office as areas such as finance, legal, and marketing reduce waste and improve productivity.

Hats off to Parker for another great year.  That kind of commitment to the customer almost makes us want to run out and buy their product... even if we don't need it!  Think about that the next time you read the annual report of another company... perhaps yours.

Comments

[Dave Mawhinney]

Great post, Kevin. I read it at www.supplychaindaily.com.

Parker is a great role model for the rest of us. Always think in terms of your customers' success and you will be rewarded. It reminds me of an old saying I try to live my life by: "Always give more than your asked for and you will get more than you ever expected."

Kudos to Parker! Thanks for sharing it Kevin.

[Lou English]

When lean is truly part of a company's culture it easily revels itself in everything said and portrayed. For example I learn a lot about a company from what I see and experience in its entrances. What is displayed on the walls, e.g. mission statements(look closely at what these say and don't say). posted measures, product displays, new technologies, and employee accomplishments. If my hosts show up late, or there was confusion about my appointment, I can expect to see late deliveries and quality problems in the work place. A company cannot hide its "operational being" no matter how many change projects it launches.