Key areas of focus include reducing revenue profile complexity, optimizing organization structure and processes, consolidating
divisions and reducing bureaucracy. Simplification will increase speed, reduce costs and enable growth.
• Lean Enterprise
In recent years, Parker has made a great effort to implement lean principles across manufacturing. Parker is expanding lean
throughout the enterprise to non-manufacturing areas to further reduce costs and increase productivity and profitability.
• Strategic Supply Chain
Parker has built a competitive advantage through best-in-class supply chain management, leveraging purchasing power to
buy at the best value. The company strives to maintain a fully integrated supply chain, and continues to reduce the number of
suppliers to cultivate high-value relationships with key partners.
• Year-over-Year Growth
Year-over-year growth in four key financial metrics is correlated to driving total
shareholder return. Earnings per share (EPS) and earnings before interest and taxes
(EBIT) are the relevant corporate measures. Cash flow and division net earnings
(DNE) are the relevant division measures.
• 17% Operating Income
Aligned with the company’s goal of ranking among the best of its proxy peers,
Parker aims to achieve 17% operating income margin.
• 21.4% RONA
return on net assets (RONA) plan is a unique annual incentive available
to team members that drives sales growth, profit
and the appropriate management of assets. Achieving 21.4% RONA at the
divisions will generate 17% ROIC as a company.
• Top Quartile Diversified Industrial
Parker’s primary goal is to rank among the top 25% of its proxy peers across a range of financial measures.
• 17% ROIC
After-tax return on invested capital (ROIC) is a metric used at the corporate level to
determine how efficiently Parker is allocating invested capital to generate income,
and is strongly correlated to total shareholder return.
• Value Pricing
has a powerful effect on every company’s long-term growth. Utilizing an
industry-leading approach to pricing, Parker is able
to provide customers high-quality products and systems at the best price
based on the demonstrated value being created.