Parker Hannifin Corporation: Donald Washkewicz's Turnaround Strategies


Code : COM0078

Year :

Industry : Engineering, Electrical and Electronics

Region : Global

Teaching Note:Not Available

Structured Assignment :Not Available

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The Genesis In 1918, Arthur Parker, an entrepreneurial engineer established Parker Appliance Company for manufacturing pneumatic brake boosters in Cleveland, Ohio, USA. But in 1919, the company had to shut down its operations due to loss of inventory in an accident. Arthur Parker re-started the company in 1924, as hydraulics and pneumatic components business that prospered even during the Great Depression of the 1930s. In 1935, the company purchased 45,000 square foot auto plant to strongly establish its operations in Cleveland. In 1945, after the death of Parker, hiswifeHelen took over the reins of the company and focused on the automation market...

Going the 'Lean' Way Parker Hannifin's lean slogan reads, "Lean - the way we do things". Traditionally, the work in the company was based on the setup time taken for production and the company focused on utilization of themachinery to justify the setup time. In order to complete production within the specified setup time, the company had to engage all its machines and capacity in production leaving no room for taking up new orders. Using the traditional method of manufacturing, the company was left with huge amounts of unwanted inventory and few customers. When recession hit the industry, order rate declined and the company was left with enormous amount of unused capacity on its shelves...

Financial Performance By 2001, implementing the lean initiative the company was able to reduce inventory worth $40 million, reduced inventory on hand by 45 days, reduced work-in-progress from 43 days to one shift and decreased lead times to less than five days resulting in an increase in cash flows by $86 million and costs savings by over $10million (for reducing additional space). The company generated net sales of $5.98 billion with acquisition adding $830 million to sales...

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