Black & Decker Reaches
For True Optimization,
Not Mere Calculation
Editorial Director
Jean V. Murphy
A conversation with Michael Martin, manager of global supply chain
strategy at Black & Decker.
Black & Decker manufactures and markets quality
power tools and accessories, hardware and home
improvement products, and technology-based fastening systems. Its products and services are sold in more
than 100 countries and the company has manufacturing operations in 11 of those. Black & Decker
recently has focused on implementing inventory optimization, using the PowerChain solution from
Optiant. Martin led this implementation, which is
helping Black & Decker define a methodology and set
targets for component and finished goods safety stock
to support customer fill rates.
Q: I know you have been at Black & Decker for
some time. How did you become involved in the
supply chain?
Martin: Yes, I have been with Black & Decker
for 20 years. I started working here as a temporary
worker when I was going to school at night. I think
I gravitated toward the supply chain because I like
being in the middle of the action. I always say that
in the supply chain you have accountability for
everything and complete control over nothing. A
lot of people have trouble with that disconnect, but
I am comfortable with it.
Currently, I have responsibility for global supply chain strategy for power tools and accessories. This involves developing new metrics and
reporting, exploring systems enhancements and
driving business process improvements. Our big
focus lately has been leading the implementation
of inventory optimization.
Q: Give us a profile of Black and Decker’s supply chain.
Martin: We build product in regional low-cost
locations like Mexico, the Czech Republic and China
and also in the U.S. More than half of everything that
we sell in a given region is made within that region.
For example, more than half of what we sell in the
U.S. is made in either the U.S. or Mexico. This helps us
balance low costs with shorter lead times.
Our largest markets are the U.S. and the European Union. In the U.S., we have three major distribution centers, in North Carolina, Tennessee and
California. In Europe, a major DC in Belgium serves
most of the EU, with a few forward-stocking locations in other countries.
Q: So short order-cycle times are a priority?
Martin: Quick order-to-delivery cycle times
are very important to our customer base. But we
have to contend with very elongated supply chains.
Even when we are making products in the U.S. or
Mexico for the U.S. market, we have components
coming in from China or Europe or other places
and these imports have very long lead times. So, we
have to create buffers within the supply chain to
enable us to meet customer demands.
Q: What were the key issues that led you to an
inventory optimization project?
Martin: We wanted to improve our inventory
turns to support corporate financial targets. As with
every company, our corporate executives set targets every year to improve performance. Inventory
management was one area where we felt there was
opportunity to increase our cash flow and make
better use of capital. There is always a trade-off
between inventory and service—how do you support higher fill rates without a heavy inventory
investment or how do you maintain good fill rates
with less capital investment? These are the issues
we were trying to balance. Where we had poor fill
rates, we wanted to see what we needed to invest
to give us the return we wanted; where we had
high fill rates, we felt there was a significant opportunity to take inventory out.
Q: What was behind your choice of the Optiant
solution?
Martin: Black & Decker had purchased
Optiant before this area came under my scope of
responsibility and had been using it with mixed
