80/20

A driving force behind much of our success at ITW is our 80/20 business process, a practice that keeps us focused on our most profitable products and customers. The concept underlying 80/20 is simple: 80 percent of a company's sales are derived from the 20 percent of its product offering being sold to key customers.

Put simply, too often companies do not spend enough time on the critical 20 percent of their key customers and products and spend too much time on the less important 80 percent. Our view is that once you know who your high volume customers are, you can begin to understand what drives your growth and what your true costs are in the business. At the same time, we don't typically walk away from low volume customers; we just treat them differently, via outsourcing and specialty pricing programs.

Known internally as the ITW Toolbox, this repository of proven strategies and techniques guides our business process and helps us find new ways to enhance customer satisfaction as well as drive margin growth and profitability. Specific strategies that help us reach our goals include: product line simplification, segmentation, in-lining, cellular manufacturing and outsourcing, as well as manufacturing to the market rate of demand.