Siemens to save €3 billion with procurement overhaul

29 November 2012

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29 November 2012 | Anna Reynolds

Siemens is to integrate supply chain management (SCM) activities more closely into its business operations to save €3 billion (£2.4 billion) by 2014.

The company plans to introduce a framework that aligns the SCM function more closely with the business and will develop cross-functional co-operation between procurement and product development using the ‘design-to-cost’ method, where products are designed in the most cost-effective manner.

Siemens said its CPO Barbara Kux would work together with the company’s four sector CEOs (energy, healthcare, industry, infrastructure and cities) to drive savings of at least €3 billion (£2.4 billion) through this approach. At the same time, it announced Kux would leave the company when her contract expires in December 2013.

The company aims to build on its success in procurement since Kux's appointment in November 2008. It said that four years ago, less than 30 per cent of the company’s total procurement spend was aggregated, and today the figure is 55 per cent.

Further cost savings have been made through buying more cheaply from emerging countries. This now accounts for 26 per cent of Siemens’ procurement spend compared to 20 per cent in 2008.

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