Siemens 2009 Annual Report Download - page 139

51
 Managing Board statements, Independent auditors’ report, Additional information
95 Net assets position 97 Report on post-balance sheet date events
98 Risk report
108 Information required pursuant to
§315 (4) HGB of the German Commercial
Code and explanatory report
114 Compensation report
114 Report on expected developments
We have set clear and ambitious targets for our Supply Chain
Management initiative: by fiscal 2010, we intend to increase
the share of cross-Sector managed procurement volume by
60% over fiscal 2008 levels; and in the medium term, we seek
to increase the share of sourcing from emerging markets to
25% of the Group’s total volume, and reduce our total number
of suppliers by 20%.
Program for the reduction of legal entities
In order to reduce complexity within the structure of our group,
to optimize synergies and to strengthen governance and trans-
parency, we have started a program aimed at reducing the num-
ber of legal entities, including minority investments, to fewer
than 1,000 by 2010. Due to significant M&A activities targeted at
enhancing and optimizing our portfolio, the number of legal
entities had substantially increased in recent years.
The reduction will be achieved primarily by integrating legal
entities into existing Siemens regional companies. Stream-
lining actions within our portfolio will also contribute to the
goal. At the end of fiscal 2009, we successfully reduced the
number of legal entities to approximately 1,300. This compares
to approximately 1,600 legal entities at the end of the prior
year and approximately 1,800 legal entities at the end of fiscal
2007. For fiscal 2010, we have set an additional reduction tar-
get of 300 legal entities.
RESEARCH AND DEVELOPMENT
It is our aim to continue to strengthen our innovation capabil-
ity. Therefore Siemens increased research and development
(R&D) spending in fiscal 2009 by 3.1% year-over-year, to €3.900
billion.
forward, our primary objective will be to sustain the achieved
cost savings after the completion of our global SG&A program.
The job reduction measures under the SG&A program, which
provided for around 12,600 job cuts worldwide, primarily in
administration, have also been completed during fiscal 2009.
The restructuring expenses associated with these job cuts
were largely accounted for in fiscal 2008, when we incurred
expenses in the amount of €1.081 billion. Within Segment in-
formation, the restructuring expenses for job reduction mea-
sures under the SG&A program and related to the program
were recognized under Corporate items.
Supply Chain Management initiative
In fiscal 2009, we have launched a Supply Chain Management
initiative with the objective of working with our suppliers to
establish a leading global procurement network, push the de-
velopment of technologies, and accelerate innovation cycles.
The initiative is intended to generate substantial and sustain-
able improvements in profitability for the Sie mens Group by
optimizing our supply chain management and to better man-
age our supplier-related risk.
One of the key levers for achieving the potential savings is
to integrate procurement activities across our Sectors. By
bundling and focusing our purchasing volume throughout
Siemens, we expect to obtain lower prices through bulk
purchasing.
A second central component of our Supply Chain Management
initiative is global value sourcing, which entails the develop-
ment of a competitive global supply network and joint product
development and innovations with our key suppliers. In addi-
tion, we want to increase the share of sourcing in emerging
countries in the medium term, in order to achieve a better re-
gional balance between revenue volume and procurement
volume.
A further measure is to intensify our cooperation with those
suppliers who contribute most to our value creation. This mea-
sure implies that we intend to significantly reduce the number
of our suppliers.
R&D intensity
Research and development
expenses (in billions of €)
Research and de-
velopment intensity
FY 2009 3.900 5.1%
FY 2008 3.784 .%
FY 2007 3.399 .%
1 R&D intensity is defined as the ratio of R&D expenses and revenue.
B25G003_E