Siemens 2010 Annual Report Download - page 129

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

better regional balance between sales and procurement vol-
ume. The final measure within our initiative was to optimize
our supply base by reducing the number of our suppliers and
to intensify our cooperation with those suppliers that contrib-
ute most to our value creation.
In fiscal , we had set clear and ambitious targets for the
above-mentioned measures within our Supply Chain Manage-
ment Initiative. By the end of fiscal , we achieved our first
target to increase the share of the Siemens-wide managed
procurement volume by %, compared to the level of fiscal
. As a second target, we had intended to reduce our num-
ber of suppliers by % in the medium term. We also achieved
this target by the end of fiscal . Finally, we set ourselves
the goal to increase the share of sourcing from global value
sourcing countries to % of Siemens’ total procurement vol-
ume in the medium term. In fiscal , we were able to ex-
ceed our internal targets with respect to global value sourcing
and are on track to reach our respective medium-term goal.
Another important topic for supply chain management at
Siemens is sustainability in our supply chain. We made further
progress with this topic in the current fiscal year and will con-
tinue to pursue it in fiscal . Siemens requires all its suppli-
ers to comply with the principles of the Code of Conduct for
Siemens Suppliers and to support its implementation in their
own supply chains as well. We also initiate worldwide on-site
sustainability audits by external experts to ensure the fulfill-
ment of our standards and to encourage a sustainable business
conduct throughout our entire global supply chain. Further, we
are striving to optimize the continuous feedback from our sup-
pliers by taking a new approach to feedbacks. In particular, we
want to find out from our suppliers how Siemens can better
support and integrate them in implementing sustainability
topics.
In addition, we have designed an Energy Efficiency Program for
our suppliers. By conducting environmental and energy effi-
ciency checks, we work with our suppliers to identify any po-
tential for reducing the consumption of energy and resources.
In this regard, we draw upon the expertise and know-how
gained in connection with our own environmental program
and our Environmental Portfolio. For further information, see
“– Sustainability – Environmental protection.” We are planning
to roll out this program to the first , suppliers over the
next two fiscal years.
Production and quality management
Siemens has in excess of  major production and manufac-
turing plants in more than  countries worldwide. A produc-
tion and manufacturing plant is defined as a facility at a busi-
ness level, in which raw or source materials are transformed
into finished goods on a large scale by using equipment and
production resources such as machines, tools, energy and la-
bour. More than  production and manufacturing plants are
located in the region Europe, C.I.S., Africa, Middle East; over 
production and manufacturing plants are located in the
Americas and over  production and manufacturing plants
are in Asia, Australia. With more than  production and
manufacturing plants, the Industry Sector accounts for the
greatest proportion of these, followed by the Energy Sector
(more than  facilities) and the Healthcare Sector (more than
 facilities).
Key elements of Siemens’ production site strategy are a sus-
tained improvement in the cost position for our products and
solutions and the development of new markets. In one of its
largest growth markets, China, Siemens has a presence based
on more than  production and manufacturing plants. In-
house production is therefore one of the most important cor-
nerstones of Siemens’ operations. One of the most significant
features of Siemens’ production activities is the diversity of
products, volumes and processes: The spectrum of products
ranges from optical semiconductors to -tonne steam tur-
bines; production volume can be anything from a single cus-
tomer-specific order to high-tech serial production; and pro-
duction processes range from automated production in clean-
rooms to manual final assembly of major installations on
construction sites.
We aim to improve our production processes continuously to-
wards lean principles, so that we can satisfy the growing re-
quirements of our customers as well as consolidate our cost
position and that of our customers compared with competi-
tors. With the implementation of lean principles based on the
Siemens Production System (SPS), Siemens is achieving
shorter lead times and is therefore able to deliver a higher
level of quality in its processes, products and solutions. This is
enabling us to improve flexibility and reliability in our deliver-
ies to customers. Employees are actively involved in process
design and are therefore the cornerstone of a sustainable
change management system.