Siemens 2013 Annual Report Download - page 215

253 D. Consolidated Financial Statements
357 E. Additional Information
245 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report
246 C. Siemens AG ( Discussion on basis of
German Commercial Code)
250 C. Notes and forward-looking statements
15
Examples include the extremely lightweight and almost fully
recyclable Inspiro modular subway train and the innovative
and especially lightweight SF bogie. In the field of build-
ing automation, the Desigo facility automation system inte-
grates many of its system components into buildings them-
selves and thus achieves significant energy savings. In addi-
tion, researchers are looking for ways to integrate buildings
into smart grids. Through such integration, the buildings can
feed the electricity they produce into the grids and provide ad-
ditional power during times of peak demand.
In fiscal , Siemens launched a large “smart city” project in
Vienna, Austria in conjunction with partners. A living laborato-
ry will be created in the next five years in the waterside district
of Aspern, which is expected to constitute one of the largest
urban development projects in Europe. In this laboratory, pow-
er supply, building systems, intelligent power grids, and infor-
mation and communication technologies will interact in an
optimized way.
C.. Supply chain management
The principal goal of supply chain management at Siemens is
to ensure the availability and quality of the materials we re-
quire to serve our customers also considering innovation
strength and sustainability of our suppliers. We aim to
strengthen our competitiveness by achieving substantial sav-
ings in our purchasing volume. In fiscal , Siemens’ pur-
chasing volume amounted to approximately € billion, which
equaled roughly half of our total revenue. Our primary strate-
gies for achieving savings in purchasing are the following:
> Siemens-wide managed volume: We bundle more than
half of our purchasing volume which includes direct and in-
direct material. Through this worldwide pooling of volume,
we achieve substantial economies of scale.
> Sourcing from emerging markets: We try to move to-
wards a globally balanced supply chain network. One es-
sential element is to constantly increase the share of sourc-
ing from Global Value Sourcing (GVS) countries, which are
generally emerging economies. To accomplish this goal,
we identify, select and fully qualify suppliers from GVS
countries, and engage them in a continuous development
process that extends to sustainability thereafter. Addition-
ally, we encourage and support our suppliers to expand
their operations in order to follow our manufacturing foot-
print in these countries. In fiscal , we further increased
the proportion of our sourcing coming from GVS countries
on a comparable basis.
> E-sourcing: We significantly increased the proportion of ex-
ternal purchases that we award via electronic bidding over
the last few years to more than %.
We expect to realize further savings potential within the
framework of Siemens  by further integrating supply
chain management activities into other business activities,
such as design and production. The relevant lever in this con-
text is material cost productivity and in particular Design-to-
Cost, which optimizes the design of products in order to reduce
material cost.
We are strengthening Siemens’ innovation power by benefit-
ing from the innovative strength in our supplier network. With
our Siemens Supplier Forum, we established a platform for
regular dialogue with our top strategic suppliers at the CEO
level. With this dialogue, we aim to ensure long-term cost
leadership, realize shared growth potential and increase inno-
vation capabilities. To promote outstanding suppliers for their
excellence, we introduced Siemens Supplier Awards for a num-
ber of categories.
Sustainability is a guiding principle for our supply chain man-
agement. Sustainability requirements are therefore an integral
part of all relevant supplier management processes – such as
supplier selection, supplier qualification and evaluation, and
supplier development. We require all of our suppliers to com-
ply with the principles of our Code of Conduct for Siemens
Suppliers, which include respect for the basic rights of em-
ployees and environmental protection. We also require them to
support its implementation in their own supply chains. We
have established a risk-based system of appropriate processes
to enable us to systematically identify potential risks in our
supply chain. It consists of sustainability self-assessments by
suppliers, risk evaluation conducted by our purchasing depart-
ment, sustainability questions within supplier quality audits
and sustainability audits by external auditors. To further en-
courage sustainable business conduct throughout our entire
global supply chain, we are committed to building our suppli-
ers’ competence and intensifying knowledge transfers related
to sustainability.
In , the SEC adopted a regulatory rule, known as the “Con-
flict minerals rule.” This rule aims to increase transparency and
responsibility in the procurement of “conflict minerals” from
the conflict zones of the Democratic Republic of Congo and
the surrounding region. A project organization was estab-
lished to address the requirements within our supply chain in
fiscal . For further information, see C.. RISKS.