Easier does it for Siemens: Simplified processes are paying off. John Eisenhammer reports from Munich

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The Independent Online
THERE ARE FEW parts of Siemens, or, indeed, German industry, that can boast of a doubling in manpower last year; the general trend in the country is in the other direction.

But then the Productivity Centre in Europe's biggest electronics and engineering conglomerate has a distinctive way of doing things. It is at the forefront of the campaign by the head of Siemens, Heinrich von Pierer, to tug the vast company away from an ingrained belief in size and in the infallibility of German engineering.

Like Helmut Werner, the incoming head of Mercedes-Benz who recently warned that over-engineering risked pricing the car manufacturer out of the market, Mr von Pierer is seeking to reform an industrial ethos forged by the predominance of the engineer.

Product development tended to be driven by the know-how and demands of engineers, on the assumption that customers could not fail to be delighted. But as troubled times have increasingly exposed the weaknessesin such assumptions, the cry has gone out to simplify and to bring the client back into the centre of things.

This is the philosophy at the Productivity Centre, now boasting a staff of 20 scientists, economists, psychologists - and, of course, engineers. Formed two years ago, it has the task of getting the colossus - or 'moloch', as centre members like to describe their company - to change its ways.

'Time is the lever to achieve everything,' said the centre's Rudolf Grimmer. 'Under the condition of stable or even reduced resources, achieving a substantial reduction in time automatically improves quality and lower costs.'

This is not just management school talk. For instance, Siemens simplified its telephone production to the extent that the lead time from order to delivery was reduced from seven weeks to three days. 'The number of machines involved in production was reduced; there was greater standardisation and a reduction of elements in the phones and the number of suppliers,' said Mr Grimmer. As a result, he said, quality improved dramatically, with the error quotient dropping from 16 per cent to 3 or 4 per cent.

The common thrust of these fitness programmes is to flatten management structures, bringing the development, production and sales functions together to create a specific procedure for each product.

'We have to stop parts of the business having their own playing fields and rarely looking beyond them,' says Gerd Roedel, who headed a fitness programme in relay systems. The first step was to separate the production of general-purpose, telecommunications and automotive relays into three processes. Then development, manufacturing and sales were brought together as one business team to decide on clear specifications. Important clients took part in the project meetings from the outset.

'We had set a goal of halving our break-even time. In two years we made it,' said Mr Roedel. The average experience of the Siemens fitness programmes, according to Mr Grimmer, was that time savings of 40 per cent are possible, with cost savings of between 10 and 20 per cent.

(Photograph omitted)

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