How is Siemens Transforming Procurement?

As digitisation becomes increasingly necessary for businesses to thrive in our modern, competitive and connected world, supply chain and procurement teams across the globe are transforming their practices. 

Procurement has shifted its focus from cost-cutting to value creation, and needs an appropriate network to support this. 

Siemens is just one company that has made this change, creating a "supply chain network" which better suits its goals of innovation, sustainability and resilience. 

Innovation

Technological innovation is becoming the key that gives competitors the advantage by continually seeking new ways to enhance efficiency and reduce costs.

By modernising and creating Innovative procurement strategies, such as leveraging advanced analytics and digital tools, Siemens is able to optimise its supply chain, leading to more reliable and faster delivery of materials. 

"At Siemens, we realised that our suppliers often need innovative solutions to optimise their own processes," says Klaus Staubitzer, CPO and Head of Supply Chain for Siemens AG. 

"Because we are in such close contact with the supplier network, our procurement colleagues are able to identify and address possible innovation potential within our supplier’s processes." 

Through the adoption of new technologies and practices, Siemens can also source materials responsibly, reduce waste, and lower its carbon footprint, aligning with global environmental standards and enhancing its reputation.

Ultimately, innovation in procurement helps Siemens to maintain its position as a global leader in technology and engineering, driving continuous improvement and long-term success.

"If there is potential, we can open the door to the sales teams to introduce the suppliers to Siemens’ cutting-edge technology," Klaus continues. 

"These solutions are not meant to be mere one-time transactions but long-term partnerships where we support our suppliers' growth long-term.

"Our digital products, such as the twin technology, enable process innovation, which in turn can make us a critical partner in our suppliers' success stories." 

Sustainability

Similarly, by prioritising sustainable procurement practices, Siemens can significantly reduce its carbon footprint, contribute to global efforts against climate change, and work towards meeting its regulatory requirements- avoiding any legal penalties and improving the company’s reputation in the eyes of investors, customers and other stakeholders.

"Sustainability, as I have stated many times before, is obviously no longer a buzzword," says Klaus.

"It's a business imperative. For us, procurement strategies are deeply intertwined with our sustainability goals: we demand high sustainability standards from our suppliers, which presents the unique opportunity for us to offer our own sustainability-enhancing solutions."

Through sourcing eco-friendly materials and adopting circular economy principles, Siemens can also reduce waste and lower costs, leading to more efficient operations.

Sustainability can also have a positive impact on SRM, as Siemen's Carbon Web Assessment (CWA) tool helps suppliers monitor and reduce their CO2 emissions. This supports their sustainability journey by supplying them with the technology to meet ambitious targets. 

"Similarly, our "Green Digital Twin" technology assists suppliers in sustainable sourcing, covering aspects like water usage and overall environmental impact," Klaus adds. 

"By embedding sustainability as a key lever into our strategy, our function is able create a win-win scenario that drives revenue while promoting greener supply chains."

Resilience

Finally, in maintaining a resilient supply chain, procurement professionals can ensure the continuity of operations by mitigating risks associated with disruptions, such as natural disasters, geopolitical instability, or pandemics.

A resilient supply chain allows Siemens to maintain steady production and delivery schedules, thereby upholding customer satisfaction and trust.

"The COVID-19 pandemic and ongoing geopolitical tensions made us rewrite the book on supply chain resilience," Klaus furthers. "We adopted a proactive approach to building a resilient supply chain through digitalising processes, and therefore making each node transparent." 

Prioritising this enhances Siemens' agility and responsiveness, as through the likes of diverse sourcing strategies, Siemens can swiftly adapt to unforeseen challenges, minimising downtime and financial losses.

This adaptability is essential in an increasingly volatile global market.

"The need for resilience in the whole supplier network opens up revenue opportunities," says Klaus. 

"Our suppliers benefit from our advanced risk management tools and services, which we develop and offer to ensure their operational stability. This, in turn, strengthens the relationships in our supplier networks."

It is clear that by centring these goals in the heart of its procurement and supply chain teams, Siemens has established itself as a world-leader. 

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