Siemens sticks to savings pledge Siemens will deliver on a promise to find €3bn in savings in its supply chain and keep its commitment to green technology as it seeks to close a profitability gap with competitors, says a senior executive of the German engineering group. Siemens last month announced a €6bn cost-cutting plan after a fall in profits and new orders. The group also surprised investors by revealing that Barbara Kux, board member for supply chain management and sustainability, would leave the company when her contract expires at the end of next year, half way through the two-year cost-cutting programme. In an interview with the Financial Times Ms Kux, 58, defended her legacy and vowed that Siemens would still deliver on the promised savings. The €3bn target is only possible because of what I have set up in the last four years . . . I'm very confident, I know exactly what can be done . . . I can tell you that the €3bn can be delivered. We are set up to achieve that. Ms Kux, a former Philips executive, was appointed in 2008 to oversee Siemens" green portfolio and increase centralisation in Siemens" purchasing and the amount of components and services purchased from emerging markets. She became one of Germany's most prominent, and highly paid, female executives. Under her leadership Siemens achieved "upper single-digit" billions of euro in supply chain savings and raised the proportion of bundled purchasing from less than 30 per cent in 2008 to about 55 per cent in fiscal 2012. Meanwhile, Siemens" environmental portfolio increased from €19bn to €33.2bn in revenues during that period, equivalent to 42 per cent of total sales. However, the German engineering conglomerate now plans to modify its supply chain strategy by focusing more during the manufacturing and research process on "design to cost," to ensure its products are competitive in the market. This will entail greater involvement of Siemens" business unit heads in purchasing. The company is overhauling its diverse portfolio of products - which ranges from industrial automation technology to trains and medical scanners - by selling its unprofitable solar business and some water treatment assets, and strengthening core businesses via acquisitions. Last month, Siemens agreed to acquire Invensys" rail division for £1.7bn. Ms Kux rejected the notion that Siemens was weakening its commitment to green technology as it tried to cut costs. Everything has to have a business case . . . We have shareholders and they want a return . . . That led to the decision on solar that we're not the best owner," she said. She said green technology remained a "very big business opportunity and we in Siemens are fully in there." Ms Kux said she had not sought a renewal of her contract because she had achieved her goals and out of a desire to focus more on supervisory board roles in the future. Still, her departure triggered speculation that she had encountered opposition among Siemens" managers to her role. Peter Loescher, chief executive, has tried to transform Siemens culture, which he described to the FT in 2008 as "too German, too male and too white." Angela Merkel, the German chancellor, last week said she was losing patience with German companies that have appointed comparatively few female board members. Mr Kux acknowledged that she was "not everybody's darling" but insisted that she has worked well with Siemens" powerful sector chiefs. I think we've reaped all the synergies we can reap on the total Siemens scale . . . Now the challenge will be target costing," she said. In wind, for example, we have 50 Chinese competitors, so it's important to identify what the cost level should be and this has very much to be run by the businesses and the engineers, in co-operation with supply chain management. And that's why I've proposed to move this closer to our businesses. Ms Kux rejected the suggestion that Siemens" cost-cutting plan could mean a partial reversal of her centralised purchasing legacy. Why should we reverse what we've done? . . . This [centralised] network has been established and it will remain . . . We want to maintain these bundling, synergy effects. That's absolutely required, it would be wrong to move that back.