SIEMENS

Generating greater economic output using less material is like trying to square a circle. According to a study conducted by the German Material Efficiency Agency, raw materials account for around 42.9 percent of total costs in manufacturing industries. Personnel costs are a distant second at 17.9 percent. The experts who conducted the study concluded that efficient use of expensive resources can generate greater savings than trimming labor costs, which in some quarters are regarded as being too high.

In its Vision 2050 report, the World Business Council on Sustainable Development in Geneva states that the savings potential in relation to raw materials is far from exhausted. A similar view was taken in the European Commission’s “Roadmap to a resource-efficient Europe” report, which was published in the fall of 2011 and concluded that even simple measures for more efficient resource utilization can quickly produce positive results. In many cases, the investments required for this are low and the amortization times short.

Finding new ways of improving resource efficiency is an integral part of many R&D activities at Siemens. In fact, there are several hundred cross-functional material optimization projects under way throughout the company. These projects pool the expertise of materials specialists, production planners, and procurement managers. “You have to understand how costs are generated within value chains and then develop rules to prevent resource waste,” says Michael Händel, who is responsible for supply chain management of company-wide direct materials.

The principle here is that the lower the material cost per product unit, the greater the competitive advantage achieved on the market. Siemens engineers are therefore studying the composition of cost-intensive components, as well as the process steps used in their production. The insights they gain flow into material optimization projects. “Our commodity engineers visit suppliers and work with them to develop less expensive alternatives,” says Händel.

Helping Suppliers. A Mexican company that supplies Siemens with sand casting machine housings once pointed out that its foundry wasn’t making enough money. A Siemens team supported by commodity engineer Dr. Pradeep Pawar then spent three days studying the casting process onsite. Acting on the recommendation of the Siemens experts, the plant’s managers redesigned the sprue system and a short time later were able to achieve enormous material savings while also improving product quality. They also managed to save Siemens and its suppliers a lot of money in the process.

As a leading supplier of product lifecycle management (PLM) software, Siemens and its specialists address costs that are identified as far back as the early phase of the product lifecycle. “Costs are usually 20 to 30 percent above the target value by the time we’re called in,” says Mark Westermeier, Head of Lifecycle Management at Corporate Technology (CT). As Westermeier also points out, experts then have to retrace everything to the beginning and check to see if the product in question conforms with the exact requirements of the market.

The search for the best price begins with the search for the best technical concept. That’s why regular meetings are held that bring together more than 100 experts from development, quality assurance, commodity engineering, and procurement units of many Siemens areas. The experts exchange information, develop special tools and methods, and jointly launch commodity engineering projects, several hundred of which are now up and running. The projects have had a big impact on costs, and are therefore also helping the company achieve the goals of its Siemens 2014 program.

Strategies for replacing expensive raw materials with less costly composites are becoming increasingly important. “Composites are a very interesting means for making more efficient use of raw materials,” says Dr. Friedrich Lupp, Chief Engineer at Corporate Technology in Munich. Lupp points out, for instance, that cooling tubes in generators are usually made of copper, a material that requires the use of a complicated soldering process and expensive silver solder. However, it’s also true that sufficient cooling can be achieved with welded steel tubes — and CT specialists have developed and now supply the welding tools necessary to accomplish this. “Resource conservation will be a decisive factor for business success in the future,” says Lupp. This development can already be seen in the trend toward lightweight design and the use of composites in automobile manufacturing, as well as in the increasing amount of research being done with so-called technical plastics.

“For example, biopolymers made of renewable raw materials could be used in some areas as an alternative to conventional plastics,” says CT materials researcher Dr. Dieter Heinl. Petrochemical standard plastics such as acrylonitrile butadiene styrene (ABS) have an unfavorable environmental performance. In view of this, Siemens researchers working in a project with BASF, the Technical University of Munich, and Hamburg University developed a composite made of renewable palm oil and starch. “We wanted to demonstrate the potential offered by bio-based plastics,” says Heinl. The new mixture displays physical properties similar to those of ABS, but it also needs to be softened using polypropylene carbonate (PPC), nearly half of which can be produced with carbon dioxide from power plant exhaust gases. The environment thus benefits in two ways. Firstly, the use of palm oil, starch, and exhaust gas means valuable petroleum resources aren’t consumed, and secondly, the process produces no additional greenhouse gas emissions.