Siemens implements streamlined structure in U.S.

September 16, 1993

Siemens will carry out a radical restructuring of its U.S. operationsnext month. Structural changes will coincide with the hiring ofa new president for Siemens Medical Systems in Iselin, NJ, accordingto Werner Maly, group president of the worldwide

Siemens will carry out a radical restructuring of its U.S. operationsnext month. Structural changes will coincide with the hiring ofa new president for Siemens Medical Systems in Iselin, NJ, accordingto Werner Maly, group president of the worldwide medical companybased in Erlangen, Germany.

Robert V. Dumke, who headed up the industrial automation divisionof Siemens in the U.S., will take over as president of SMS, followingthe retirement of Robert J. MacKinnon, long-time head U.S. executive.

The operational changes, first revealed earlier this year (SCAN4/7/93), bring all of Siemens' medical businesses directly underthe control of SMS, including Siemens Ultrasound, nuclear medicine/SiemensGammasonics, all other imaging modalities, patient monitoringand linear accelerators.

The ultrasound and nuclear medicine businesses will retaintheir worldwide product responsibilities. They will function withina type of matrix organization, serving directly under SMS butretaining ties to special committees of the medical board in Erlangen,Maly told SCAN.

Dumke will have an advantage in coming from outside medical,in that he has no predisposition to any of the various businessesnow gathered under the SMS roof.

An important factor in the new structure is its impact on thevendor's overall U.S. tax burden. The new centralized organizationshould save Siemens several million dollars in state taxes, Malysaid.

Also effective Oct. 1, SMS will consolidate a decentralizedstructure of 26 district profit centers into eight. The rest willremain staffed but will function as normal sales offices. Manyimaging vendors, including GE Medical Systems, have also strengthenedcentralized operations in order to maintain cost controls andoperational efficiencies in an increasingly competitive marketplace.

"In today's market, you need more steering and control--likeat GE," Maly said.

Siemens Medical is in the midst of a cost-reduction effortthat trimmed 900 positions last year and will eliminate 2000 morethis year and about the same number in 1994, Maly said. Some 400of the positions cut this year will be in the U.S.

The vendor is investing in new factories and developing newprocedures that will allow it to produce high-quality imagingequipment at a reduced price. More use will also be made of remoteservicing centers to reduce service overhead and improve performance,he said.

"We are spending about 65% of our research and development(funds) on ways to cut costs and bring out cost-optimized products,"Maly said.

Siemens is building a new CT factory that will provide forlean production methods already implemented in angiography equipmentmanufacturing, he said. Angiography production time has been cutby half.

The vendor focuses less on automation and more on developingbetter procedures to trim production and installation times, hesaid. For instance, testing--even for radiation--can be performedduring manufacturing, rather than taking additional time at theend of the process. A lead cage is dropped from the ceiling toperform angiography radiation testing during assembly. Systemsare also shipped whole to customers rather than disassembling,shipping and reassembling on site.

"We cut installation time from a worst case of six monthsto six weeks," Maly said. Following these production andsiting enhancements, however, the vendor now must make more painfulcuts in administration and overhead costs, he said.