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Review: 6th FACTON Congress "Proactive cost management and innovation are the drivers of sustainable growth"

06/30/2015

Over 60 representatives from key German and global industrial corporations along with leading industry experts came together at the 6th FACTON Congress “Securing the future with proactive cost management” on June 25th in Berlin to discuss how companies can grow profitably in an uncertain market environment. They all came to the same conclusion: Sustainable growth can only be secured through full cost and innovation transparency – not just in terms of products but also with respect to cost management.

Event sponsor Prof. Bernd Gottschalk, CEO of AutoValue GmbH and former president of the German Automotive Association (VDA), began the congress with a warning about the possibility of a split in the supplier landscape. The split would start to occur if small and medium sized suppliers in particular were unable to follow OEMs abroad where the major share of growth is taking place. “In a globalized world, the optimum value chain places new and high demands on all partners,” said Gottschalk. “It’s false to believe that OEMs are interested in weak suppliers. In addition to the best price, they want to have strong international partners.” Car manufacturer Jaguar Land Rover has long valued fair cooperation with suppliers, emphasized Adrian Mardell, Deputy CFO and Operations Controller at Jaguar Land Rover. The fact that his company was voted the most popular OEM testifies to this. Integrating suppliers early on is a decisive factor.

 

After its relaunch in 2008, Jaguar Land Rover also reorganized its cost management. Among other things, the company has increased the number of cost controllers to around one hundred. “It’s not enough to demand transparency from your suppliers alone,” explained Mardell. “You must also have a complete overview of your costs in your own company.” According to Mardell, the company used to view cost data separately, such as those from pre-production and production. “It’s dangerous when you have departments doing costing in isolation. The positive development we’ve experienced in recent years shows that viewing cost management as an overall task is the right approach.” IT systems are available to support these efforts – however, companies must not only be willing to use these, but also change their fundamental attitudes and find innovative approaches to cost management.

 

These are common guidelines in the mechanical engineering and automotive industry, confirmed Jens Delventhal, Head of Production Material, Corporate Purchasing, at Körber AG. However, the scarce human resources are a challenge: “In mechanical engineering you have to be pragmatic,” said Delventhal. “We must be bold in deciding what needs to be measured and which key performance indicators we can do without.” Andreas Müller, CFO and Member of Division Management at Georg Fischer Automotive, added that the problem is not just deciding what to measure and how often, it is also a question of how and why you use the data. A lot of data is collected at Georg Fischer, but they massively aggregate it: “Our management dossier has ten KPIs,” explained Müller. “We focus very strongly on driver-based monitoring. This means we don’t just look at the individual key performance indicators. We also look at the things that will influence our business and this KPI in the future.“

 

Alexander M. Swoboda, CEO of FACTON, concluded the day with a positive summary of the event: “Our participants made it clear that cost management should not just be considered a necessity, but an opportunity.” At the end of the day, it could even be said: “Transparent cost management is the mother of growth.”

 

The FACTON Congress is one of the leading events for executives from controlling, purchasing, production and development in key sectors including the automotive, aerospace, mechanical engineering and electronics industries. It examines modern cost management from a variety of perspectives and shows how future-oriented enterprises take a proactive approach to the current challenges.

 

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