Improve profitability - The Big 5
Five strategic initiatives called the Big 5 will increase profitability for Getinge Group by leveraging the scale in the organization. Overall, the Big 5 are expected to lead to an EBITA improvement of SEK 2.5-3 billion by 2019. The five focus areas are:
1. LEAN SUPPORT AND ADMINISTRATION
Three independent business areas will merge into one Getinge and thereby create a more lean support an administration of the Group as well as reduced management levels. This will be achieved by structure simplification, backbone consolidation, process harmonization and continued development of the shared services functions.
2. INDIRECT SPEND OPTIMIZATION
Consolidation and implementation of strategic sourcing of indirect spend, that is purchases of goods and services that are not directly incorporated into the Group’s products, will be achieved through consolidation of the supplier base, leveraging spend categories as one company and negotiating centrally.
3. DIRECT SPEND REDUCTION
A reduction in direct spend, that is purchases of goods and services that are directly incorporated into Getinge’s products, will be achieved through more efficient use of resources, consolidation of the supplier base and by reducing the complexity of components in the product development phase.
4. PORTFOLIO SIMPLIFICATION
The product portfolio is to be rightsized through clearer profitability transparency and discontinuing the manufacture of unprofitable products and options that do not demonstrate customer value.
5. COMMERCIAL EXCELLENCE
A comprehensive set of initiatives are being implemented globally to improve customer segmentation and prioritization, optimize the sales and service mix and improve discount management according to customer classification and performance. Important plans and targets have been developed for realizing the savings potential of the transformation program. This work is being led by the newly established Program Management Office, which will facilitate the change and follow up on plans and progress.