Miele’s competitiveness initiatives

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Miele initiates a thorough transformation 120 years after its inception. “The objective – the company said – is to expand the company’s leading market position in the premium segment for domestic appliances and commercial machines whilst at the same time sustainably securing the economic standing of the entire Miele Group”. New business units, a more powerful format for worldwide sales, a new location for digital marketing and sales and the entry into new business fields, for example, will contribute in a major way to achieving this goal. This realignment will result in clear savings in terms of business costs which will also impact staffing levels: by the end of 2021, around 1070 jobs are to be shed worldwide. “Urgent need for action, but above all enormous opportunities, result for instance from strong growth in the significance of digital channels and mobile devices to the way customers obtain information and communicate – the company explains -. This is further exacerbated by the increasingly price-aggressive behaviour of Asian corporations. Furthermore, economic prospects in important markets are greatly subdued. This situation is triggered by familiar geopolitical conflicts and risks to which no end is in sight. In this changing situation, the German family-owned company continues to rely on the strength of its brand, its unique claim to quality and its compelling innovations. This will be accompanied by a greater focus on new business fields and on increased speed and flexibility in developing new products and services. At the same time, the company will realign in the fields of administration and sales with a view to greater growth, optimise its processes in all areas and hence achieve greater latitude in terms of costs and prices. The associated challenges and opportunities will be tackled from a position of strength and with the necessary vigour”. In order to unlock potential for greater growth and identify cost efficiencies for the entire Miele Group and derive concrete measures, Miele launched its Design2Excellence (D2E) programme a year ago. “In order to promote a sense of entrepreneurial accountability within the organisation, the operative business is to be bundled in eight business units – Miele said – . The management of individual units will be given full decision-making powers with respect to their value-creation chains. These are answerable to the Executive Board with respect to turnover, costs and profitability. This gives greater power to managers and makes for shorter lines of command and decision-making. With respect to commercial machines and in the field of medical technology, it is also planned for the respective business unit to assume responsibility for worldwide sales and service at foreign sales subsidiaries. The ‘New Growth Factory’ business unit has been specifically created to identify new fields of business. The objective is to move beyond current core business areas to put the company on a broader footing and tap new sources of revenue. In order to exploit the potential of markets to the full and to cash in on regional synergies, Miele is to restructure its sales units worldwide. China, the USA and Canada, for instance, will in future report directly to the Executive Board. To continue the expansion of Miele’s digital marketing and sales expertise, digital marketing, e-commerce and digital analytics are to be merged into a new unit. The Miele Group’s new Digital Hub Marketing & Sales is to be set up in Amsterdam. To finance necessary future investments and sustainably secure the company’s economic standing, savings in the order of 190 million euro per year are to be achieved, including tried-and-tested programmes which are already running to continuously improve productivity and purchasing. This figure will predominantly come from reductions in material costs, although reductions in the personnel sector are also unavoidable. This applies to the avoidance of parallel structures and the pooling of resources in Sales, Service, Logistics, IT and standard financial operations. On balance, around 240 jobs could be shed in Germany by the end of 2021, mainly in Gütersloh (Central Headquarters, Germany). Outside Germany, around 830 jobs may be affected”. Elsewhere within the company and in the course of D2E, around 470 jobs shall be created to strengthen Miele’s digital expertise.

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