Industrial Marketing Management 35 (2006) 91 – 102

Business partnering—a driving force for innovation

Klaus Wucherer *
Mitglied des Zentralvorstandes Siemens AG, Wittelsbacherplatz, 2 80333 München, Germany

Accepted 10 August 2005

Abstract

Win – Win situations are used and also created by companies which cooperate with each other, complement each other on a synergy basis and
work together fairly and competently. Today, business partnering has therefore become a key qualification for companies. This should not depend
alone on the commitment of individual persons.
This article describes how Siemens has organized its company, services and products using partnering solutions and how it has installed this
concept as an intrinsically dynamic process. Thanks to institutionalized partnering, B2B interfaces have been established to form a rational
alliance, offering benefits to all involved, and can be used regardless of the size of the company. These offerings generate Win – Win situations
themselves—and provide individual employees in large companies with a structural framework for a personal partnering initiative.
D 2005 Published by Elsevier Inc.

Keywords: Cooperative R&D; Partnering; Innovation; Alliances

1. Business partnering—a driving force for innovation
1.1. Siemens as partner
Siemens, founded in 1847, now is active in more than 190
countries, has almost 160 years of experience in international
markets, and currently employs approximately 430,000 people.
Product development and manufacturing are centered on
Europe, the U.S. and Asia. Siemens is the global market leader
in several business sectors such as automation and drives.
For Siemens, business partnering is one of the most
important, if not the most important, strategy for improving
and securing market positions. For us, business partnering is
not restricted to cooperation with selected partners, but is a
basic corporate attitude that imbues everything from strategic
alliances to day-to-day contact with users. This basic attitude
also characterizes the design of our products, systems and
services, and not least the structuring of the company into
self-contained divisions that are clearly understandable for the
market. Their cooperation with each other within the
company follows the same partnership principles as cooper-
* Tel.: +49 9131 727 227; fax: +49 9131 727 421.
E-mail address: klaus.wucherer@siemens.com.
0019-8501/$ - see front matter D 2005 Published by Elsevier Inc.
doi:10.1016/j.indmarman.2005.08.014
ation with our customers and suppliers who we regard in
every way as partners.
The ability to cooperate has always been one of the skills of
all Siemens management generations because win –win situa-
tions only arise when the possibilities and requirements of
cooperating companies are combined, and these can only be
tapped and exploited economically in partner relationships.
Partnership here means:
˝ Taking fair account of the interests and potential of all
participants,
˝ Committed and sustained pursuit of common goals,
˝ Long-term expansion of the commonly created and
exploited win –win situation to strengthen all involved.
1.2. All corporate levels
If you initiate a cooperative partnership, you must be
convinced of the sense and purpose of the partnership.
However, it has been shown time and again that it takes more
than just the will to cooperate of the management levels of the
participating companies to fully exploit the potential of win–
win situations in practice. Those carrying out the policies in
the participating companies must be just as informed and
92 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
convinced of the benefits of and need for the cooperation, and
they must also be capable of implementing the cooperation.
This requires a continuous and maturing culture of mutual
cooperation at all levels of the participating organizations,
right down to the product level. It is thus obvious that while
the decision in favor of a cooperative business attitude is an
initial and important step towards business partnering, it does
not in itself guarantee unconditional and immediate success.
Partners must prove themselves, make sure they qualify as
partners and practice being one.
In the 160 years of experience in international markets, fair
cooperative business relationships have always been part of the
Siemens corporate culture. However, since the beginning of the
1990s, Siemens has been following such an orientation more
selectively, more consistently and for the long term.
It has been proven that the benefits for the users and end users
of our products, systems and services can only be maximized by
taking a thoroughly holistic view that includes the entire creation
and use cycle of a technology, a system or a product, right up to
disposal. This maximization of user benefit is crucial to success.
Only this results in the best possible return on investment for the
user—and secures the vendor’s market position. This has been
the experience of many Siemens divisions during the course of
the company’s history, including the Automation Group.
1.3. From fighting for survival to the world leader—through
cooperation
At the height of the crisis in mechanical equipment
manufacturing (around 1993), ever-decreasing sales figures
forced mechanical equipment manufacturers and automation
equipment vendors to develop new, workable strategies.
Personally backed initiatives for visionary cooperation guided
not only Siemens and the participating partner companies out
of the crisis. The shared aim of countering unit cost price
dumping with optimized lifetime value provided German and
Fig. 1. In 1993, the market for machine tools was in a serious crisis.
European mechanical equipment manufacturing with a strate-
gy, still valid and workable today, that opened up new
prospects for the future. By constantly optimizing the benefits
and added value of our systems, the Automation and Drives
Group is today’s global market leader in the automation of
machines and plants (Fig. 1).
1.4. Orientation of use results in a universal definition of
partnership
Win – win situations are constantly created and exploited
through cooperation with companies and institutions that are as
technologically advanced and use-oriented in their area as
Siemens is in the area of automation and drives. The
partnership relationship with individual companies as well as
industrial organizations or public agencies has repeatedly
contributed to the early market introduction of economically
relevant innovations and thus to improving our own compet-
itiveness and market position and those of the partner. These
cooperations are based on the basic partnership attitude that
Siemens maintains and cultivates towards all users and end
users of its products and systems. Our strength is based to a
high degree on absolute effort and the ability to constantly
improve the productivity, competitiveness and profitability of
our customers and end customers.
The consciously cultivated basic partnership attitude to-
wards the individual market players– from the supplier, through
the development partner, right up to the end customer –is the
fertile ground on which win –win situations prosper and on
which they can be exploited and secured in the long term.
1.5. Intensive market contact and holistic viewpoint make
innovation possible
The broad-based and intensive contact with users and end
customers of our systems, molded by mutual cooperation,
 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
generates the necessary in-depth insight into the technical and
economic needs of mechanical equipment manufacturers and
plant builders, industrial operators and the manufacturing
sector, and the concerns and difficulties they face. Knowledge
of the basic motive forces of future trends springs from this
direct contact with users and end customers. It enables
Siemens not only to equip its products and systems with
benefits that are perceived as especially valuable, but also to
simultaneously standardize them for flexible use. Knowledge
of underlying market currents must be incorporated into
product and system innovations at an early stage in order to
be ready – just in time – with solutions for the upcoming
technical and economic challenges. By the time there is
market demand for them along a wide front, these solutions
have already been tested and optimized in pilot versions in
our partner companies. In this way, trends are set and the
market is shaped. As trendsetters, Siemens and its cooperating
partners also achieve good EBIT margins in markets plagued
by cost pressures—and this is the indispensable requirement
for sustained innovative power. Leading positions in patent
rankings in Germany, Europe and also the U.S. prove that
Siemens has for long been the most important trendsetter in
automation.
1.6. Mechatronic Support, ePS, CoC—innovative, extremely
beneficial services offered in cooperation
We see ourselves as a partner, we act accordingly, and we
have a great deal to offer. This must also be obvious from the
outside so that interesting companies can find us. Innovative
services such as the globally unique Mechatronic Support and
the electronic Production Service (ePS) Network, but also the
sector-specific Application Centers or the technology-oriented
Centers of Competence, are also to be regarded as a
cooperative effort. Siemens concentrates the highest technical
competence here for maximum customer benefit and thus
provides, de facto, a preliminary service that visibly documents
the readiness and capability for synergetic give-and-take within
the scope of a continuing partnership.
1.7. Trust decides on the opportunity for innovation
Deep insight into the needs and visions of a company is only
guaranteed to those who can be fully trusted. It is therefore
crucial to successful business partnering and efficient syner-
getic innovation that the interests of your own company are
clearly and plausibly distinguished from those of the potential
partners and that they are communicated transparently, both
internally and externally. Only in this way can mutual
cooperation develop the necessary dynamic for shared suc-
cessful innovations.
1.8. Innovation based on standards
The readiness to make your own contribution is of crucial
importance to being accepted as a partner. One of the many
ways this is expressed at Siemens is in the development of
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innovative services. Because in order to not only open up a
win – win situation initially but to expand and secure its
profitability on a sustained basis, significant investments in
the partnership may be necessary—not least in order to secure
sufficient connection of the partner’s business processes and IT
environments. Along with optimization of cooperative business
processes, consistent business partnering for Siemens thus
encompasses the promotion of non-proprietary standards in the
IT interfaces of these business processes, such as in the
ordering system, purchasing, exchange of project-specific
information, and material planning and logistics.
Vendor-independent standards for the organizational-tech-
nical side of cooperations make it easier to enter into
partnerships and to jointly tap into profitable win – win
situations. The use of established standards also secures the
value of the investment in cross-company IT interfaces. The
standardization of these interfaces, actively promoted by
Siemens, gives direct support to the trend towards the value
networks of companies operating in synergetic partnerships.
Our route to the partnership orientation of the company, and
especially the Automation and Drives Group, is sketched out in
the sections below and takes us through the following:
˝ Individual standards-based solutions that simplify the
management of partner relationships,
˝ Innovative value added services such as the simulation of
actual processes that prepare the ground for new win– win
situations and that result in new partnerships by attracting
innovative companies,
˝ Evolutionary innovation of existing technologies and the
development of new base technologies in cooperation with
medium-sized companies, industry, public research and
standards bodies,
˝ Strategic alliances with large and small partners for
improving market position and the sales and earnings
situation, as well as reducing costs.
2. Individuality and standards
The following is as applicable to business partnering as to
classic personal relationships: to fulfill your role as a partner,
you have to pay attention to the requirements, needs and
conditions of the other party to the relationship. The trust
principle demands that you must prove yourself to be basically
fair in order to be accepted as a long-term reliable partner. A
partnership-oriented company must therefore structure all
business relationships on a partnership basis, and not just a
few of them. In view of the individuality demanded of business
relationships, huge costs threaten at first glance.
These misgivings prove to be irrelevant in practice because
the needs of the partner companies are very similar in many
aspects. They are based to a large degree on classic virtues such
as discretion and reliability. Another factor common to all joint
ventures is that they must provide both quick and sustained
return on investment. What is needed are partners who
competently accompany the use of technical products and
systems, and in doing so relieve users of onerous, time-
94 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
consuming, costly and risky detailed questions that are not part
of their core competence.
A very large proportion of the elements required for
cooperative structuring of business relationships can therefore
be initiated extremely efficiently through a binding and reliably
established cooperative company credo, and made available by
far-sighted, extremely benefit-oriented design of products and
services. It can take a number of years before all the individual
approaches towards an efficient, integrated, practice-oriented
range of tools have fused together and come to fruition, but one
thing is quickly apparent: the more thoroughly the internal
business processes have been standardized and efficiently
tightened up with regard to business partnering, the more
freedom individual employees will have to act flexibly in their
dealings with customers, and to find individual solutions for
those aspects of the partnership not covered by standard
processes. In automation engineering, the success of this
concept is especially clear because it is our conviction that
the demand for ‘‘Individual solutions based on powerful and
flexible standards’’ is immediately reflected at the level of
systems, products and services.
2.1. Fundamental: product development with partnership
orientation
Automation has a key role to play in all modern
technologies, especially in mechanical equipment manufacture
and plant building. This role increases the more the benefits
of mechatronic principles and modularity are used. However,
as interesting as automation and the idea of using a specific
device with extreme features may be for the engineer, such
details are irrelevant to the user: automation is a pragmatic
means to an end. The machine has to do what is expected of
it, and it has to do it as simply, reliably and economically as
possible.
However, maximization of economic effectiveness today
covers much more than just increasing cycle times or other
simple productivity indicators. As well as high performance,
the primary demands are for openness and flexibility:
openness for integration into production networks, openness
for simple integration of user-specific software and hardware
functions, openness for integrated access to all production and
machine data for production verification and diagnostics
purposes. This openness of automation systems also secures
the independence of users from their electrical equipment
suppliers, because it allows them and third-party vendors to
maintain and service existing applications. This means the
partnership with the electrical equipment supplier remains
voluntary in the long term.
The greatest possible functional flexibility of the automation
systems is required, as well as openness, so that the most varied
requirements of a machine, a production site, a sector, or an
industry can be covered with just a few different automation
components. This immediately reduces the cost factor involved
in establishing and maintaining know-how. It also makes
service and maintenance easier, and rationalizes spare parts
inventory.
Taking account of these interests of the user as partner
makes demands on our system developers, but also results in
substantial benefits for us as a vendor of technical solutions:
the flexibility of our systems is an unconditional requirement
for (a) being able to offer individual users a solution that
exactly matches their technical and economical requirements
simply by scaling the hardware and software, and (b) being
able to distribute the probably high development costs for
functionally flexible systems over sufficiently high unit
quantities for a good price/performance ratio. The success is
indicated by the number of different systems and system
versions required for market coverage. This grows significantly
more slowly in the case of Siemens than the number and
complexity of the market segments covered by these systems.
A current example is the Sinamics family of drives that covers
an extremely wide range of applications with low-cost
solutions using integrated components. The area of application
of this family of drives ranges from low-cost machine modules
for simple transport tasks, through motion control applications,
right up to high-precision machine tools and machining
centers. Mechanical equipment manufacturers can perform a
host of drive tasks with just a minimum of drive-related know-
how. At the same time, industrial operators require significantly
smaller stocks of spare parts for electrical drives, even in
complex production plants.
2.2. Standardization enables integrated engineering—simple
access to the individual solution
The conviction that only one holistic viewpoint results in
maximum utilization of automation systems for the user
resulted in the early development of higher level system
concepts at Siemens: Totally Integrated Automation, Totally
Integrated Power and Open Architecture. While Open Archi-
tecture (OA) is the basis for individual and flexible automation
of machines and plants, Totally Integrated Automation (TIA)
and Totally Integrated Power (TIP) are the philosophical
superstructure for an integrated and cross-sector system
technology in the automation of machines and plants, as well
as in energy distribution in buildings, industrial plants and real
estate. Each of the three system concepts covers a self-
contained task area in electrical/electronic equipment, but the
systems overlap and use the same elementary standard
interfaces.
Higher level system concepts like TIA, TIP and Open
Architecture are an essential requirement for presenting
ourselves as a valuable partner to an extremely wide and
varied range of users. Only within the scope of a higher level,
holistic concept can engineering tools be made available that
make development as simple, quick and rational as possible
with standardized look-and-feel, plug-in interfaces for technol-
ogy-specific wizards and tools for partial and fully automated
startup. This means users can transform their ideas into market-
ready products much more quickly and safely, and with lower
costs than they could just a few years ago. Minimization of the
time to market, constant improvement in development security,
and reductions in engineering costs benefit all users of Siemens
 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
automation systems—while continuously improving Siemens’
market position over a long period.
In this sense, Totally Integrated Automation is in itself the
manifesto of the partnership orientation of automation engi-
neering, and only by tending towards maximization of the
benefits of all partners/users does the concept receive its depth
and scope. More than 10 years after its formulation, the
visionary principle of Totally Integrated Automation bears yet
more fruit from system generation to system generation.
The partnership-oriented superstructure of Totally Integrated
Automation means today that practically every user can find a
technically and economically optimized automation solution
from Siemens: from the mechanical equipment manufacturer
specializing on one element of a process chain, to the company
looking to homogeneously automate an entire plant with
extremely different process and manufacturing steps. Such as
Batavia Transmissions Ltd., for example.
2.3. Batavia Transmissions in Tonawanda/Ohio
At its site in Tonawanda, Batavia Transmissions operates a
joint venture between the German gears manufacturer ZF
Friedrichshafen AG and the Ford Motor Company. This joint
venture produces a series of automatic gears (CVT—continu-
ous variable transmission) used in the automobile makes Ford
Focus C-Max, Ford Five Hundred, Ford Freestyle and Mercury
Montego from model series 2004/2005. The production line of
the joint venture had to be set up as new and encompasses
approximately 150 machine tools, machining stations and
handling stations from different manufacturers.
Siemens advised the planning team. First, all requirements
affecting the automation, data traffic and IT environment in the
widest sense were clarified with the operator company. Then
the Siemens employees worked out with which of the currently
available automation resources the requirements could, firstly,
be implemented, and secondly, which alternatives would
further improve the economic effectiveness of the project with
additional benefit aspects. Finally, a solution was proposed on
the basis of ‘‘Transline’’. Transline is an integrated automation
concept for production lines that is also used by European
automobile manufacturers and suppliers as the basis for total
solutions in manufacturing automation. It is based on indus-
trially field-proven standard components. Turning and milling
machines, machining centers, transfer and handling equipment,
surface finishing stations, assembly stations and test equipment
were fitted with a uniform operator interface based on
Transline 2000 HMI Pro. This keeps the training overhead
for personnel extremely low. Employees can be used extremely
flexibly also on changing machines and machining centers.
Work planning is thus significantly more independent of the
personnel manning the shift, holiday planning, fluctuations in
employee numbers, and sickness than is the case on production
lines without an integrated HMI (Human Machine Interface)
philosophy.
The integrated uniform automation system –all machines of
all manufacturers are equipped uniformly with the same
controller – allows simple coordination of the machining
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stations, supply with parts programs and tool data, tracking
of finished parts on their route through the production plant,
logging of all quality-related data, and much more. Although
the machine tools have been ordered by a host of different
manufacturers, the automation concept, integrated down to the
last detail, ensured extraordinarily precise specifications to the
mechanical equipment manufacturers and high system-related
suitability of the delivered individual stations. The complete
production line was implemented in only a little more than 1
year—on time and within budget. This is a remarkable success
by any standards, as those responsible at Batavia Transmissions
acknowledge.
Such success is only possible in a cooperative partnership.
People in the U.S., Europe and Asia have cooperated
intensively, culminating in ‘‘shoulder-to-shoulder’’ work at
the Tonawanda site. Analyses of the win –win situations at the
heart of the project and the success strategies of the many
participating mechanical equipment manufacturers show that
the benefit-oriented, partnership-based Siemens systems and
products have made a direct contribution to this success and
even underlie it.
Siemens supported the project in Tonawanda with its own
personnel who provided design consultation service for the
overall system on-site, supported the integration of all 150
machines into a self-contained production line, and held
training courses for operator and service personnel. The use
of Siemens personnel was relatively low-key because right
from the start of planning all participants knew the standards on
which they could base their share of the solution, and the
uniform system interfaces guaranteed the interaction of all
components right from the start.
3. Attractive services promote broad-based cooperation
We regard ourselves as partners and we act accordingly. So
we never abandon our customers, either before or after
purchasing our products and systems. With a range of
innovative services and excellent sector-specific technology
know-how, we support our customers from development,
through implementation and operation, to retrofit. Siemens
concentrates the highest technical competence here for
maximum customer benefit and thus documents readiness
and capability for synergetic give-and-take within the scope of
a more continued partnership.
3.1. Simulation optimizes development costs
Testing alternatives – without having to implement them – is
becoming more and more important in the optimization of cost-
related processes, machine designs and products. Instead of
building and modifying prototypes until the required product or
machine properties have been achieved, we optimize at the
computer. This saves a great deal of time and money, and the
results are better because they are more complete overall and
more consistently optimized in detail.
But we do not stop at the simulation of a machine or
product. The trend is towards simulating all the stations of the
96 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
production plant complete as a virtual factory, and thus
optimizing not just the product but the entire production
process. A shared database and the dynamic combination of all
simulation-related information leads to the ultimate aim of
taking account of modifications to a planned product right back
at the layout stage and when optimizing the required
production equipment. All this takes place at the level of
simulation and before investing in production hardware,
production facilities or prototypes.
With extremely cost-sensitive and complex products in
particular (such as automobiles or aircraft), comprehensive
simulation of the product and its overall production reduces the
development risk, shortens the development time, and makes it
possible to rationalize standard production more consistently
than with the classic procedure—while simultaneously reduc-
ing startup and testing times.
Such complex simulation tasks are a science in themselves.
To be able to take account of dynamic aspects of machine
behavior realistically in the simulation, the properties of
actuators, sensors, motors, drives electronics and control
technology must be known down to the last detail. For this
reason, Siemens has for a long time been actively driving the
use of internal system know-how for virtual environments. The
fact that Siemens can offer innovative services and product
options such as Mechatronic Support, Virtual Production or
Machine Simulator at a high level makes us an interesting
proposition as a partner for many industrial companies. Such
offerings are rare and in some cases, globally unique.
Siemens provides the high level of continuous investment in
the development of industrially suitable, beneficial applications
of simulation technologies as a preliminary service to meet the
challenges of current and future joint ventures. The benefit for
Siemens: intensive contact, even at early project phases, with
companies prepared to invest. This gives us the opportunity of
being able to offer economically optimized total solutions
instead of just automating individual components or production
segments, and with this the chance to bring the full
performance power of Totally Integrated Automation to bear.
At the same time, every such individual project offers the
opportunity of further perfecting the electronic services and
allowing them to fuse together, thus securing and expanding
the technological advantage.
The Siemens simulation-based services start with the first
design idea and go through to the finished product via the
simulation of parts programs.
3.2. Mechatronic Support—jointly optimizing machine
performance on a lasting basis with minimum overhead
In modern high-power and modular machines, there is an
extremely close relationship between mechanical components,
electronic components and closed-loop control systems. This
interlinking of mechanical and electronic elements into a
mechatronic system is one of the mega trends in mechanical
equipment manufacturing. Inflexible mechanical elements are
replaced by electronic components. For example, the central
drive on the vertical shaft is replaced by individual drives that
are electronically synchronized. The low inertias permit
significantly more dynamic movements and thus higher
productivity. However, as the dynamic response increases,
the oscillatory characteristics become more complex. These
oscillatory characteristics can only be controlled with an
optimized mechanical design.
This is why Siemens has set up Mechatronic Support,
aiming primarily at mechanical equipment manufacturers. The
technological core of this service is the simulation of the
oscillatory characteristics of a planned design in order to
discover the weak points and mechanical limits right back at
the planning stage. The planned mechanical features of the
machine are simulated on a computer and the dynamic
characteristics of the drives and their control are simulated
for all essential operating situations, especially borderline
situations. This makes clear which effects currently limit the
power and performance of a design and what causes this. From
this information, the mechanical equipment manufacturer can
work out the suitable modifications to the mechanical systems,
and Siemens can derive the optimal drive dimensioning, so that
the desired success can be achieved with the least possible
overhead (Table 1).
Mechatronic Support is thus an extremely efficient method
of optimizing the performance of a machine even before
production of the first prototype. The achievable performance
can be estimated right from the start (in terms of quantity and
quality)—as can the electrotechnical equipment and the costs
involved. This reduces the engineering compared with iterative
optimization on the prototype and development security is
significantly improved. With innovative machine concepts in
particular, for which there is no previous experience, this high
development security removes the typical risks of going down
a new route.
3.3. Huron Graffenstaden: staying one idea ahead secures
the lead
The French machine tool manufacturer Huron Graffensta-
den from Illkirch in Alsace planned a highly dynamic 5-axis
high-speed gantry-type milling machining center that can
manufacture extremely large workpieces, such as dies for
automobile building or the aircraft industry, significantly faster
and more accurately than previous machines. The dynamic
response and precision required for this, at traverse speeds of
up to 60 m/min, are achieved with the use of linear motors.
Huron cooperated on this project with Siemens Mechatronic
Support. The design and drive dimensioning of the new
Table 1
Development goals
General goal Program objective
Shorter development cycle Faster time to market
Increased safety Safe achievement of development goals
More creative concepts Risk-free evaluation of new kinematics
Higher quality Targeted machine optimization
Fast machine analysis Measurement on the real machine and
simultaneous simulation
 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
machine were optimized to an extremely dynamic response at
maximum rigidness with the help of the simulation, requiring
minimization of the moved body. The machine design
optimized step-by-step in cooperation with Mechatronic
Support appears to be so open compared to classic develop-
ments that experienced design engineers at Huron, used to
much more solid designs, had doubts about the functional
capability of the new machine. However, the performance of
the machine optimized in cooperation with Mechatronic
Support corresponded with that of the simulation to well over
99%.
The result: Huron had the expected engineering and
hardware costs under control over the entire course of the
project and knew what performance would be possible with the
machine even before the first machine part was manufactured.
3.4. Troubleshooting and retrofit
In contrast to purely development-oriented simulation
approaches, Mechatronic Support also has outstanding metro-
logical procedures for analyzing the dynamic response of
existing designs. This makes Mechatronic Support a sought-
after and field-proven troubleshooting instrument. If a machine
design does not provide the expected performance, the
measurements and analyses of Mechatronic Support can
expose the limiting factors extremely quickly, efficiently and
precisely. The profitability of a retrofit can also be worked out
and optimized in the same way with Mechatronic Support.
3.5. Unique resource as motivating factor in cooperative
partnership
In this version, Siemens Mechatronic Support is globally
unique. Development costs, time-to-market, and technical and
economic performance of a machine project are optimized
simultaneously in cooperation with Mechatronic Support.
Although Mechatronic Support can be ‘‘purchased’’ as a
standardized service, the customer is regarded as a partner right
from the start.
Mechanical equipment manufacturers can immediately
quantify the first benefits of the open, partnership-based
cooperation, and they and their end customers can also expect
to profit from this investment in the future, because mecha-
tronically optimized machines offer an improved price/perfor-
mance ratio and are generally less prone to wear and tear.
Mechatronic Support is an extremely important business
partnering instrument for Siemens. Direct benefits, and the
technological and economic prospects revealed by continuing
cooperation are immediately available—for the mechanical
equipment manufacturer, the user and also for Siemens.
3.6. Simulation of production processes safeguards planning
and production
Whereas Mechatronic Support is aimed at optimizing the
performance of individual machines or machine modules,
services and product options such as virtual production and
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machine simulation are oriented more toward the optimum
application of production resources and the rationalization of
the production process itself. With all these services, Siemens
helps its cooperation partners toward improved planning
reliability, more rational use of investment resources and a
shorter time to market.
3.7. Virtual production and machine simulator
Virtual Production is the simulation of the production of a
specific part on a specific machine tool. This machining,
however, is not simulated on the machine tool, but on the PC,
so that the machine can continue producing in parallel with the
simulation. The aims of Virtual Production are the optimization
of machining quality, the reduction of production time and the
systematic tracking of the causes of machining errors. To this
end, the simulation of the virtual production considers the parts
program which controls the production of the workpiece, the
parameterization of the machine and the properties of the
controller and the drives. On request, the dynamic properties of
the machine mechanics can also be determined and considered
in the simulation. The result is a set of concrete proposals for
optimizing the parts program and the machine parameters so
that the fullest potential of the machine can be exploited for the
task in hand.
For this simulation all relevant simulation parameters must
be precisely known, which is why this service is aimed
predominantly at machine manufacturers and operators who
already use Siemens systems. The partnership aspect:
Siemens supports the user actively, even during the utilization
phase of the Siemens systems. The user does not take any
risks: the simulation and optimization of parts program and
machine data does not demand any interruption of production
whatsoever.
With the Machine Simulator, user programs can be
simulated in conditions similar to those in practice and the
programs optimized with regard to surface quality and
production times, before even one speck of swarf has fallen.
This considerably speeds up and safeguards the engineering. At
the same time, the machine simulator is an excellent tool for
instruction and training.
3.8. Optimization and safeguarding of the operation—motion
control information system MCIS and ePS network
The optimum use and maximum availability of machines
and system resources are the potential that must be exploited in
order to stand up to the increasing competition in machine
construction.
The motion control information system (MCIS) offers an
entire range of powerful software modules for production
machines. The individual modules are of modular design and
fully coordinated with one another. Modular, flexible and user-
friendly, the system can always be adapted individually to each
production process—regardless of the size or requirement
profile. In addition, international standards guarantee simple
operation and fast commissioning. The user has immediate
98 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
access to all relevant information from any location. Machine
performance, plant parameters as well as cycle times and
utilization rates can be verified, monitored and evaluated. The
utilization rate and machine availability are significantly
increased.
Using the ePS Network service, Siemens initiated an
economic platform for efficient data management and global
communication (see Fig. 2). The competence of the ePS
services is in the provision of powerful and reliable IT
infrastructures for the recording, editing, compressing and
archiving of specific machine data. The infrastructure for this is
made available in the form of high-performance servers,
storage media and links to e-mail and SMS systems. The
innovative and internet-based information and communication
architecture insures that only a minimum load is placed on the
control of the machine.
The raw data that accumulates during operation is trans-
ferred via the Internet by means of a secure protocol to an
expert system, where it is automatically edited and evaluated.
By comparing the precision that can currently be achieved
using the machine with reference data for the machine, it is
possible to predict reliably when and where erosion of critical
proportions will occur. Preventive maintenance can thus be
implemented at a significantly later point than before, which
reduces maintenance costs.
In the case of a fault, service or maintenance personnel can
be alerted by e-mail or text message. Detailed, current
information is already available on the ePS servers at this
time, thereby shortening the response times in the event of a
service call. By remote access all operating functions are
available to the service personnel, such as editing, parameter-
izing, parts programming or program administration, in the
same way as if they were on-site at the machine.
Machine manufacturers and operators are frequently forced
to cooperate repeatedly over the entire period of use of a
machine. The ePS Network provides them with an instrument
that considerably reduces the expense of technical after sales
support for the machine manufacturer and at the same time
guarantees the shortest response times in the case of faults—a
‘‘win –win situation’’ for both users of the ePS Network.
Fig. 2. Utilization of virtual commissioning.
3.9. Application centers and centers of competence
The experience gained in the Siemens automation systems
from intensive partnership contacts with machine constructors
and industrial companies result in automation systems with
powerful functions. In the case of innovative projects, however,
the user does not usually have access to experience that shows
which of the conceivable alternative solutions will lead to the
objective and which of the alternatives represents the most
favorable overall solution and offers the greatest additional
benefits. Especially in the case of innovative or complex
projects, the search for the best possible automation solution is
a task in itself and it is a task that will determine the level of
success. For the performance achieved with an automation
solution, its level of suitability for the task and its price/
performance ratio are the most important criteria by which the
user assesses the Siemens systems. In short: the performance
actually achieved with the solution determines the sense of
quality, not the potential performance of the system.
For this reason, Siemens maintains Application Centers and
Centers of Competence that make engineers with the best
training available as personal partners to every sector of
industry. Their task is to find the best possible automation
solution for the individual user and for the individual task.
Application engineers have practical experience with all
technologies that are of importance to the respective sector.
They are continually brought right up to date with developments
in every relevant Siemens system. In addition, application
engineers are not only hand-picked for their technical compe-
tence but also for their personality, so that they themselves are
competent, dependable and likable partners in the cooperation.
Application engineers are actively integrated into the
development of systems and products, as they have an
excellent insight into the practical requirements with their
contact to the cutting edge of machine and plant construction.
These in turn can be fed back into the continuing development
of the Siemens systems and practically extend the standard
scope of functions of the automation system (Fig. 3).
Application engineers do not advise about the best possible
solution of a task, but accompany ‘‘their’’ project, making their
 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
Fig. 3. Effects of virtual commissioning on the planning process.
own contributions toward development until the successful
conclusion. Success is guaranteed, since long before a project
cooperation is accepted in the application center it will have been
analyzed precisely to determine the level of performance that can
be achieved with the proposed solution. The partner from the
machine construction is assured that the solution will function. As
a rule, the performance to be achieved is contractually agreed.
The synergy effects of this cooperation are enormous,
creating a profitable win – win situation in every individual
case. The machine manufacturer or industrial customer is
assigned a contact partner, with whom they can discuss the
technical aspects of their project competently and without a
long preamble or introduction. They receive a technically and
economically optimized solution proposal with a function and
performance guarantee, for which their personal contact, the
application engineer, assumes responsibility and performs
subsidiary tasks. Siemens profits by means of a very intensive
access to the requirements of the most innovative machine and
plant constructors. It is guaranteed that the development of the
systems and products is directly practice-driven and is thus also
relevant to practice and the market. In addition, the work of the
application centers insures a continuous flow of innovative,
marketing-relevant reference projects, in which the extreme
demands on the functionality, performance and/or the economy
have been successfully implemented. The investment in such
cooperation is very worthwhile—for both sides.
4. Strategic alliances
Business partnering is based on a balance of interests that
leads to added value by means of synergy.
4.1. Partnership with public institutions speeds up innovation
in basic technologies
Partnerships with public agencies have proven very advan-
tageous in the development of new basic technologies. An
example is the development of a bio-sensor system in
99
cooperation with the Institute for Silicon Technology ISIT and
the semiconductor manufacturer Infineon. ISIT, Infineon and
Siemens jointly developed a compact, industry-standard and
easy to manufacture sensor system, with which the presence of a
chemical element can be verified and quantified. On an
electronic chip biomolecules are anchored, which react imme-
diately to the presence of the media to be detected and thereby
emit electrical signals. The new bio-sensor system is consider-
ably more flexible to use and more economical to manufacture
than all previously available, usually optical sensors for
comparable tasks. In the cooperation for the system integration,
Siemens was responsible for the fact that the new sensor system
together with its compact evaluation tool is very easy to
integrate into system solutions.
The significance of the innovation and the successful
cooperation between industry and public research were recog-
nized with the German Prize of the Future for 2004. For
Siemens, the prospects of the solution developed in a synergetic
partnership are of considerably more importance than the prize
that is coveted by many. The effect of this is improved market
access to biotechnology, its equipment manufacturers and
suppliers. Existing industrial process-engineering solutions
become more powerful and flexible through the use of the
new bio-sensors. By means of successful cooperation, Siemens
can offer users from the field of process engineering a further
genuine competitive advantage (Fig. 4).
4.2. Employer’s Liability Insurance Associations are important
partners in safety technology
A partnership with public agencies that has been successful
for a long time is the cooperation with Employer’s Liability
Insurance Associations in safety technology. Today a far higher
level of safety is achieved than just a few years ago with a
considerably lower expenditure on technology.
Siemens profits from the cooperation with the associations by
means of the earliest possible access to information concerning
the latest safety related requirements and standards. They can
100 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
Fig. 4. Web-based Teleservice based on the ePS Network Services.
then be considered at an early stage in the definitions for the
medium- to long-term system planning. The result of this is that
sophisticated and comprehensive state-of-the-art safety func-
tionality has since been integrated as a universally available
option in all Siemens automation systems. In comparison with
separate safety systems that are installed in addition to the auto-
mation, humans, machines and environment can be protected
more easily, economically and efficiently with integrated safety
technology. ‘‘Safety Integrated’’ has assumed the rank of a basic
technology that conceals enormous potential for innovation and
saves industrial users considerable expense in some cases.
The Employer’s Liability Insurance Associations benefit
from the cooperation, as they can point to a functioning and
economically justifiable application of the new standard. They
are thus unburdened of the responsibility of having to prove to
the industry that their safety requirements can be implemented
practically and economically.
Siemens works on an international basis preferably with
those associations that are making the greatest effort to promote
the safety standards. The safety functions of the Siemens
systems are therefore accepted worldwide and are certified
according to all major standards, this being an important
prerequisite for acceptance among the partners operating on a
global basis in the machine and plant construction sector.
4.3. Profibus User Organization
This success of partnership and cooperation with the
associations in safety technology is not an isolated case. With
the availability of safety related protocols it is possible today to
connect all safety-related components of a machine or plant via
standard fieldbuses and industrial Ethernet, which brings
significant cost and handling advantages for machine and plant
constructors as well as for the operators, beyond a certain
expansion of the plant. Siemens has helped to structure the
practice-oriented definition of the non-proprietary safety-
oriented protocols: by means of close cooperation with the
Profibus User Organization.
4.4. Global Leadership Program
In niche markets, the global market leaders are often small,
innovative and highly specialized enterprises. Very often they
use Siemens automation systems, as our integrated system
technology and the availability of modular systems for
standard solutions for frequently occurring sub-tasks in
machine automation simplify the engineering to a great extent.
In this way even the smallest development teams can offer
functionally complex and sophisticated solutions within a
competitive time frame. Additional important arguments for
Siemens automation remain the high acceptance among end
users, the worldwide availability of service and the sophisti-
cated logistics for the supply of spare parts at short notice.
They also enable small companies to offer reliable support to
large customers.
In fact, the ‘‘Global Leader Partnership’’ principle works
well and– despite the necessary advance work relative to the far
smaller partners – is very profitable also for Siemens.
 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
4.5. Partnership in supplier chains
As a leading supplier of electrotechnical equipment, we at
Siemens are very familiar with the role of a supplier and we
know that cooperation has a special value in the supplier chain.
It improves the cost structures, promotes the secure adherence
to delivery promises and simplifies the flexible and short-term
response to the current market situation. Specifically in the
supply chain, however, it was frequently observed that the
cooperation did not necessarily run according to partnership
criteria, but instead the conditions of cooperation were
characterized disproportionally by the interests of the stronger
partner. Distinct examples are provided by the automotive
industry. The tough global competition between the car
manufacturers and the need to keep the value of shares as
high as possible, insure a high, in some cases extreme, cost
pressure along the entire supplier chain for KFXZ components.
In the past, this cost pressure has threatened the existence of
many suppliers and still does in some cases today. When the
last surviving supplier of a component gets into difficulties due
to the cost pressure and the dependence on its customers, only
then does it become clear that suppliers and customers are
mutually dependent on one another. One way out of this
dependence is for the supplier not only to supply components,
but also to assume an actively constructive and responsible role
in the production chain, i.e. to become a partner of the
customer. In this way, many lighting manufacturers are today
assuming the design and manufacture of complete headlight
modules for specific vehicle types in close cooperation with the
vehicle manufacturers. This cooperative partnership consider-
ably improves the opportunities for a company to set itself
apart from its competitors and conquer a niche market that
secures the survival and profitability of the enterprise. Business
partnering is therefore, particularly in the supply chain, a factor
Information
Exchange
Logistics
Pro-
duction
Purchasing
Research & Development
Logistics
Pro-
Purchasing duction Sales e.g. order as usual
Research & Development
Fig. 5. Partnerships change as complexity increases.
101
of success that secures the survival of the enterprise and opens
up new prospects. Siemens as a supplier of control systems has,
as already demonstrated, through partnership cooperation in the
supply chain, maintained its automation sector in the face of a
ruinous price war—and reached the top of the global market.
At present, business partnering with Siemens in the supplier
chain is concentrating on the optimization of the partnership
cooperation. This is illustrated below in an example from the
field of medical technology (Fig. 5).
4.6. % delivery reliability due to supplier collaboration system
The importance of computer tomography (CT) scanners as a
precision diagnostic tool is continuously growing, and as image
generating navigation instruments for the low-invasive opera-
tions on essential organs and the brain, CT scanners are
indispensable today. The worldwide demand for high-end CT
systems is correspondingly high. Siemens is the market leader
in this technological sector.
For clinics and private practices, not only the technical
performance of a CT scanner is an essential quality criterion,
but also the immediate operational readiness upon delivery.
The amortization of the high investment in such a device must
begin as quickly as possible. In order that Siemens can offer its
CT customers optimum satisfaction, it is very important that all
the components belonging to a CT system are available on time
and in the required quantities, even those components not
manufactured by Siemens itself.
Two suppliers open to innovation already maintained a
consignment store at Siemens for the provision of components
for the patient couches and the diagnostic and operating
stations of our CT systems. A web-based Kanban-system was
used for controlling the consignment store and for the online
exchange of ordering and billing data. In order to be able to
Logistics
Pro-
e.g. supply
Purchasing duction Sales chain
integration
Research & Development
Sales
e.g. linking a
supplier via EDI
Complexity
102 K. Wucherer / Industrial Marketing Management 35 (2006) 91 – 102
Fig. 6. Continuous process optimization.
supply CT customers with their scanners as fully guaranteed
complete systems, the delivery reliability of the suppliers
however must be further safeguarded, and in particular
guaranteed by all suppliers.
In cooperation with selected suppliers, a Supplier Collab-
oration System was worked out. Its essential properties are the
bundling of all information concerning the supply chain, via a
shared online portal. All interfaces of the suppliers involved
converge at this point. This creates the direct link between the
suppliers and the Siemens SAP system in the form of a supplier
workplace, where the incoming information is immediately
processed and forwarded, effectively in real-time. At the same
time, binding min – max limits for the warehousing and stocks
of the components required by Siemens and well as a
contractual agreement by all suppliers for absolute reliability
of delivery insure that Siemens can guarantee its CT scanner
customers today the complete availability of the CT scanners
from the moment they are delivered.
The supplier collaboration system has since been introduced
not only at all suppliers of CT components, but also for the
entire Siemens medical division. For the suppliers, this
standardized form of cooperative partnership achieves a
considerable organizational simplification and significantly
improved reliability of planning. Siemens can guarantee its
CT scanner customers 100% reliability of delivery that is
insured by the more intensive cooperation with the suppliers in
the supply chain—and at the same time reducing the ware-
housing stock by C300 million (Fig. 6).
Klaus Wucherer is Member of the Corporate Executive Committee of
Siemens AG. Professor Wucherer started his career with Siemens AG in 1970
as a project engineer. Soon after joining the company, Prof. Wucherer switched
to the Automation and Drives (A&D) Group and, after heading up the Siemens
A&D Group as President, was appointed in 1999 to the Corporate Executive
Committee of Siemens AG. Prof. Wucherer is honorary professor at the
Technical University of Chemnitz and at the University of Applied Sciences in
Osnabrück.