FRIEDRICHSHAFEN, Germany -- ZF Friedrichshafen plans to cut its costs by as much as 10 percent over the next two or three years in response to increasing price pressure from automakers.
To achieve the target, the German-based supplier of driveline and chassis technologies is scrutinizing all its processes.
"What we will need in the upcoming two to three years is a reduction in costs of 5 to 10 percent," said Siegfried Goll, ZF group CEO, in an interview here.
"We will start with purchasing, then go through to logistics, development and production, sales and everything that's related to field services," Goll said.
"Wherever potential for improvement is identified, we'll go for that."
ZF also will try to improve productivity by 3 percent to 5 percent annually.
In June, ZF began implementing Toyota's lean manufacturing system, called the Toyota Production System, and started a continuous improvement program for all its plants.
Global sales will rise
ZF also hopes to save on personnel costs. The supplier continues to negotiate with its large workforce in Germany to create more flexible work schedules.
Meanwhile, ZF plans to increase its global sales 5 percent next year, pushing past the E10 billion a year plateau.
The company expects to finish this year with a sales increase as high as 10 percent, totaling E9.82 billion.
Goll said he'd rather predict a modest gain next year and exceed it than have to backpedal.
The increase will come in part because of ZF's strategy to supply more systems. Today, 30 percent of business is in systems and 70 percent in individual components.
"What we will see in the next five to eight years is a balancing out to a 50-50 percent situation, and the focus here will be given to the axle business," Goll said.
Sixty-seven percent of ZF's business is in light vehicles.