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1 DESCRIPTION OF THE GROUP, AND ITS STRATEGY, MARKETS AND BUSINESSES ORGANISATIONAL SIMPLICITY AND EFFICIENCY • IT, which covers Critical Power & Cooling Services and two end- customer segments: Data Centres and Financial Services when it relates to solutions integrating the offers of several activities from the Group; • Buildings, which includes Building Automation and Security and four end-customer segments: Hotels, Hospitals, Offi ce Buildings and Retail Buildings. Rationalisation and optimisation of synergies The organisation is deployed in accordance with three key concepts: specialisation, mutualisation and globalisation. Specialisation mainly concerns sales and front-offi ce operations. Mutualisation covers local back-offi ce operations at the country and regional level. Globalisation concerns the six support functions, now known as Global Functions: • Finance; • Marketing; • Supply chain; • Human resources; • Strategy & Innovation; • Information systems. A substantial portion of the Global Functions’ costs is re-allocated to the businesses using distribution keys or application bases that are generally defi ned annually. • Specialisation: in each country, each business has its own sales force and local leader as soon as it reaches critical mass. It also has a specialised front offi ce in each host country to respond more effectively to customer demand for specifi c expertise. Each business is also responsible for its overall results, both for product sales (in its business lines) and the implementation of solutions (especially for end-customer segments within its scope). Over the course of 2011, the main efforts in this area focused on strengthening, and in certain cases, implementing teams dedicated to meeting the specifi c needs of strategic customer segments with a strong focus on the collaboration between the business lines, in order to ensure these customer’s needs are met as fully as possible. In addition, the 2011 rollout Operational companies 32 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC Schneider Electric SA Schneider Electric Industries SAS of a common Customer Relation Management (CRM) tool for all the businesses, for use from the end of 2011 by 17,000 front offi ce equipment users, represented an important improvement for better sharing of sales opportunities between the various business lines. • Mutualisation: a country President is appointed in each country to oversee the Power business (and therefore, of its income statement), deployment of Schneider Electric’s strategy in the country (including all local cross-functional issues such as increasing cross-selling among businesses) and pooling of local back-offi ce resources. These resources are gradually brought together in each country or region under the country President’s supervision and can include multiple local support functions ranging from administration to project execution, depending on the situation. In addition, the country President serves as Schneider Electric’s main representative in the country, notably in dealings with employees and local offi cials. The signifi cant advances to note for 2011 in terms of this objective lie in the alignment between the information systems development plan in the different regions and the back offi ce integration projects resulting from the creation or acquisition of various entities in different countries. • Globalisation: major support functions that are not specifi c to a given country or business are gradually globalised to increase experience and leverage a signifi cant scale effect. Manufacturing and supply chain operations, areas of shared services or expertise (such as fi nance or human resources), information systems and certain marketing functions (e.g. web services) are now included within the Group’s Global Functions. Over the course of 2011, these various Global Functions have followed their structuring and rollout approach at a global level. In particular, the volume of operations dealt with by the service centres shared by the Finance and Human Resources functions (Finance shared services and HR shared services) has been a signifi cant development. Geographic dimension and legal structure The Group’s goal is to establish, and where possible, a single legal structure in each country. Schneider Electric’s simplifi ed legal organisation chart is as follows: Boissière Finance The list of consolidated companies is provided in note 32 to the consolidated fi nancial statements (see pages 205 and following ). Boissière Finance is the Group’s centralised cash-management structure; it also centralises hedging operations for all subsidiaries.
DESCRIPTION OF THE GROUP, AND ITS STRATEGY, MARKETS AND BUSINESSES ORGANISATIONAL SIMPLICITY AND EFFICIENCY 4.2 A more modular approach to information systems In 2011 Schneider Electric continued with the redesign of its IT strategy, in order to gradually roll out a common model aimed at simplifying and standardising operations. This model is developing towards a more open architecture, capable of deploying faster and less inter-dependent IT platforms to allow for easier upgrades at a lower cost. Four platforms are being rolled out for employee management, customer relations, back-offi ce functions and R&D support systems. The gradual roll out of an SAP-based information system known as “bridge” is now focused on back-offi ce functions. After pilot testing in India, Hungary, Austria, Croatia, Romania, Slovakia and Slovenia, in 2011 the bridge core system has continued to be rolled out various countries and entities. The roll out will continue in 2012. This thinking at Group level was facilitated by the globalisation of information systems within a single IT function created in 2009 that has a governance role and provides services internally. This move towards globalisation mainly involved: • gradually deploying a single IT Department that serves all businesses and users within Schneider Electric in a uniform manner. To achieve this, the most qualifi ed and competitive providers – both internal and external – will be used as needed; • gradually setting up a global IT infrastructure (networks, data centres, distributed computing and help desk) that is independent of the various managerial lines and that makes the most of the Group’s critical size and accumulated experience. 4.3 Worldwide redeployment of production and supply chain resources Schneider Electric has more than 260 production sites and 110 distribution centres around the world for whom customer satisfaction is the top priority. While working constantly to improve occupational health and safety and environmental protection, the Group’s manufacturing policy aims to fulfi l four key objectives (listed in order of importance): 1. deliver a level of quality and service that meets or exceeds customer expectations; 2. achieve competitive product costs and keep increasing productivity; 3. develop the speed and effi ciency of the system and limit production sites’ risk exposure (currency parity, geopolitical risks and changes in cost factors); 4. optimise capital employed in manufacturing operations. A number of the production facilities and distribution centres are dedicated to the global market. The other units are located as close as possible to their end markets. Although design and/or aesthetic features may be adapted to meet local requirements, Schneider Electric standardises key components as much as possible. This global/local approach helps Schneider Electric maximise economies of scale and optimise profi tability and service quality. Drawing on its global scope, the Group has re-balanced and optimised its manufacturing and supply chain resources. The Group launched a new stage in its industrial deployment in 2010. As part of the Group’s new organisation, the Power business production and supply chain resources have been globalised and combined under a single organisation, with global operating responsibility. Previously, these resources were organised by region and reported to the various Operating Divisions. In Western Europe, the United States, Japan and Australia, rightsizing plans continued to be deployed with a focus on specialising production and supply chain units and reducing the number of sites. Continuous improvement on a global scale At the same time, an industrial excellence programme called Schneider Production System (SPS) has been rolled out in all plants to substantially and continuously improve service quality and productivity. The programme also takes environmental criteria into account. Based on a lean manufacturing approach, SPS is supported by the extension of Six Sigma and Quality and Value Analysis programmes across the Group. By deploying these optimisation methods globally and sharing best practices, the Group intends to lift the operational performance of all its plants to the same high standard. Schneider Electric’s plants and products comply with increasingly extensive and stringent European regulations and with international standards governing environmental protection in all host countries. In many cases, the Group anticipates future standards. In 1992, Schneider Electric defi ned a formal environmental policy, which was revised in 2004 to take account of changes both inside and outside the Group. This policy is designed to improve production processes, promote eco-design, integrate customer expectations into the Group’s environmental protection approach and raise awareness among all employees and partners about environmental protection and energy effi ciency. In order to limit risks related to the environment generally, the Group has implemented an ISO 14001-compliant process to continuously improve the environmental performance of its plants and supply chain centres. External environmental audits were implemented in 2011 that were responsible for validating this process as well as for the consistency of assessments. The segmented response to customers’ needs Since 2011, a new approach to progress was initiated in terms of the search for responses that were better adapted to industrial operation for each customer segment (distributers, partners, panel builders, etc.). 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 33 1
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