Karlheinz Zuerl: “Most Organizations Don’t Recognize Their Optimization Potential”
In times of economic strain, reducing the workforce is often at the top of the agenda for many companies. “This is completely wrong,” says Karlheinz Zuerl, CEO of German Technology & Engineering Corporation (GTEC), “because there are usually far better options for cost reduction.” Drawing from numerous optimization projects in industry, he knows: “In most cases, costs can be reduced by at least a quarter without the need for layoffs.” He explains why it’s advisable to first exhaust all other savings potential: “Once workforce reduction is on the table, top talent leaves the company, and the remaining workforce is typically less capable. This leads to a downward spiral, with new rounds of layoffs emerging without addressing the true causes of the malaise.”
From Administration to Sales
According to GTEC CEO Karlheinz Zuerl, there are significant cost-saving opportunities outside of personnel management, particularly in areas like supply chain management, logistics, manufacturing, sales, reporting, and administration. For example, in many cases, up to half of the staff in general administration could be moved to the sales back office, Zuerl reports from his project experience. He explains: “Such a step not only halves the generally too high personnel costs in administration but also strengthens the sales department, thus boosting revenue.”
Additionally, Zuerl notes that many companies’ sales departments are still based on very old and largely outdated principles. He gives an example: “Business development in the B2B sector no longer works solely through human interaction, as is often claimed. Companies cutting their phone sales to save costs would be better off reallocating those resources to explore new ways to reach customers, such as through social networks. Of course, this requires organizational changes and targeted training, but with the help of LinkedIn and AI tools, you can find new customers. Unlike layoffs, this approach focuses on future success and leads to a wave of motivation instead of layoffs.”
Cost Management in the Supply Chain Pays Off
In supply chain management, Zuerl finds there are often substantial savings opportunities. “Cost management in the supply chain always pays off,” the CEO of GTEC states, “essentially, suppliers should be reassessed every two to three years.” Technological advances alone often allow for significant cost reductions, “but you typically only get these from your suppliers if you demand them,” Zuerl explains. In practice, he has found that the “necessary internal cost calculations for any reasonable negotiation with suppliers” are often lacking. Poor cost calculations can also lead to serious mistakes in sales, for example, when price floors are set incorrectly in offers, according to Zuerl, based on his project experience.
Optimization Potential in Manufacturing
Many industrial organizations could significantly lower their manufacturing costs through optimization, Zuerl points out. “Cycle times are much higher than necessary in most production facilities,” he says. The greatest optimization potential lies in better coordination of various manufacturing processes. Typical parameters include batch sizes, setup times, the sequence of manufacturing steps, and quality management. Zuerl gives an example: “Poka-Yoke stations or cameras with AI behind them can automatically handle ongoing quality control, so manual inspection processes are limited to spotting outliers. This reduces costs and simultaneously improves quality,” he says.
Reporting is Key
“Wrong decisions, especially regarding workforce reduction, are often due to organizations not having a clear overview of their costs,” Zuerl is certain. While declining revenues or profits, or even losses, are obvious, the underlying reasons are often hidden, as he has learned from many consulting assignments. “Company management is often astonished when we show them the true cost drivers,” he chuckles. He gives a real-life example: “We had a case where the company had invested a lot of money in expanding production capacity for a product that was making a loss with every item sold. The management didn’t even realize that their bestseller was, in fact, the company’s downfall.”
GTEC (https://gtec.asia) helps Western industrial companies to overcome challenges in Asia. The focus is on business development, the establishment and expansion of branches and production facilities, as well as restructuring and turnaround measures to bring automotive suppliers and mechanical engineering companies in critical phases back into the profit zone. Under the direction of CEO Karlheinz Zuerl, a team of consultants, experts and interim managers is on hand to work on-site with the client if necessary. The CEO himself is available for tasks as an interim general manager and for executive consulting. GTEC’s list of references includes corporations such as BMW, Bosch, General Motors and Siemens, large medium-sized companies such as Hella, Schaeffler, Valeo and ZF, as well as smaller medium-sized companies that are less well known but are operating all the more
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