Kinetic Concepts, Inc. (KCI), a wound care management company, revealed cost reduction initiatives to improve the company's cost structure and maximize its growth potential. The initiatives would enhance the company's potential to increase shareholder wealth maximization and improve operational efficiency and effectiveness by streamlining its organizational structure and workforce and evaluating expenditures.
“During this global economic downturn, we believe it is prudent to further streamline our organization and reduce expenses to enable our vision of continued global expansion and investment in research and development,” said Catherine Burzik, KCI’s president and chief executive officer.
Streamlined Organizational Structure
The KCI said it has created a Global Shared Services Team (GSST), as part of its multi-pronged cost reduction efforts, to improve overall productivity and performance. Kinetic underlined that GSST would help optimize its resources through improved process design and organizational structure.
“Ensuring the right processes, organization and technology initiatives are in place will improve our efficiency and effectiveness,” said Burzik. KCI estimates the GSST initiatives will yield approximately $100 million in annualized savings by the end of 2011.
In addition to the above measures, KCI also said it expects to reduce its global workforce by about 4%, or about 300 employees. The activities are expected to result in a first quarter 2009 charge of about $7-10 million before income taxes.
“This decision was not made lightly and we view this as an essential step to ensure our future success,” said Burzik. “We are confident that our decision will result in a global workforce that will leave us well-positioned with the appropriate expertise and initiative to achieve our vision for all stakeholders now and in the future.”