Annual Report 2005/06 THE WORLD OF SOUND - Sonova

OPERATIONS AND STAFFOperationsWithin operations – which includes purchasing, logistics,manufacturing, quality, and IT – one of the priorities in 2005/06was to optimize product costs. Furthermore, the focus wason building up production to meet demand for many recentlylaunched products and the associated transfer of productionto the PALIO platform.Production sites and processesDuring 2005/06, the Phonak Group significantly expandedits production capacities and pushed ahead with the division oftasks between the two main manufacturing sites – Stäfa inSwitzerland and Suzhou in China.The establishment of the Chinese production facility was animportant step to reduce product costs on a sustainable basis.During the financial year we also adapted our logistics conceptto the new manufacturing structures and switched to directdistribution. At present, we are continuing to optimize goodsflows and production processes as well as to improve costefficiency in the design stage.StaffThe Phonak Group employed 3,428 people as of March 31,2006 (prior year 2,926). This total was allocated among researchand development 214 (prior year 188), operations 1,624 (prioryear 1,439), and sales, marketing, and general and administration1,590 (prior year 1,299). Major staff increases were made insales, marketing, and general and administration to increasemarket coverage through direct sales representatives and tosupport the many strategically important product launches, andin operations, to create new posts to keep up with the expansionof the Group’s sales volume.14Operations and Staff