Düsseldorf, 23.01.2019 – Last year, the order intake of many companies collapsed, in some cases completely unexpected. As a result, production capacities were freed up on the supplier side and raw material prices fell. In many industries, the sellers’ market turned into a buyers’ market within a short period of time. Buyers will continue to have great potential in 2020 to optimize their procurement costs. Considering the more turbulent times as well as the opportunities offered by digitization, purchasing should basically see itself as a permanent innovation motor in order to be able to adapt to major changes faster than before.
1. Make use of buyer’s markets
If it has not already happened, we recommend that buyers take advantage of the opportunities offered by the buyer’s markets. The focus on better prices as well as on new suppliers pays off. Renegotiating conditions with existing suppliers alone can result in savings of three to five percent on average.
2. Supplier conventions are becoming increasingly popular
Supplier conventions with all core suppliers are an effective method of improving your own purchase prices and conditions. Buyers can even save costs of 10 to 15 percent through new suppliers. Due to the falling demand, suppliers are again looking for new customers in many areas and are therefore also prepared to submit more attractive offers.
3. The interest in Eastern Europe is growing again
Furthermore, more and more companies are looking for support in building up new suppliers, especially in Eastern Europe. This was hardly possible in the last two years due to the good economic situation. The economic slump will enable companies to make better use of their opportunities in Eastern Europe in the future.
4. Companies rethink product costs
In addition, we are registering an increase in enquiries for value analysis projects. This shows that many companies again have capacities in technology to put the technical nature of their products to the test. Here we see savings potential of around 10 percent to 40 percent in many industries.
5. Trend towards outsourcing
More and more companies no longer see purchasing as a purely in-house function. Processes such as invoice verification, operational and indirect purchasing, disposition, project purchasing support or even tendering can be taken over faster and more professionally by specialized service providers. Purchasing can focus on more important issues and companies gain significantly in agility and innovative strength. Accordingly, more and more companies do not want to outsource value-adding activities.
6. Digitization has become easier
The topic of process optimization also affects our eProcurement tool proctopus. There is a clear trend among companies to digitalize their purchasing processes. In order to expand our leading role as a 360-degree provider on the market, we are in the process of concluding further partnerships with specialized purchasing software companies.
7. Trend towards buying syndicates
In the context of purchasing platforms and framework agreements, companies are increasingly joining forces to increase their purchasing volumes and benefit from savings effects. Especially in the indirect areas there are enormous savings synergies in which companies can easily participate thanks to our regularly renegotiated framework agreements.
8. Global sourcing risks on the radar
At a global level, 2019 has brought many major changes and uncertainties. For example, the situation in Russia is expected to ease, while the conflicts in the Middle East are intensifying. Meanwhile, larger exposures in the UK need to be planned more carefully to avoid risks. Otherwise there is a threat of supply bottlenecks and high tariffs.
Entrepreneurs and buyers should therefore pay close attention to the countries and regions in which they are buying.
We also advise companies to secure their global sourcing strategies with alternative suppliers and to fundamentally rethink their risk management or insurance program.
9. Cyber risks on the radar
Awareness of the increasing dangers of hacker attacks and industrial spying has increased significantly. More and more companies are relying on in-house solutions and are having their IT departments and employees trained further.
10. Purchasing repositions itself
The trends mentioned above make purchasing more visible than ever as an elementary factor in value creation. Outsourcing allows them to concentrate on the essentials. Thanks to digitalization, purchasing is becoming more transparent and savings opportunities, innovation potential and risks are more predictable. Today, buyers have better opportunities to reposition themselves as the interface within the company. Mainly to:
- To push product development,
- improve the agility of enterprises,
- to develop suppliers into strategic partners,
- to lead the company safely through turbulent times and
- – to ensure that internal stakeholders get more for their budget.
In order to initiate this reorientation of purchasing, it is worth considering purchasing consultancy.
Conclusion
Purchasing becomes the central interface of value creation
Last year showed once again that companies must never neglect their own costs, even during a good economic phase. Instead, they should work permanently – regardless of external circumstances – on their optimization in order to be optimally positioned for the next growth phase. Thanks to outsourcing and digitization, purchasing is also being relieved and made more transparent in order to reposition itself as the central interface for value creation.
Contact
Kloepfel Group
Christopher Willson
rendite@kloepfel-consulting.com
Phone: +4921187545323