New-Year-Interview with Marc Kloepfel and Duran Sarikaya
Which factors have particularly affected the year 2019 for the Kloepfel Group?
First of all, we would like to say a big thank you to 116 companies who have placed their trust in us in 2019. In total, we were able to achieve savings of 138 million euros for our customers. We are very proud of this and look forward to working on exciting projects with our existing and new customers in the new year.
As far as purchasing is concerned, we can look back on an unusual year. The companies started with full order books, but so many suppliers showed less interest in new customers. However, in March and April we recorded a turnaround. The amount of new orders collapsed by many customers, production capacity on the supplier side became free and raw material prices fell. Added to this was the weakening German automotive industry. In many sectors, the sellers’ market turned into a buyers’ market within a few weeks.
Unfortunately, many companies recognized this development too late. In the first months of the year, during the boom, their own costs had risen due to more personnel, high investments and high purchase prices. Due to the turnaround in spring, many companies experienced a sharp drop in sales. As a result, we experienced a significantly higher demand for purchasing services in the third quarter. Here, the focus was particularly on supporting negotiations in order to regain the previous, lower price level. Many companies continued to seek 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. As a result of the economic slump, companies were able to make better use of their opportunities in Eastern Europe.
In addition, we have registered many requests 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.
Given these developments, we as the Kloepfel Group can look back on a successful year 2019, in which our consultants were able to implement the numerous requests from our customers professionally and on time with great effort.
What can medium-sized businesses learn from 2019?
Last year showed once again that companies should never neglect their own costs, even during a good economic phase. Instead, they should permanently work on optimizing them – regardless of external circumstances. During strong economic phases, many companies tend to focus only on their growth and then too often neglect the support processes necessary for this. In the medium to long term, the consequences of this become apparent.
At a global level, 2019 has also brought many major changes. In almost all regions, economic uncertainty has increased over the past few months. For example the trade wars instigated by the USA, the uncertainty about the Brexit, the lack of cohesion in the EU or the conflicts in the Middle East. Against the background of the associated uncertainty, we recommend that companies secure their global sourcing strategies with alternative suppliers and fundamentally rethink their risk management and insurance programs.
What do buyers need to focus on in 2020?
If this has not already happened, buyers must once again clearly focus on prices and new suppliers. By renegotiating conditions with existing suppliers, savings of on average three to five percent can currently be achieved. Supplier conventions with all core suppliers are a particularly effective method. Buyers can even save costs of 10 to 15 percent through new suppliers, as suppliers are looking for new customers in many areas and are therefore prepared to make more attractive offers. Companies should also work on reducing their inventories and selling off excess stock. This will reduce working capital and improve cash flow.
In addition, buyers should pay close attention to the countries and regions they are buying from. As there are currently many potential trouble spots, the decision for a procurement market needs to be well thought through. For example, the situation in Russia is expected to ease, while conflicts in the Middle East are expected to intensify. Now that the Brexit is practically decided, larger commitments in the UK must be planned more carefully to avoid risks. Otherwise, supply shortages and high tariffs may result.
What goals has the Kloepfel Group set itself for the year 2020?
On the one hand, we expect a consistently high demand for negotiation and sourcing projects. That is why we are strengthening our team in local sourcing markets such as Romania, Ukraine, Turkey, Slovakia, Mexico and India.
In addition, a core focus is on the outsourcing of purchasing services. More and more companies no longer see purchasing as a purely in-house function. Processes such as invoice verification, operational and indirect purchasing, scheduling, project purchasing support or even tendering can be handled faster and more professionally by specialized service providers. Purchasing can focus on more important issues and companies gain significantly in agility in the meantime. Accordingly, we will significantly expand the outsourcing program of Kloepfel Services and increase our investments in our service center in Slovakia as well as at the other locations. The topic of process optimization also affects our eProcurement tool proctopus. We are receiving more and more orders to digitalize the purchasing processes of medium-sized companies. In order to continue to play a leading role as a 360-degree provider on the market, we are in the process of concluding further partnerships with specialized purchasing software companies.
What advice would you like to give medium-sized companies for the new year?
The time of sales growth is over in many industrial sectors for the time being. This makes it even more important to position your company optimally for the next growth phase. Now take a look at your cost structure, especially purchasing conditions, indirect costs, technical complexity, wage costs, inventories and processes. Make sure that you are optimally positioned in all these areas to maximize your profits in 2020. The Kloepfel Group can support you in all these areas as an experienced companion. Therefore, we will be at your disposal for a personal conversation within the next few days.
Many thanks for the interview!
Contact
Kloepfel Group
Christopher Willson
rendite@kloepfel-consulting.com
Phone: +4921187545323