At the beginning of 2021 Marc Kloepfel and Duran Sarikaya, Managing Directors of Kloepfel Consulting, again took the time to review 2020 and recall the highs and lows of this special year for many companies. In doing so, they also talked about their goals and resolutions for the new year and gave purchasers in the midmarket important tips that are particularly relevant this year.
What factors made 2020 particularly special for the Kloepfel Group? And what conclusion did you draw from it as an entrepreneur?
The most formative event in 2020 was of course the Corona pandemic, which hit us as a company just as unexpectedly as it probably did many other companies. Fortunately, we had relatively long contracts, which meant that we did not suffer a major drop in orders immediately in March and April. During the summer, however, we noticed that customer inquiries sometimes failed to materialize. The number of orders then rose again in August and September.
Another significant factor was that we joined the market for protective masks as a group of companies. During major orders for the federal and state governments, we procured several million masks in this connection. In addition, we paid particular attention to the issue of new suppliers and set up a team dedicated exclusively to the search for new suppliers on a global scale. As a result, we were able to achieve high-cost savings for companies through new suppliers. We were also able to expand our supplier conventions, which were conducted purely digitally, as it is well known that several people from different companies are no longer allowed to be in the same room. The savings achieved digitally were in no way inferior to the analog format.
In summary, 2020 was a challenging year and we, like many other companies, learned to accomplish our work in the home office and to use digital tools such as teams in our daily business to continue to achieve good results and high savings. In hindsight, we handled the situation well, focusing on other fields and evolving our business model. We are convinced that we will emerge from 2020 stronger and be able to apply the new methods we have acquired in the new year 2021 and benefit from the lessons learned in the long term.
What can SMEs learn from 2020?
We suspect there will be many more companies continuing to build out the digitalization theme, as we have, so they can communicate and negotiate with customers, employees and suppliers using digital tools. This also includes enabling employees to work more from their home offices. These are points that I believe will shape the German economy in the long term. This will result in various benefits, such as more satisfied employees and lower staff turnover if employees can be with their families more often. We think this is a great topic for the future in the SME sector.
Certainly, there will also be a need for sound safeguards for companies. Having alternatives ready when borders are closed, that the company becomes more independent of suppliers and considers alternative suppliers from different markets. This is an issue that many had to painfully recognize to consider in the future which suppliers to cooperate with – where their headquarters are located, what risks can be found in the supply chain and how to ensure that these risks are kept to a minimum.
What advice would you like to give medium-sized companies for the new year?
We believe that a lot was learned in 2020 and many companies have completely repositioned themselves. We therefore strongly suspect that 2021 will have bottomed out and will be a positive year overall, even if the first few months will still seem a bit difficult. Of course, it will also take a little longer to overcome the Corona virus, but great products have emerged from the crisis. Innovative companies can learn a lot from the crisis and will apply this knowledge in the new year.
What we would like to share quite clearly: The time of overheated supplier markets, which prevailed in 2018 and 2019, is over and the prices of raw materials have fallen sharply. Suppliers are urgently looking for new orders, which creates opportunities, especially in purchasing, to implement price reductions or establish new supplier relationships. Before the Corona pandemic, this issue proved to be very difficult because no suppliers could or wanted to deliver anymore. Because of the new situation, this has changed and suppliers have new capacity. In some countries the situation is particularly dramatic, so especially now you should rebuild your supply chain. This should include new, cheaper and higher quality suppliers that offer shorter and more flexible delivery times in the supply chain. Therefore, we give the advice to focus on these topics, in which we as a procurement service provider of course also want to support.
What opportunities and risks do buyers need to look out for in the new year 2021?
One great opportunity for purchasing that we have already mentioned is that new suppliers can be found in terms of price and quality who are interested in submitting new offers and winning new customers. Another great opportunity is the increased availability of new employees. Unfortunately, some people have lost their jobs and once short-time work in companies comes to an end – which will happen in 2021 – many companies will once again have to make redundancies. As a result, more staff will be available and companies that previously had problems in finding employees will have opportunities to hire good managers and buyers as well as production managers.
These opportunities are clearly offset by the risk of the Corona virus, which will continue to accompany us in the coming months. For companies, there still is the risk that a production employee could become infected, forcing them to shut down. Suppliers are still very fragile in many places, which could lead to many insolvencies in the supply chain. Business owners and buyers should keep this in mind in good time and ask themselves, “What happens if a supplier breaks away at certain points? Do I have an alternative? Should I set this up directly?” Likewise, customer orders can drop away. The market situation is still unstable and will be a problem for various companies in the first half of 2021. Not to mention industries such as tourism or hotels and restaurants, which are still completely restricted and have virtually no business at all.
What are the goals of the Kloepfel Group for the coming year?
One very big goal is, of course, to carry out significantly more purchasing optimization transactions once again for our customers. We notice that there is currently a great interest in this service, because we receive many inquiries and have many discussions, which we would like to convert into orders for our group. Therefore, we expect a special push in purchasing optimization at Kloepfel Consulting, also in the development of new suppliers and the use of the Supplier Convention. We expect a significant increase in sales, at least 25% compared to 2020, and we want to invest these funds. This means that we plan to hire new employees and continue to grow with Kloepfel Consulting.
Another important area is outsourcing purchasing services. Here, we also want to grow significantly and further expand our branch in Slovakia. With this in mind, we are continuing to expand our offering, especially with digital tools, because in outsourcing, we are noticing that companies want to be more flexible, too. Corona has made it clear to entrepreneurs that it is not a good idea to hire every employee by yourself, but to work together with various outsourcing service providers. This is exactly what Kloepfel Services offers, accordingly we expect significant growth here in 2021 as well.
Last but not least, Kloepfel Engineering, which offers value analyses and product standardization. These were also a major topic during the crisis, as they create opportunities for cost optimization without having to lay off employees. The acquisition of new machines can also be avoided. Instead, work is being done on the product itself, as well as on the use of materials and on standardization, in order to optimize costs to a much greater extent than just via purchasing, where some things are already possible. In engineering, however, even greater savings can be achieved, which is why we also intend to expand this unit in 2021.
In conclusion, we would like to wish our customers and partners a happy new year and are already looking forward to the cooperation and challenges in the coming twelve months.
Thank you very much for the interview!