Supply bottlenecks closed via international supplier networks
Working with Kloepfel Consulting to leverage alternative sources to manufacturers.
Autor: Shapur Kaikhosrowi, Manager
The pandemic poses major challenges for many companies. At the beginning, many of our clients did not know how severe the impact of the Corona pandemic will be on business activities. This manifested itself in material shortages caused, for example, by logistics chains that no longer functioned and one-way container shipments. During 2020, many companies adapted to the framework conditions. Topics such as security of supply, supplier and risk management, but also production capacities were high on the agenda. Some companies in the mechanical and plant engineering sector were even able to benefit from the situation, as evidenced by remarkably full order books. One of our valued customers was able to participate in this.
The demand for machines and plants increased rapidly. In contrast, there is a continuing supply problem of standard electrical components from the major manufacturers due to their own material shortages. High-quality plants in the million-euro range could often not be completed due to a lack of mostly trivial components, resulting in a slump in sales and profits. In addition, end customers threatened to impose high contractual penalties. To avoid a shutdown of production and the resulting short-time work, the customer started to investigate the issue of “alternative procurement channels” or “purchasing via dealers/brokers”. In this sense Kloepfel Consulting was assigned to support the customer and to ensure the bottleneck parts supply.
Which challenges arose and how they were solved
The delivery times of the manufacturers grew in large part from a weekly cycle to a multi-monthly cycle. The additional increase in demand meant that purchasing now became more of a focus for the company. Therefore purchasing and Kloepfel Consulting closely coordinated the necessary measures. The following division of labor took place: Purchasing continued to contact the manufacturers regarding an improvement of the current delivery times. In parallel, Kloepfel Consulting requested the critical standard components from their international supplier network. The goal was to bridge the longer delivery time with the parts procured from the dealer network without causing a production shutdown.
The order in detail
The specific customer order was the procurement of standard electrical components subject to a bottleneck situation. The Kloepfel dealer database and employees specially trained for this purpose served as a basis. The activities included the tendering, bid evaluation and result transmission to the purchasing department. This also included the preparation of all necessary documents and communication with the traders and brokers. As a result, purchasing received an overview of all relevant offers. This relieved the purchasing department, eased the situation in procurement and improved the image of purchasing in the company.
The international trader database as the central medium
After many projects, Kloepfel Consulting was able to establish a database with several hundred dealers. This database must be updated and supplemented regularly because it is based on the brand cards (manufacturer lists) of the dealers. In addition, there are several categories of dealers in terms of size (number of employees and subsidiaries), the range of the product portfolio, the storage concept (demand- or inventory-oriented), procurement concept (via own warehouse or supplier network) and internationality. Subsequently, each project was evaluated to prioritize the individual dealers/distributors of the respective manufacturers and thus increase the effectiveness of the database.
Specially trained employees of Kloepfel Consulting
The handling of this topic requires buyers who have received special training on the process, documentation and communication level. A challenge is e.g. the handling of a very high number of dealers per tender with the corresponding effort in documentation and communication from the inquiry phase, the feedback phase, the evaluation phase up to the consolidation phase of the result with the handover to the customer. Depending on the customer’s requirements, the order can still be generated and dispatched by Kloepfel Consulting.
The effects of a supplier market
Due to the worldwide shortage of materials, the market increases the general cost situation. Consequently, the prioritization of purchasing criteria is partly turned upside down. For the most part, the distributors do not let themselves be talked to regarding the conditions, it is only “take it or leave it”. Nevertheless, we did not rest on our laurels regarding the price criterion. We took care to create a competitive situation through the high number of requested suppliers in order not to let the prices rise to infinity. The overriding objective was to avoid production losses. In terms of overall costs, it may therefore be necessary to accept high prices despite all efforts in order to be able to deliver machines and systems in the high multi-digit cost range.
Final evaluation of the project
Over a period of one year, 89 invitations to tender were sent out, in which a total of 333 different items were tendered by 362 dealers. With a success rate of over 95% (at least one bid per critical part), all equipment was delivered on time and a decision to short time was averted. In addition, since the beginning of this year, the production rate has been increased by approximately 15%, resulting in an improved positioning on the world market. Internally, the tensions that had arisen were largely resolved and the purchasing department, which was the focus of attention, was able to position itself positively vis-à-vis the interface areas and the management. Thus, Kloepfel Consulting was able to successfully conclude this project.
Delivery bottlenecks are currently the biggest problem for manufacturing companies. Therefore, Kloepfel Group has set up the “Immediate help against supply bottlenecks”. Affected or threatened companies can reach our emergency service via our hotline +49 211 941 984 33.
Behind the “Immediate help against supply bottlenecks” is a team of experienced buyers from a wide range of industries. For global emergency sourcing, they use, among other things, the Kloepfel database of more than 700,000 suppliers, which has been built up since 2007, as well as new digital sourcing programs.
Don’t get caught up in inflated prices or postponed deadlines and contact us to find out how we can help you in your specific situation.
Tel.: 0211 941 984 33
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