Year kick-off interview with Marc Kloepfel and Duran Sarikaya
Marc Kloepfel and Duran Sarikaya talk about what shaped the Kloepfel Group last year, what they plan for 2023, and what measures are important for purchasing in 2023.
How did 2022 shape the Kloepfel Group?
2022 was a very difficult year for the entire German and European economy. The invasion of Ukraine brought exploding energy prices, generally high inflation and supply bottlenecks in a wide variety of areas. At times, there were very sharp increases in raw material costs, which then fell again just as quickly in some cases. It also became apparent that companies that were flexible and able to adapt quickly, for example by switching to alternative sources of supply, were able to cope well with this difficult situation.
For us as the Kloepfel Group, this has brought just as big changes. Supply chain management and purchasing combined with supply risks became much more important. Meanwhile, cost savings took a back seat in 2022. Companies were happy to get products at all and not have to pay too much. We therefore adapted our type of consulting to market needs.
We also succeeded in doing this. We were often able to close our customers’ supply bottlenecks, find new suppliers and optimize supply chains. To source raw materials, we made use of our large networks – in particular that of the EPSA Group. In doing so, we also supported our customers with negotiations, tenders, supplier days and product cost calculations to keep prices in line as far as possible.
2022 was a very difficult year that took a lot of effort. Did you still achieve your goals?
We met our goals and ended the year slightly over budget. As I said, that was very difficult. But the challenges of 2022 have also shown how flexible our group of companies is and how quickly we can adapt to new situations with new service offerings. Therefore, our very special thanks go to our great employees.
What is the cooperation with EPSA like?
Our French parent company, the EPSA Group, has developed very well this year. Especially in the area of material shortages. There is an EPSA Marketplace where worldwide supplier warehouses are listed with their products. This allows us to source a lot of scarce products for our customers that we had difficulty sourcing through our Kloepfel volume. In addition, we have cross-fertilized each other. We are starting more and more international projects and have generally come together very well in the group.
What are the megatrends in purchasing and supply chain management in 2023?
In addition to digitalization, supply security continues to be an important megatrend, which was created by the Corona outbreak. Here, for the first time in a long time, the business community has noticed how vulnerable supply chains are and how heavily we depend on Asian manufacturers. Whether in the pharmaceutical industry, mechanical engineering, the toy industry, plastic products, electronics, simple raw materials or the logistics behind them. Since then, companies are investing more in their supply chain and purchasing.
The megatrends for 2023 again include cost optimization in addition to security of supply. In the last three years, cost optimization was less important because security of supply came first.
Why will cost reduction become important again in 2023?
Germany and Europe will almost certainly slip into recession in 2023. Companies and their suppliers will then earn less. Therefore, purchasing should focus strongly on cost reduction and making companies rich. We see average cost reductions in purchasing of around 10 percent.
Prices were raised significantly in the shadow of product or supply shortages. Many companies have now put fat back on the bone, and prices are falling again – but not across the board for all companies. Suppliers are trying to make profits that they have not been able to bring in as much in recent years.
By making the necessary savings on a profit basis, we want to make our contribution so that inflation slowly comes down again.
How exactly can companies reduce their purchasing costs?
Conduct RFPs and compare prices. Bundle volumes. With our support, organize a supplier day where you invite all suppliers and set a savings target of 10 to 20 percent. Confront your suppliers with market price changes. Analyze your suppliers’ product costs against global benchmarks. Find out the cost drivers of your own products. Ask your suppliers why savings have not been passed on to you. Here we support companies with our capacities 100 percent on a success basis. So, the customer can only win.
How do you assess supply chain risks this year?
Of course, geopolitically it is still very difficult. The terrible war in Ukraine continues. There is the sword of Damocles hanging over Taiwan. We don’t know how China will change and what will happen in North Korea. There are many trouble spots in this world. Nevertheless, we think that things will be a bit more orderly in 2023 than in 2022 and that many companies will put the issue of cost reduction back on their agenda.
How is the Kloepfel Group positioned in the area of ESG?
The topic of ESG (in German: Umwelt, Soziales und Unternehmensführung – environment, social and corporate governance) is a future market in which we have invested heavily and have developed and will develop new products. Here we have built up our own team and in 2023 we will be able to help many companies to set up their own ESG agenda and to ensure that they can meet the requirements that the legislator is also making in this area.
What services are still important for procurement this year?
In 2022, our outsourcing area was in high demand so that purchasing can gain capacity and better focus on strategically important issues. We will continue to expand this area.
We have a great technical sourcing area that did incredible things last year. We will be investing more here this year.
We also have a new interim management area where we offer highly experienced interim managers to companies. This expertise is interesting for purchasing departments that need short-term help from experts with the relevant industry knowledge.
And of course, digitalization also offers great opportunities for purchasing.
What else is important for purchasing this year?
Many companies have realized that just-in-time and blind trust in suppliers are no longer possible in today’s world. It is important to expand dual sourcing in order to hedge with alternative suppliers in different regions of the world for core products. Hedging on certain raw materials is also necessary in order not to be surprised too much by strong price fluctuations.
How does the Kloepfel Group support purchasing with regard to the shortage of skilled workers?
In view of the shortage of skilled workers, more needs to be invested in purchasing and logistics so that purchasing can gain time for the important issues. The keywords are: Outsourcing, qualification, automation and digitalization. Companies need to consider how to outsource purchasing processes to companies like the Kloepfel Group, where you can get good, even not so expensive external German-speaking employees in Slovakia, for example.
Then it is a matter of equipping employees with digital products in such a way that purchasing no longer has to do operationally complex things, but can concentrate on strategic things and has better control of its supply chains. Purchasing is where the money is made, where supply shortages are resolved, and where purchasing is an important interface for innovation projects with suppliers. Therefore, more investment needs to be made here.
The more purchasing is relieved of simple purchasing processes through outsourcing, digitalization and interim managers, the better it can focus on future-proof supply chains, opportunities and risks.
What other tips do you give SMEs for 2023?
From our point of view, the supply chain needs to be rethought. This needs to be addressed urgently, because competition does not just exist between companies, but rather between their value chains. The key question is: How can I make my value chains more resilient and less dependent on, for example, geopolitical influences or certain raw materials? The last three years have shown that many companies have learned a lot here, but there is still a lot of catching up to do.
What goals has the Kloepfel Group set itself for 2023?
As always, we are ambitious. Our budget at the end of 2022 was about 15 percent higher than the previous year.
Then, among other things, we have new products such as services around ESG, the expansion of technical sourcing and outsourcing. We will also significantly expand our interim management platform to offer our customers more experienced and talented employees and interim managers.
But of course, there are also the old familiar products such as qualifications in purchasing and cost reductions through negotiations, tenders, structural optimization, supplier days and product cost optimization. In all these areas we want to meet the increased demand. Accordingly, we plan to recruit new motivated high potentials.
Above all, we want to meet the demand for cost optimization in purchasing and provide all inquiring customers with the appropriate employees here.
Otherwise, we as the Kloepfel Group are striving for various expansion targets. For example, we want to exploit more synergies within the EPSA Group. As Kloepfel Consulting we want to set up more new projects in France and Spain. We will also expand our activities in Eastern Europe.
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