One crisis has not yet been overcome, and the next one is already following: Corona, supply bottlenecks, energy crisis – reason enough to discuss the situation of the procurement markets and the design of more stable supply chains.
The purchasing department has to deal with many crises at once: Corona, supply shortages, energy crisis. One crisis has not yet been overcome, and the next one is already following. Further disruptive factors could result from the increasing tensions between China and the USA. For the purchasing department, the search for the required parts and, in some cases, multiple price adjustments per year on the part of the suppliers, mean an enormous burden on personnel capacities – and the personnel urgently needed for this is also difficult to obtain.
The current situation poses great challenges for purchasing. For this reason, ProduktionNRW held a virtual event on October 20, 2022, which focused on the situation on the procurement markets and the cost drivers. On the other hand, the question of how purchasing can be set up in a more stable way in the long term in order to make security of supply and costs more predictable again was discussed.
Situation of the procurement markets
Michael Wolf, speaker of the VDMA Business Advisory, first went into the price development of different products and materials. Prices – for steel, for example – fell again in the second half of the year following extreme increases in the first half. The new cost drivers are the rising energy costs, which, for example for aluminum, make production in Europe almost impossible. The machinery and plant engineering sector itself is not very energy-intensive, but is being hit by cost increases in the energy-intensive supplier industries.
Designing more stable supply chains in a changing global environment
The industry has been struggling with supply issues since 2020, which have escalated further in 2022. The biggest bottlenecks today are in electrical engineering as well as electronic components. An easing in this area is not expected by many manufacturing companies until after 2023. Securing supply security in one’s own company is therefore currently a top priority.
The design of more stable supply chains first requires an analysis of the effects of the failure of certain materials and how high the risk of this is. A material group strategy with diversified procurement in the form of dual sourcing and a more intensive evaluation of suppliers, also with regard to their procurement policy, can help to set up a more stable supply chain. Flexibility with regard to the specification of parts can help to substitute missing parts and the reduction of the variety of parts facilitates the plannability of the demand and also the economic design of processes and warehousing.
In the concluding discussion, it was emphasized that at the moment there is an internal willingness within the company to increase storage space. However, it is a question of time until this internal company attitude decreases again and purchasing has to plan materials management more cost-effectively again. A central message of the event is to bring purchasing into a more balanced position.
Organizer
The event was offered by ProduktionNRW. ProduktionNRW is the competence network of mechanical engineering and production technology in North Rhine-Westphalia and is organized by VDMA NRW. ProduktionNRW sees itself as a platform for networking, informing and marketing companies, institutions and networks among themselves and along the value chain. Significant parts of the services provided by ProduktionNRW are funded by the European Regional Development Fund (ERDF).