The supply situation has again worsened in many areas due to the war in Ukraine, lockdowns in China and ongoing disruptions in transport logistics. As a result, prices are rising in many segments and these are rippling through the entire supply chain. In order to discuss the current situation as well as the perspectives of the procurement markets, ProduktionNRW has organized a virtual event for the mechanical and plant engineering industry in NRW on June 15, 2022.
Procurement markets: situation, background and outlook
Michael Wolf, VDMA Business Advisory, classified the current situation for mechanical and plant engineering. The biggest production obstacles currently result from a shortage of materials: the biggest supply bottlenecks continue to be seen in electronics, electrical goods and metals. Companies’ assessment of the situation remains good, but business expectations for the next 6 months have fallen slightly, as has capacity utilization. The following problems threaten to persist:
- Logistics: after corona-related lockdowns in China, ports are resuming operations. However, as the Chinese government is sticking to its no-covid strategy, further lockdowns cannot be ruled out. In addition, European ports are beginning to show signs of congestion due to delayed processing in China.
- Energy: The EU and Germany remain dependent on Russian energy exports. As long as this dependency persists in the context of the Ukraine war, there is no relief in sight, making planning difficult for energy-intensive suppliers in particular.
- Semiconductors: Demand in the semiconductor sector is forecast to continue to grow. It remains to be seen whether investments in new capacities can keep pace and whether these are aligned to the needs of the mechanical and plant engineering sector.
In the subsequent discussion, the participants reported different experiences with various preliminary products, such as steel, connectors or cables in purchasing. In addition to the general challenge in the procurement of products, difficulties in logistics exacerbate the situation.
Dealing with price increases
Frank Sundermann, Durch Denken Vorne Consult GmbH, then addressed the issue of dealing with price increases. In this context, it is central to prepare for the negotiation. Several independent sources look at the presentation of prices for individual product groups, such as the Federal Statistical Office (Destatis, free of charge) or the MBI Stahlmonitor (subject to a charge). With the aid of this data basis, it is possible to check whether the price increases demanded are justified.
When preparing for negotiations, it is important to consider other aspects such as current delivery and payment terms (in comparison with other suppliers) or existing framework agreements as well as future awards. In addition to preparing the content, the relationship level is of central relevance. It is important to assess the personality of the counterpart: Along the introvert/extrovert and rational/emotional axes, people can be roughly classified into four categories – for example, a more analytical negotiating partner can be reached more strongly via the content level.
In the concluding discussion, one of the complaints was about the tying up of personnel capacity due to the large number of current price increases. In summary, the suggestions for the preparation and execution of negotiations were positively brought to the fore, as there is little time available for such training in everyday business life.
The event was offered by ProduktionNRW. ProduktionNRW is the competence network for mechanical engineering and production technology in North Rhine-Westphalia and is run 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).