News
Tuesday 06. September 2011
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| Mid-sized companies worse in purchasing than major group companies |
| Purchasing departments not sufficiently tied into internal decision-making processes |
| About one third of Germany's small and medium-sized businesses do not perform any standardized supplier evaluations and audits or visit their suppliers regularly. They are thus far behind major companies and corporate groups where more than 80 % of all enterprises systematically control their suppliers. This may result in significant competitive disadvantages for small and mid-sized companies. That has been the result of a recent poll of 501 deciders in the German economy by the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach and the Kerkhoff Competence Center of Supply Chain Management of the University of St. Gallen. Controlling suppliers is still the main job of every purchasing department. Small and medium-sized companies also neglect other, especially strategic areas. Even more dramatic than with the supplier management is the difference in handling risk management. A mere 14% of companies with fewer than 250 employees have a risk management system in purchasing; the figure is 47% for companies with more than 1,000 employees. Small and mid-sized businesses thus do not meet today's requirements. Most recently, the disaster in Fukushima has shown how a far-away event can threaten supply chains all over the world. Companies which also anticipated disaster scenarios in a risk management system and developed solution models before the beginning of a crisis will find it easier in such as scenario to change over to alternative suppliers. With regard to tying the purchasing department into production, the mid-sized sector and the large industry are approximately at the same level: 65% have created interfaces with production. It's a different picture in product development: Half of the companies with more than 1,000 employees is involving already "closely" or "very closely" the purchasing department in the development of products. This has been the case for only one third of the companies with fewer than 250 employees. Small and mid-sized businesses which have not yet set up any adequate interfaces are missing out on major savings potentials. Because only the buyer who is also sitting at the table will be able to identify, in the planning stage already, the best suppliers in a cost/benefit ratio for certain components. If, however, the components are only specified ex post by the product planners, buyers will be able to function only as persons processing the order. This will reduce possibilities of strategic influences to thus reduce costs. An average of only every fifth company is using product cost calculation and value analysis as modern purchasing tools. This technology will help companies to estimate precise manufacturing prices of the goods procured by them and thus carry out much more powerful supplier negotiations. Here again, the difference is significant between small and large: 13% of small and mid-sized businesses have a "cost breakdown tool"; in large companies, it's about one third. It should be noted that even large-sized companies continue to have the need for optimization and leave potential unused. Only half of them has a risk management system; the purchasing department is not adequately tied into internal decision-making processes. Also, far from all of them use modern tools such as the product cost analysis. But it must also be pointed out: In every area, the "big ones" are just ahead of the "small ones". So as not to lose by far that "David against Goliath" duel in the future, Germany's small and mid-sized businesses should act now and professionalize their purchasing departments for a lasting effect. Gerd Kerkhoff, Kerkhoff Consulting |
