By Klaus-Dieter Florecke
How are purchasing conditions at suppliers and what are the challenges the industry is facing? On behalf of the Düsseldorf-based consultancy Kerkhoff Consulting, the Institut für Demoskopie (Institute for Public Opinion Polls and Research) in Allensbach interviewed a total of 100 persons responsible for purchasing in medium-sized and major supplier companies in Germany in July 2010. After 2009 which had been a very difficult year for many suppliers, most of them are again looking more optimistically into the future. Almost three quarter of those responsible for purchasing expect the industry to get better in the coming twelve months. Only two percent of those interviewed are afraid of an economic downturn. Expectations for their own company tend to be even more optimistic.
Worried about price pressure
Purchasing managers at suppliers in Germany expect procurement conditions to change in many areas in the next decade. A total of 87 percent of those interviewed expect significantly increasing raw material prices, 84 percent expect significantly increasing energy prices. Also, 86 percent expect growing price pressures on the part of car manufacturers; and 83 percent of the suppliers polled by the Allensbach institute expect more intense purchasing competition from emergent markets.
Suppliers are worried about the subject of financing. Nearly two thirds of the industrial buyers expect that the banks' more restrictive lending policies will render procurement processes more difficult (65 percent); also, that there will be an oligopoly development among their suppliers (64 percent) and that product piracy is turning more and more into a problem for the industry (62 percent). In addition, half of those polled can see increasing difficulties to ensure on-time delivery by their own suppliers. But what will be the consequences of the changed framework conditions for the suppliers? When asked about the biggest strategic challenges for procurement in the industry over the next decade, those responsible for purchasing most frequently indicate costs and prices (25 percent) as well as the globalization and internationalization of purchasing (24 percent).
Prevailing on the market is indicated as the biggest challenge by 16 percent, and 15 percent indicate new technologies to be adjusted to, such as electric propulsion systems. Additionally, other strategic challenges are indicated by significantly smaller percentages of those interviewed.
Globalization of purchasing
Also, those interviewed consider as the greatest strategic challenges for the purchasing department in their own company especially the rising costs and prices (23 percent) as well as the globalization of purchasing (18 percent). Then follows securing raw materials on the procurement market (16 percent), maintaining sales markets (14 percent) and the increasing price and/or cost pressure on the customers' part (11 percent). However, it depends on the size of the company which challenge is considered to be bigger by those responsible for purchasing. Companies with over 50 million euros in sales indicate significantly more frequently globalization and internationalization of purchasing as a challenge which concerns them directly, more than the smaller suppliers.
Cooperations with other companies in the field of procurement are not very popular among suppliers. Only 18 percent of the companies work together "closely" or "very closely" in purchasing by forming buyers cooperations, for example. In the area of transport and logistics, the rate of cooperating companies is lower yet. Overall however, the majority of suppliers is convinced that buyers cooperations will become more relevant in the future (58 percent). Among them, 15 percent even expect a major increase in importance. This conviction prevails especially among those responsible for purchasing at major suppliers. Gerd Kerkhoff, founder and chairman of the executive board of Kerkhoff Consulting, also expects "that cooperations in the supplier industry will increase because they are the result of logical considerations". Cost pressures in this sector would also contribute to it. For the future, the large majority of purchasing managers expect their department to be rated higher within the company. Only one percent fear that purchasing will lose in importance.