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Alternative procurement: definition and important aspects for buyers
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Alternative procurement in a nutshell:
Alternative procurement refers to the systematic identification and qualification of alternative sources of supply or substitute products for critical materials and services. For purchasing, this is an essential tool for minimizing risk and improving the negotiating position with existing suppliers.
Example: An automotive supplier develops two new suppliers for critical electronic components within 6 months and thereby reduces its dependency on the main supplier from 100% to 60%, while at the same time reducing procurement costs by 12%.
Contents
What is alternative procurement?
In purchasing, alternative procurement refers to the strategy of identifying and using alternative suppliers, materials or products in order to reduce dependencies and increase security of supply. By including alternatives, companies can react more flexibly to market changes, supply bottlenecks or quality problems and minimize their risk management.
Core elements of alternative procurement
Significance for purchasing
Alternative procurement is essential for modern procurement in order to minimize risks in supply chain resilience and remain competitive. It enables supply gaps to be closed, costs to be reduced and innovation potential to be exploited. By diversifying procurement sources, buyers can react to volatile markets and achieve strategic advantages.
Alternative procurement: from traditional to modern approaches
Alternative sourcing is essential in today's globalized economy in order to make supply chains resilient and flexible. Building on the theoretical basis, it is crucial in practice to minimize dependencies on individual supplier management and ensure security of supply. Traditional procurement methods are reaching their limits, especially in view of the increasing complexity and dynamics of the markets. There is therefore an increasing need for innovative approaches in order to meet these challenges efficiently.
Old: Manual supplier search
Traditional approach: In traditional alternative sourcing, new suppliers were mainly identified through manual research and personal networks. Buyers attended trade shows, looked through industry directories and made time-consuming phone calls. Communication was often by fax or email, and information about suppliers was limited and not always up-to-date. This process was inefficient and often led to delays. There was also a lack of standardized evaluation procedures, which made it difficult to analyze risks and compare suppliers.
New: Digital Supplier Integration
Digital supplier integration: Modern alternative procurement relies on the integration of digital technologies and platforms. E-procurement systems and online marketplaces give companies worldwide access to extensive supplier databases. AI-supported algorithms enable potential suppliers to be quickly analyzed and evaluated according to criteria such as price, quality, delivery reliability and sustainability. Real-time data and automated communication processes significantly accelerate the procurement cycle. This approach not only improves efficiency, but also reduces procurement costs by up to 50% and lowers costs by an average of 15% through better conditions.
Practical example: Mechanical engineering industry
A medium-sized mechanical engineering company was faced with supply bottlenecks for specific steel components. By implementing a digital procurement platform, the company was able to identify and qualify new suppliers within 24 hours. The platform enabled a comparison of over 100 potential suppliers worldwide, taking into account factors such as certifications, delivery times and prices. By quickly integrating alternative suppliers, production was able to continue without interruption. In addition, procurement costs were reduced by 12%, resulting in a 5% increase in the profit margin.
Conclusion on alternative procurement
Alternative procurement is an indispensable strategic instrument of modern purchasing. It not only enables companies to minimize procurement risks and dependencies, but also creates competitive advantages through cost savings and innovation potential. Success lies in systematic implementation, careful supplier selection and continuous market observation. Despite initial challenges and investments, the long-term benefits for the company's security of supply and flexibility outweigh them.
