30,000 savings in a single negotiation by reversing the price increases of recent years
published on
18.10.2024
🏗 Industry: Electrical industry
🗺 Company headquarters: Langenbrettach (Baden-Württemberg)
🧍 Employees: ⁓ 130
ME MOBIL ELEKTRONIK has been a pioneer in the development and production of electronic steering systems for commercial and special vehicles for over 50 years. As a pioneer of steer-by-wire technology, the family-run company supplies innovative solutions to leading manufacturers of mobile machinery and special vehicles worldwide.
"With Tacto, we can successfully renegotiate the price increases demanded in the past, which are no longer plausible. In recent months, we have achieved price reductions of over €50,000 thanks to Tacto's price modeling. We can also validate current price increases and thus ensure fair prices along the supply chain." - Robin Lippmann, Head of Purchasing & Materials Management at ME MOBIL ELEKTRONIK GMBH
Purchasing is currently in a challenging situation, characterized by a persistent shortage of skilled workers, supplier insolvencies and the continued dominant position of sellers on the market. In addition, short-time working and a slight fall in GDP are putting pressure on the market and supply chains and making access to materials more difficult.
The price increases implemented by suppliers in the past could only be passed on to end customers to a limited extent. As a result, the company's profit margins came under increasing pressure and decreased in many areas.
This situation is a direct consequence of the economic upheaval caused by the Covid-19 pandemic. During the pandemic, there were widespread disruptions in global supply chains, material shortages and significant production delays. Many companies were forced to accept higher prices for raw materials, transportation and services, while demand fluctuated and the purchasing power of customers in some markets declined.
Even after the pandemic subsided, these effects have not fully recovered. Many problems have persisted, particularly in procurement, as supply chains remain vulnerable, production costs have risen and global market dynamics remain volatile. For companies that rely on constant margins, passing on these cost increases to customers is proving increasingly difficult. Customers have become more price-sensitive and expect companies to keep their prices stable despite the economic uncertainties.
In summary, the disruptions caused by the pandemic have had a lasting impact on the purchasing conditions of many companies. They find themselves in a situation where they have to cope with rising costs but are only able to pass these costs on to their customers to a limited extent. This poses an ongoing challenge to profitability and may require new strategies to stabilize margins and remain competitive in the long term.
ME MOBIL ELEKTRONIK is also under constant pressure to optimize costs and achieve market-driven conditions. However, many medium-sized companies lack the resources and the necessary data to bring transparency to their price structures and to be able to assess whether they are actually paying prices in line with the market or whether they are still paying excessive prices.
Tacto enables Robin Lippmann's team to automatically model the price structure of each item. This makes price drivers visible at a glance and can serve as a basis for the next negotiation. A practical example: Robin Lippmann and his team used Tacto to discover that they were paying far too much for cast material. This led to an immediate supplier negotiation in which ME MOBIL ELEKTRONIK was brought back to a price level in line with the market. Within a single negotiation, the company was able to save 30,000 euros - and that is just one of many examples of success. Robin Lippmann sees great potential for further optimization here.
With the help of Tacto, ME MOBIL ELEKTRONIK is also able to check suppliers' justified price demands in a comprehensible manner. Thanks to Tacto's price modeling, ME MOBIL ELEKTRONIK can identify exactly where the fair price should be and compare it with the supplier's demands. Should the supplier set unreasonably high price increases, ME MOBIL ELEKTRONIK also has the opportunity to point out that possibly excessive price adjustments have been passed on, which were previously accepted uncritically by other customers (including the supplier itself).
These mechanisms lead to fair and transparent prices along the entire supply chain and promote long-term, stable and trusting relationships with suppliers. In this way, Tacto not only enables savings, but also sustainable cooperation based on transparency and mutual understanding.
Economic and geopolitical uncertainties can have a significant impact on procurement, which is why it is important to prepare for them at an early stage. Companies can use the current easing of the procurement market to strengthen their resilience. Through the targeted use of tools, price increases can be warded off and price negotiations can be conducted effectively. At the same time, continuous analysis makes it possible to keep an eye on all key cost drivers in order to make well-founded decisions.
In addition, by recognizing unjustified price increases at an early stage, companies can be better prepared for future crises and ward them off. All of these measures lead to fair and transparent prices along the entire supply chain and promote long-term stable business relationships as well as greater resilience in uncertain times.
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Many thanks to Robin Lippmann and the entire ME MOBIL ELEKTRONIK team for our partnership and trustworthy cooperation.
Thanks to partners and customers like you, it is possible to further develop our product in close exchange and close to daily events, as well as to talk in joint webinars about the topics that concern the procurement of industrial medium-sized companies today.
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