Cost optimization in purchasing through the automated connection of price indices
published on
21.3.2024
🏗 Industry: Medical technology (emergency medicine)
🗺 Company headquarters: Hamburg
🧍 Employees: ~ 420
💶 Turnover ~ € 60 million per year
Purchasing volume ~ € 25 million per year
Weinmann's mission is "simplify saving lives". Weinmann strives to make the use of its devices as simple as possible for the people who save lives. Weinmann's core products are ventilators and defibrillators, which are primarily designed for use in emergency situations. This is clearly differentiated from hospital equipment and includes equipment that is used in ambulances and helicopters, for example, and therefore also needs to be mobile. Customer profiles include armies, the Red Cross, ambulance equipment suppliers, the World Health Organization (WHO) and governments. The majority of employees work in research and development (R&D), as Weinmann develops almost all of its products in-house. Purchasing also plays an important role at Weinmann, as this is where decisions are made about components that have a direct impact on people. Quality and availability are therefore a particular focus in procurement.
"With Tacto, I can compare prices paid with the modeled target prices at the touch of a button and call up this data immediately for every negotiation. Tacto offers an outstanding opportunity to reverse price increases from the past. And that is precisely one of the main tasks of purchasing now: to reverse price increases!" - Jan Herburg, Head of Strategic Procurement
Around two and a half years ago, Weinmann had almost no contact with digitalization in Purchasing. Work tools consisted mainly of an ERP system as well as Word, Outlook and Excel. To counteract this situation, Jan Herburg began actively looking for digital solutions for Weinmann's purchasing department. He came across both isolated solutions and integrated solutions such as Tacto, which offers a variety of functions in one package. As a medium-sized company like Weinmann, it is particularly advantageous to integrate many aspects into one solution.
"With Tacto, I can compare prices paid with the modeled target prices at the touch of a button and call up this data immediately for every negotiation. Tacto offers an outstanding opportunity to reverse price increases from the past. And that is now one of the main tasks of purchasing: to reverse price increases!" - Jan Herburg
Why was the topic of cost modeling so exciting for Jan Herburg?
A key aspect for Jan Herburg was the observation that in the last two to three years, supply chains in many areas have become much more unstable than ever before. The behavior of suppliers, unforeseen bottlenecks and considerable fluctuations in delivery times from, for example, three to 30 weeks and sudden unavailability of products have made themselves felt. The main reasons for this were external factors such as the blockage of a ship in the Suez Canal and the impact of events such as the COVID-19 pandemic, which led to the temporary closure of ports in China, for example.
"Due to global networking, we will probably no longer experience the times of former calm and stability. This situation means that we are confronted with higher costs more frequently, but without any control or transparency as to what justifies these additional costs. We also lack the ability to track when these additional costs may disappear." - Jan Herburg
No transparency about additional costs charged by suppliers
Long and manually driven preparation time for price negotiations with suppliers
No overview of price outliers and the distribution of financial volumes among suppliers
And this is precisely where Tacto's cost modeling module comes in:
Tacto's cost modeling module allows Jan Herburg to search specifically for parts where there is potential for negotiation or where there will be in the future due to a downward trend in certain raw material prices. For example, if the energy costs for an article are high and energy prices have fallen sharply, Tacto signals the need for a negotiation opportunity. In the past, such analyses were carried out manually and selectively at Weinmann to prepare for negotiations and took several hours per negotiation in the case of complex structures.
"With Tacto, I can compare prices paid with the modeled target prices at the touch of a button and call up this data immediately for every negotiation. Tacto offers an outstanding opportunity to reverse price increases from the past. And that is precisely one of the main tasks of purchasing now: to reverse price increases! I also have access to this data at all times. Even if the supplier calls unexpectedly, I can simply go into Tacto and see at the touch of a button what my negotiating leeway is with this supplier. This means I don't need any preparation time."
The clear objective of Jan Herburg, supported by Tacto, is to achieve fair prices in line with the market. The supplier should be able to achieve a reasonable profit, but without excessive price increases that are based on artificially increasing the margin. The cost modeling module provides valuable support here. This method can also be used to identify "black sheep" among suppliers, as there are always suppliers who do not have complete integrity and try to exploit situations to their advantage. With Tacto's cost modeling module, such suppliers can be identified at the touch of a button. On the other hand, the cost modeling module can also be used to validate increased supplier prices. If I recognize that a price increase is justified, I inform the supplier of this and accept the new price. This builds trust with suppliers.
In addition, Tacto supports Weinmann in effortlessly filtering high-turnover items and tracking price and quantity trends at item, supplier and product group level. Tacto signals price outliers where quantity and price trends are not in harmony. Such an analysis can serve as the basis for articles that are then automatically integrated into the cost modeling module and checked for validity there. In this way, Tacto can help Weinmann to achieve significant cost savings in purchasing.
Comparison of paid prices with modeled target prices at the touch of a button
Cost savings through the identification of negotiating leeway
Identification of price outliers at the touch of a button
"The synergy between Weinmann and Tacto is remarkable, both in terms of the way we work together, the chemistry between the teams and the gut feeling. I really have the feeling that Tacto is 100% focused on SMEs and their needs. This gives me an extremely positive feeling about Tacto's vision and our long-term partnership."
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Many thanks to Jan Herburg and the entire Weinmann 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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