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Tacto medium-sized industrial company survey on commodity price development: The situation remains tense!

published on
30.11.2023
  • For the first time, the Munich-based procurement software company Tacto is conducting an industry survey on the impact of commodity price developments on medium-sized manufacturing companies. 

  • The survey with procurement directors and procurement managers of leading industrial companies shows that the situation has only eased to a limited extent for many medium-sized companies - many expect the situation to deteriorate further in the next 6-8 months.

  • When it comes to reacting to price increases, the room for maneuver of medium-sized companies is often limited. In addition to passing on price increases to customers, many companies try to limit the effects primarily through price clauses or index-based pricing.

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Munich, 04.10.2022

The Munich-based procurement software company Tacto presented its first comprehensive medium-sized business survey in September of this year. In August and September, procurement managers from the DACH region were asked about their assessment of the current situationon the commodities market. In addition to information on how the situation is being handled, the focus was also on questions about expected future price developments. 

"Many of our customers and partners were still looking forward to an easing of the situation in the middle of the year and hoping for an end to the price rally," says Johannes Groll, Managing Director of Tacto. "However, especially with the increasing energy problems and the structural supply difficulties in the areas of mechanical engineering and electronic parts, the situation is still difficult and could worsen. This usually makes itself felt very quickly and clearly in the procurement departments."

83% of those surveyed said they had to deal with material bottlenecks and increased prices in their day-to-day business, with as many as 30% of them saying they had a raw material in their range that was not available. A large proportion of the procurement managers surveyed came from the mechanical and plant engineering sector and the procurement of electronic parts. 

The survey also asked how medium-sized procurement departments deal with the increased prices. A large proportion of respondents (77%) stated that the higher costs are mostly passed on to customers. 60% also rely on index-based pricing or price clauses that take the price of raw materials into account. In contrast, few consider using digital support: just 25% said they rely on digital tools to manage their procurement activity. 

"Industrial medium-sized companies are in a persistently difficult situation: on the one hand, the scope for negotiation with suppliers is smaller than for large industrial companies when prices are rising, and on the other hand, it is still difficult for many procurement managers to find suitable specialists. This often leaves no time for a detailed breakdown of the cost structure of products by raw material content," says Johannes Groll. "That's why it's especially important now to take full advantage of the opportunities offered by digitalization, to create free space for strategic activities, and thus to position themselves in the best possible way for the ongoing difficult situation. The digital tools for automatic analysis and control of procurement activities are there. Now it's a matter of integrating them into day-to-day business." 

Many procurement managers still do not anticipate a complete improvement in the situation. 60% of respondents rate the outlook for the coming months as "rather poor" or even "very poor". This is mainly due to rising energy prices and associated price increases and potential material shortages, which are perceived as a business-critical factor across all industries. In general, however, those responsible for procurement in the mechanical engineering and electronics manufacturing sectors are somewhat more confident about the winter period, as there are signs of an easing in the procurement markets for primary materials such as steel, aluminum and plastics. 

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