BME: Buyers must learn the right lessons from the crisis

The effects of the COVID 19 pandemic on purchasing, logistics and supply management are serious. They will continue to burden international supply chains well into next year. The Corona crisis has exposed the weaknesses in companies' procurement processes. Now it is up to the purchasing department to learn the right lessons. The formation of task forces, the consistent use of digital technologies using data analytics and AI, strict cost management and forward-looking risk and supplier management are therefore must-haves for him. With these tools, he can detect disruptions in operations at an early stage, avert damage to his own company and achieve sustainable competitive advantages. These are the central results of the 56th BME Symposium Purchasing and Logistics DIGITAL, which came to a successful close on Wednesday (10 November) after three days. The motto of this year's largest BME networking event was "#newhorizons - looking ahead to the Next Normal!". At the virtual conference, 900 participants discussed current and future procurement strategies in a dramatically changing global business world. In the daily plenary sessions, interactive workshop formats and topic-related chat forums, as well as the statements of the more than 140 speakers from business, science and politics, the analysis of the past one and a half Corona years and a first cautious look into the post-Corona world played a major role. It was recalled that in the course of the pandemic, different shocks affected the supply chains. At the beginning of the Corona crisis, for example, there was an increased demand for hygiene and disinfection materials that could not be met immediately. In the second phase, many suppliers were either no longer available or their room for manoeuvre was severely restricted due to government lockdown measures. Internationally closely networked, they suffered above all from the shutdown of entire economies, as a result of which borders were temporarily closed and roads and ports were closed. Dr Julia Hartmann , Professor of Sustainable Supply Chain Management at EBS Business School, said: "2020 and 2021 have clearly shown how fragile our global value chains have become. At the same time, we are learning to appreciate the relevance of risk management anew. The problem is that this important tool for crisis defence is completely unattractive." Because not a single new customer can be won with it; risk management does not bring any savings to purchasing either. Quite the opposite. After all, it is about building up second sources and developing contingency plans. In Ms. Hartmann's opinion, all this has been lost in the daily business in the past or has always been sacrificed to other, more urgent issues. In the meantime, however, it has become clear to many that this cannot remain the case in the long term. This is especially true for the supply markets, where there are currently persistent bottlenecks in raw materials and primary products. For Bernd Lüddemann , Head of Procurement Electronics & Projects at SEW-EURODRIVE GmbH & Co KG, risk management is an integral part of supplier management. For him, key factors for successful risk management are the right supplier selection (identification and evaluation through Integrated Supplier Application - ISA, supplier audit), early warning indicators (creditworthiness monitoring, operative and strategic supplier assessment, effective supplier management (close interlinking of risk and supplier management) and quick decisions by the purchasing department when measures have to be taken against a risk. The discussion of how purchasing can best master crises also took up a lot of space. Bart Ader , Vice President Corporate Supply Chain of the MANN + HUMMEL Group, mentioned well-functioning communication as a successful means of crisis management in his company. For example, there are now daily task force meetings, a management report-out and regular close coordination rounds between purchasing and logistics. One of the top topics of this year's BME symposium was purchasing's struggle for more sustainability. Here, Beiersdorf AG has set itself ambitious environmental goals, as Julia Niedermeier , Global Category Manager Sustainable Packaging, and Maren Segelken , Global Category Manager Logistics Procurement, explained in their presentations. According to the Hamburg-based consumer goods manufacturer, it wants to reduce emissions in the entire value chain by 30 percent by 2025. The circular economy is also to be driven forward by then and the proportion of new plastics of fossil origin in Beiersdorf packaging is to be reduced by 50 per cent. Another goal is for the packaging to be 100 per cent recyclable or reusable in four years. By 2030, the company's production sites should be climate-neutral. On the very first day of the congress, a presentation on "Fit for the Supply Chain Act - Creating Sustainable, Transparent Supply Chains" met with great interest. Simon Jaehnig , Head of Sales & Partner Management at Integrity Next GmbH, presented the results of a survey conducted together with the BME. According to the survey, many purchasing departments are already on the right track. Thus, 83 percent of the respondents answered the question whether they were already evaluating sustainability aspects at their suppliers with "Yes, partially" (47 percent), "in planning" (21 percent) and "Yes, for all direct suppliers" (15 percent). When it comes to implementing a risk management system to identify sustainability risks (for example, human rights violations) in their supply chains, the figure was 57 ("yes" 16, "in planning" 41) per cent. According to the BME and Integrity survey results, companies trust their procurement to be enablers for sustainable, transparent supply chains. 59 per cent of respondents identified the procurement department as the area in their company that takes the lead in creating sustainable, transparent supply chains. At the closing plenary session of this year's BME Symposium, the question arose as to what expectations the CPOs of well-known companies have of purchasing in the future and what strategies they associate with it. Jan Grothe , CPO of Deutsche Bahn AG and member of the BME national board, presented the concept "DB Beschaffung 2025". This concept defines the guiding principles of DB Procurement. According to this, his department, consisting of 1,300 buyers, wants to become more holistic, more intuitive and more sustainable. Another goal of DB Procurement is to optimise the rail system network "with innovative solutions, economic prices and improved cooperation with our suppliers", Grothe announced. In view of the industry's ongoing supply chain problems, "stable supply is more than ever a central value" for Deutsche Bahn Procurement as well, Grothe continued. DB procurement can "only be successful with TCO consideration (Total Cost of Ownership) beyond classic savings", the DB chief buyer added. In Grothe's opinion, the future of successful business relationships lies in "intelligent and intuitive networking with our suppliers". The digital procurement process with systemic connection to the suppliers is without alternative. Grothe: "In 2023, there will be no DB supplier without at least meeting our corporate social responsibility criteria." DB Procurement wants to achieve Deutsche Bahn's ambitious sustainability goals in close cooperation with future-oriented and sustainable suppliers and in accordance with supply chain, circular economy and climate protection laws. This includes, among other things, actively helping to shape the transport turnaround in Germany with CO2 as the new currency. Isabel Hochgesand , CPO of Beiersdorf AG, informed the audience that the company's purchasing department has been undergoing a transformation process since 2017. Looking ahead to 2022, she spoke of four top priorities: Digitalisation, Sustainability, External Partnerships and Human Resources. In terms of digitalisation, the priority for the next year will be to develop and implement a digital roadmap as a blue print for supply chains and finance. To increase sustainability in purchasing, the CSR roadmap will be driven forward comprehensively and solid procurement plans will be developed. In dealing with Beiersdorf's suppliers, new partnership models along the value chain will be explored. Last but not least, the Group's employees will be helped with further team building. The consumer goods manufacturer's purchasing department employs 270 people from more than 50 nations worldwide; over 60 per cent of them are women and 50 per cent of them are in management positions. Isabel Hochgesand is responsible for an annual procurement volume of 3.5 billion euros with 110 product groups. Her division maintains business contacts with 20,000 suppliers worldwide. Ralf Schulz , Partner of h&z Unternehmensberatung AG, said about the future of purchasing: it is "facing new challenges that require a new target system, a new way of thinking and a new orientation". But this also gives purchasing a new raison d'être. In future, it will have to build up resilient processes, structures and capabilities; at the same time, it will have to be flexible and adapt to the constantly changing environment. But above all, according to Ralf Schulz, it must "bring a real impact to the business". This includes generating value and sustainability.