Tense situation on the procurement market
Stable material supply thanks to BVS purchasing team
Many companies expect the shortage of materials in German industry to continue for at least another 10 months, according to a June survey by the ifo Institute. At the same time, 74.1 percent of companies complained about bottlenecks and problems in the procurement of primary products and raw materials. Colleagues in BVS Purchasing confirm the difficult situation that has unfortunately become part of everyday life since the first pandemic-related lockdown. Despite all the adversity, our team managed one thing: we were able to procure the materials for the ongoing production of customized sheet metal products, assemblies and end devices.
The current situation with suppliers
There are many reasons for the veritable storm in global material procurement: supply chains are out of rhythm, material shortages for many raw materials, a lack of containers, a sharp rise in demand in certain sectors, production stoppages and, for some months now, the enormous rise in energy costs as a result of the war in Ukraine. All these factors make the work of the BVS purchasing team more difficult.
“Our buyers have to order quotes for metals very promptly, as prices are sometimes limited to one hour, explains Harald Steiner, Managing Director of BVS Blechtechnik. We receive comments from suppliers such as “The market has escalated in recent weeks due to current world events. Raw material and energy supplies, as well as logistics costs, are among the main drivers of developments.” It goes on to say: “The price increases originally planned by manufacturers for Q2/22 have been overtaken several times in recent weeks….You must continue to assume very significant price increases.” Therefore, daily reassessments of customer orders are unfortunately necessary. The price increases for stainless steel peaked in April 2022, when prices for stainless steel were 180% higher than in October 2020.
Even standard items such as screws have a delivery time of approx. 40 working days. The situation in the paper industry is also extreme; we only receive delivery date commitments for our packaging two months in advance, with price mark-ups of up to 30%. The situation in the electronics sector remains difficult, as electronic components are mainly shipped from Asian suppliers to German customers. Furthermore, lathe operators or milling cutters, for example, do not produce new items. Due to very high capacity utilization, only known parts can be ordered here. In addition, the limited driver capacity for trucks means that small quantities cannot be removed, as only whole loads are shipped.
BVS Purchasing plans with foresight, but adjustments are unavoidable
The reasons for the increased workload, especially in purchasing, for various delivery delays or price adjustments, are therefore complex. Mr. Steiner recommends: “We appeal to our customers: plan in several stages, tell us your desired quantities per month and send us your forecasts for the next six to twelve months.” In this way, our purchasing team tries to secure certain quantities of the required materials at an early stage and order them in advance. Thanks to the excellent communication between our purchasers and many long-standing business partners, our material supply is stable. Unfortunately, we are forced to take the increased acquisition costs into account in our offers and hope for your understanding for the drastically changed framework conditions.
