In many industries the procurement budget exceeds already 50% of the total company costs, reaching up to more than 80% in certain industries, as a consequence of increasing specialization and consequently diminishing vertical integration. Shorter product life cycles and the diversification of consumer requirements evoke one-time- or initial purchases of already over 30% for many companies, reaching up to 70% in constructions or the machine-building industry. This soaring complexity, in conjunction with globalization-based surge of competition and the arduousness of fund-raising after the capital market near-breakdown, poses a variety of new challenges for CPOs across all industries.

The year-to-year price haggling with suppliers is a back number, which exploits only a fraction of the total advancement potential between supplier and enterprise. Procurement’s next generation cultivates integrative collaborations with suppliers in order to realize cost reductions by the implementation of the supplier’s own improvement potential, by making use of its innovative know-how and by exploiting cross-company process enhancement possibilities, such as logistics or stock-keeping. The utilization of these opportunities requires a supplier management, aimed at the in-depth understanding of the supplier’s business, his competences, his strategy and his cost drivers.

The exploitation of international price differences for certain products through Global Sourcing carries another significant cost reduction potential and, hence, depicts another field of activity of the new generation of purchasers. Scared by imponderability in terms of reliability, distance or trust, procurement in many companies still omits to exploit the full potential of the global market, whereas global sourcing implies the consideration of the global occurrences or trends, which affect even the local markets. Procurement cannot get away from at least thinking globally because wars in the Middle East, droughts in East Asia or long-term trends, such as renewable energy, affect prices and products worldwide.

To cope with the new challenges and the vital responsibility, the procurement department must evolve from its shadowy existence towards a division-integrating institution, which is hooked up directly to the highest decision makers in the company. The participation in make or buy decisions and product development, the transparent definition of product specifications and the efficient coordination of the supply chain are only some of the new procurement functions, which accelerate monetary optimization. Maverick-buyings, oftentimes performed by peripheral divisions such as IT, logistics or marketing, whose officers are evidently specialized in other fields than procurement, respond for the loss of millions of Euros every year. The crucial importance of the new procurement division requires a controlling tool which measures its performance transparently and under consideration of all external influences such as demand changes, inflation or other macroeconomic factors.


Our Approach

Cuppers Consulting helps its clients to immediately reduce their procurement costs through the creation of price transparency on the international procurement market assuring optimum conditions in terms of price, quality and availability. We increase our clients’ liquidity through the implementation of the optimum stock rotation keeping the balance between supply security and the lowest possible capital lock-up on stock. 
In the second step Cuppers Consulting indentifies the cost drivers of important suppliers and develops long term cost-reduction strategies with them to make use of the cross company saving potential.
In the third step we define the procurement organization and the relevant interfaces to other departments within the company to assure an integrative function between suppliers, procurement and the other divisions in the company.