The global crises of the recent years have put purchasing back in the spotlight – including at agricultural machinery manufacturer Fendt. The main focus is on security of supply and cost optimization.
Andreas Seemeier
Director Purchasing Germany
AGCO GmbH
Staufen recently supported an AGCO site in Germany in a makeor- buy project that significantly shapes the company‘s strategic direction. Other issues that AGCO GmbH‘s purchasing department is working on for the Fendt brand include spiraling costs, delivery times, and security of supply. Especially since the pandemic, the complexity of the supply chain has become a challenge for the company. “Everyone is focusing on the direct suppliers, but what about the second and third levels?” For Andreas Seemeier, Director Purchasing Germany at AGCO, this is the key question for companies in the manufacturing industry. “Our goal is to recognize and effectively manage the challenges at a deeper level,” says Seemeier. “We are investing time and resources here, and digital technologies also play an important role.”
Flexibility as a decisive factor
Using various digital tools, AGCO in Germany is creating the necessary transparency and making the structure of the supply chain traceable. The next step will be to redesign the entire supplier network to meet the increased requirements.
“Since the major supply crisis, there has been a trend to make the supply chain more regional,” says Staufen consultant Martin Späth. “This is an exciting option, especially with regard to Eastern Europe, so we at Staufen often support such projects. However, it must be recognized that certain industries and raw materials are not available in Germany or even Europe.” Regional production does offer some cost advantages, short transport times and greater security of supply. However, in the case of semiconductors, for example, it is unlikely that production will be relocated at short notice, as
these industries are firmly established in Asia.
“For me, flexibility is a crucial factor,” explains Andreas Seemeier. “Our purchasing department must be able to react to changes quickly.” This is because the economic reality has changed in the recent years. Political unrest, global supply crises, natural disasters and other unforeseeable events are increasingly affecting the supply chain network.
For me, this means that flexibility is a decisive factor.
Andreas Seemeier
Our purchasing department must be able to react quickly to changes.
Director Purchasing Germany, AGCO GmbH
About Fendt
Fendt is the leading high-tech brand in the AGCO Group for farms with the highest demands regarding quality of machines and services. Fendt tractors and combines operate globally on professional farms as well as in non-agricultural areas. At its German sites in Marktoberdorf, Asbach-Bäumenheim, Hohenmölsen, Feucht and Wolfenbüttel, Fendt employs more than 7,800 people in research and development, sales and marketing as well as production, service and administration.
Digitalization and AI are the key
A flexible and diversified supply chain prevents a single crisis from paralyzing the entire system. So broad diversification has a positive effect, but international procurement remains essential. As a global company, AGCO has factories in many countries, so global purchasing offers many strategic advantages and more flexibility. Digitalization and artificial intelligence (AI) play a central role in this and help to identify dependencies and trends. They also support sustainability reporting, because requirements such as the Supply Chain Act and the EU Sustainability Directive must be taken into account in all issues relating to the supply chain network.
“In our experience, cooperation between the departments of a company is crucial,” emphasizes procurement expert Martin Späth. Purchasing is heavily dependent on information from product management, planning, development, and quality assurance. Optimal results can only be achieved if all departments work together. Crises can therefore have a positive effect, namely breaking down silo thinking between departments and encouraging them to focus more on the overarching corporate goal.
Increasing focus on cost optimization
AGCO manager Seemeier has his sights set on the coming years. “The buyer of the future is a strong relationship manager,” he says. Even if digitalization helps with processes, the human factor remains central. While the digital tools provide support, the focus is on the strategic orientation of the supply chain network and maintaining supplier relationships. Procurement costs remain important. They usually account for more than 50 percent of the manufacturing costs of a product, and therefore are a major lever for cost reduction. “The crises of recent years have led to significant price increases,” summarizes Seemeier. “But we cannot and do not want to simply pass these costs on to our customers.” The consequence: the company is paying more attention to optimizing its costs. This also makes it easier to remain flexible, adapt to market changes and be better prepared strategically for future crises. Close cooperation between the various departments and a sustainable supply chain strategy are immensely important
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