During the past financial year, one key focus of strategic purchasing was to adjust working capital, particularly trade payables/receivables and inventories, in line with the year-on-year decline in order intake. This required prompt capacity adjustments with our suppliers. We also monitored our suppliers’ financial position on an ongoing basis, as a reduction in the flow of materials to customers can cause some to experience sharp fluctuations in liquidity. Actively asking our suppliers and service providers for information through “supplier screening” helped us to identify such developments at an early stage. We are therefore able to take any countermeasures required in the short term as well.

The Demag Cranes Group’s procurement strategies contribute substantially to safeguarding the Company’s competitive edge in the market and in terms of technology. Strategic purchasing activities and criteria for the global selection of suppliers thus continue to be aligned accordingly. We consider our main suppliers to be value-adding partners who not only reliably provide the Group with high-quality products and services, but who also give significant impetus to our product development. By sharing development and product optimisation, our main suppliers assist us in reducing manufacturing costs. This is key to safeguarding market share, particularly in times such as these. By continuously analysing processes along the supply chain, we are able to closely monitor manufacturing costs throughout the product-creation period together with our main suppliers, from the raw materials stage through to the final product.

Thanks to the increasing level of product standardisation, our strategic purchasing is able to make greater use of economies of scale and enter into new types of relationships with our suppliers. In particular, flexible logistics agreements are becoming more important for ensuring timely delivery of material supplies and reducing tied-up capital. The Company’s global purchasing presence enables it to react flexibly to constantly changing market conditions and to systematically exploit local procurement advantages. In this regard, the focus is on the procurement markets in emerging markets, where we have our own purchasing offices in key locations.

In the reporting period, strategic purchasing was converted from a segment-based purchasing structure into a central organisation. This new arrangement also brings the individual purchasing units together physically. All strategic purchasing units now report to the Group’s head of purchasing, who in turn reports direct to the CFO. As a result of their centralisation, the main purchasing activities are geared to generating economies of scale across groups of materials, implementing uniform supplier strategies and improving efficiency through the creation of uniform structures. In addition, similar procurement processes are being further harmonised and internationalisation and global sourcing are being increased.

The international purchasing process was launched at an International Purchasing Meeting in Germany led by the CFO. At this meeting, important agreements were reached with the purchasing managers from the different regions regarding a uniform approach and structure. Thus, the different market trends in each region are to be identified more quickly so that changes in the procurement markets can be exploited better for the Company as a whole. Company-level specialisation in particular groups of materials is allowing us, firstly, to optimise technical cooperation with suppliers and, secondly, to further standardise and optimise our parts, components and systems. This is taking place through teamwork with other functions, particularly production as well as research and development.

In the Industrial Cranes, Port Technology and Services segments, procurement processes for operations have largely been delegated to the individual business units or foreign locations. This organisational structure allows us to pool and manage demand centrally while maintaining sufficient flexibility to meet individual supply and service requirements throughout the organisation. The new structure gives us the flexibility we need to meet the changing requirements of a cyclical market.

Overall, the Demag Cranes Group works actively with some 240 A-list suppliers. This is the result of continuous strategic efforts to reduce our supplier base. At the same time, we have successfully ensured that the Group does not become too dependent on individual suppliers.

In the financial year, expenses for supplies and services amounted to approximately EUR 499 million in total (previous year: approximately EUR 644 million), of which some EUR 366 million (previous year: EUR 483 million) was spent on materials. Despite difficult market conditions, we were able to negotiate competitive terms with suppliers and secure these purchasing effects for the long term. This enables us, firstly, to strengthen our competitive position and, secondly, to maintain long-term relationships with our strategic partners.