Scenarios and simulations increase transparency and informative value for strategic purchasing.
The more unpredictable raw material prices, delivery capacities, material availability, and delivery times become, the louder the call for an effective, future-oriented purchasing strategy.
Currently, the priority for purchasing is to secure supplies for the company’s own production and maintain its performance. Materials and services must be procured – at almost any price. Skyrocketing raw material and energy prices are rendering many existing supply contracts worthless. In order to continue offering its own services and products on the market, purchasing is currently forced to accept price reductions from suppliers beyond the scope of existing contracts.
What is necessary in the current situation will become a balancing act in the coming fiscal year. And the questions posed to purchasing by management are becoming more urgent:
How will purchase prices develop in 2022 and beyond?
Without scenario-based purchasing planning that can take many influencing factors into account, the answer becomes a guessing game. And even if the influences of raw materials and price components are reasonably clear, the question arises as to how volatile the negotiated terms are.
How large is the potential range of price fluctuations in the coming years?
Whatever the purchasing department’s response to such questions, without sound planning it will definitely be fraught with uncertainty. Serious predictions about the future development of material costs are never exact. Such statements can only be presented within a more or less wide range. The size of the range and the reliability and quality of the forecasts depend on the scenarios underlying the purchasing planning.
This is where the great strength of WebCIS 4.0 purchasing planning comes into play. Scenarios and simulations can be created and varied in a highly automated manner. Quantities, prices, and quotas for all planned services and materials can be flexibly “played with.” Entire groups of prices can be provided with underlying price simulations. New parts, material changes, graduated prices, exchange rate influences, supplier changes, and quota changes are incorporated into these scenarios and provide precise indications of the impact purchasing will have on future P&L.
The added value of WebCIS purchasing planning lies in the precision of the simulation scenarios. Each simulation is broken down into materials and suppliers at the end, even if the simulation values are entered at aggregated supplier, product group, or other levels. Credible and measurable planning only makes sense at the lowest level and not at aggregated levels.
Dashboards integrated into WebCIS 4.0 accompany the planning process and immediately highlight anomalies and outliers. Are price and/or quantity changes plausible? What opportunities and risks are associated with them?
Since planned scenarios can be compared with each other at all aggregation levels, this inevitably results in reliable and comprehensible statements about the range of fluctuation of future purchase prices.
