2022 Review: What’s been important this year in purchasing?

Late 2022: Signs of relief
 

Is there light at the end of the tunnel? The Supply Chain Service of the Fraunhofer Institute for Integrated Circuits IIS recently published figures suggesting this could be the case. The study “TOP 100 in European Transport and Logistics Services 2021–2022" shows that the German logistics industry grew by 5% to 294 billion euros in 2021 (after +2.5% in 2019 and -1.8% in 2020). In addition, with 3.36 million employees, 100,000 more people are now employed in operational and administrative logistics tasks than the previous year.

Following their autumn summit the industry’s so-called logistics experts say they expect the sector's economic output to increase to 319 billion euros in 2022. Compared to the previous year, this indicates an increase of 8.5%. But it should be noted that this increase is mainly due to rising costs. According to the logistics experts, the real increase amounts to 0.6%.

And the bottom line? That's not much at all. Having said that, the figures offer a glimmer of hope for further progress in 2023. It’s not currently possible to make reliable predictions due to the rapidly changing global context. What we do know, however, is what has been keeping the purchasing industry busy in 2022. Here’s the review of another eventful year.

Crises continue to affect purchasing in 2022
 

Although the worst phase of the COVID-19 pandemic seems to have eased, its shock waves continue to have a noticeable effect. As a result, purchasing has been under pressure in 2022 to establish new and resilient supply chains. This task was made much more complicated by Russia's invasion of Ukraine. The industry not only suffered as supply chains were disrupted by sanctions, but also as many international transport routes were suddenly shut off – particularly from Asia.

The pandemic and the war in Ukraine presented purchasing with yet another major challenge. The tense geopolitical situation not only led to global supply bottlenecks, but also to unprecedented price increases. The result has been rates of inflation which at times have exceeded 10%.

Inflation has caused severe problems in purchasing. Despite regular budget adjustments and efforts to find cheap deals, its impact has been impossible to avoid. Many companies increased their prices in response, but this wasn’t always possible. To make up for losses, companies would have had to price some products so steeply that no customer could - or would have wanted to - pay for them.

At the same time, there’s a further potential conflict on the horizon when it comes to China. After the country’s recent party conference, it looks as if China’s leaders plan to stick with the current strict zero-COVID policy. In the meantime, there are signs of some restrictions being eased, but it is not clear whether it will be possible to prevent lockdowns in the future.

And this is not the only cause for concern for businesses. The party conference also showed that China is maintaining its rigid political line and paying little attention to human rights and freedom of expression. This is damaging the reputation of Chinese suppliers amongst consumers. For purchasing departments, this may mean having to look for alternative business partners and resources.

Glimmers of hope: Increased self-confidence and in-person networking
 

However - despite the challenges facing the industry - the figures mentioned at the start of the review are a reason for hope. While it’s premature to talk of a turning point, they do show that the industry is capable of skilfully navigating crises. This gives the industry more self-confidence and helps promote a solution-oriented approach.

This was felt not least during trade fairs  and face-to-face events, which have once again started to take place after two years of the pandemic. One example was the Logistics Congress 2022, which took place in Berlin in October. This was a meeting of around 2,000 specialists and managers, including numerous industry representatives. Together, they discussed pressing issues in the industry – during lectures, specialist seminars and product pitches. The event focused largely on supply chain issues, particularly in the context of reliability and sustainability.

2022 Review: These topics were also a concern for the industry
 

• In the run-up to the introduction of Germany’s tightened Supply Chain Act, which will come into force from 1st January 2023, many companies’ purchasing departments have had to make adjustments in order to meet future requirements. Companies will be required to guarantee human rights and environmental standards along the entire global value and supply chains.
• In any case, sustainability played a major role in procurement in 2022 as both suppliers and customers are giving increasing importance to more environmentally conscious processes.
• The use of digital B2B platforms was also an important topic over the past year. Solutions such as wlw connect are increasingly being used to connect purchasers with suppliers.
• Similarly, there continued to be a focus on automation and e-procurement solutions which simplify and accelerate the exchange of information and data between all stakeholders.
• The shortage of skilled workers continued to be an issue in 2022 and has made it difficult for companies to recruit qualified staff. This has meant that companies looking to hire have had to find ways to stand out from the crowd amongst stiff competition.

Conclusion: Purchasing 2022
 

The war in Ukraine has exacerbated the challenges facing the purchasing industry, which had already been under a great deal of strain due to the COVID-19 pandemic. Both the war and the pandemic have led to record levels of inflation. In purchasing, companies needed to mitigate the effects of high prices and create robust supply chains. This didn’t always work well, but there have been some successes - and the experts agree.

One consequence of this latent positive development is an increased self-confidence and feeling of self-sufficiency within the industry. This has led to an increasingly solution-oriented mindset, which can open up new perspectives. And this will certainly be necessary, since the current crises will no doubt continue to make their mark in 2023.