Interview with: Frank Schönrath, Managing Director European Beverage Sourcing Alliance (EBSA), the interview was conducted by Alexander Hornikel, Country Manager Kloepfel Consulting and Dr. Stephan Hofstetter, Partner Kloepfel Consulting.
An insight into the innovative purchasing community for the beverage industry and its purchasing optimization
EBSA is pursuing an exciting business model. Could you pick it up for the reader?
The European Beverage Sourcing Alliance (EBSA) is a purchasing group that focuses on procurement and supplier management for beverage producers. We negotiate framework purchasing agreements with suppliers that enable our limited partners to purchase goods and services under fixed conditions. The limited partners provide us with the goods and quantities required, while we pool this information, negotiate with the suppliers and conclude the framework agreements. We are remunerated directly by the suppliers by receiving 1 percent of the purchase volume as a service fee, without the limited partners having to pay for this service.
Our concept enables beverage manufacturers to respond to the challenges of the market, which are characterized by rising demand for raw materials and packaging materials coupled with a simultaneous decline in supply, non-transparent price increases and increasing globalized competition.
It is also important to us to comply with ESG standards and legal requirements in order to prevent human rights and environmental violations in the supply chains.
I would also like to emphasize the importance of our standardized data management through the implementation of the global reference data standard ECLASS. By using comparable data, we can establish new purchasing standards and drive forward smart manufacturing and the Internet of Things.
Did the German Federal Cartel Office have no objections to a purchasing consortium of two competitors?
The Federal Cartel Office has no objections, provided that strict antitrust guidelines are adhered to. These include compliance with a code of conduct and specific do’s and don’ts at meetings and when exchanging information. It is important that only such information is shared as is necessary to draw up a list of the products and services to be procured, without disclosing individual purchasing strategies or prices. In addition, no sensitive data such as current or future strategies, supplier or customer data may be exchanged. Furthermore, no agreements on the allocation of customers or orders may be made.
These requirements ensure that the cooperation complies with the legal framework and that competition is not impaired.
In short, breweries can work together as long as they comply with the antitrust restrictions to protect competition.
Is EBSA open to other beverage companies in Europe?
We are open and ready for more European beverage producers. By opening to additional members, we intend to increase our purchasing power and network, which will benefit all parties involved. Our ongoing goal is to optimize the efficiency and effectiveness of purchasing in the beverage industry while providing significant cost savings and strategic benefits to our member companies.
What goals did you pursue with the support of the purchasing experts from Kloepfel Consulting?
Together with the purchasing experts from Kloepfel Consulting, we pursued two main objectives. Firstly, we wanted to assess the maturity level of our various purchasing organizations. It was important for us to understand what stage of development each individual purchasing department was at so that we could derive specific measures for optimization. Secondly, our focus was on identifying opportunities to reduce costs.
What levers were used to optimize purchasing?
In the first phase, we concentrated on renegotiating existing contracts to leverage direct savings potential. In the second phase, we then focused on tenders and negotiations in order to achieve the best possible conditions.
In addition, we used global benchmarking and the negotiation of head terms to improve our purchasing conditions. Differentiation also played an important role in our sourcing strategy, which included switching to better performing suppliers, effective contract management and the development of existing supplier relationships. Value engineering, particularly through the standardization of specifications, helped us to eliminate unnecessary costs while ensuring quality.
Other long-term levers used by EBSA as a purchasing organization include volume bundling, cost-breakdown and cost indexing to target the key cost drivers – sugar, malting barley, glass and aluminum.
This strategic combination of levers has enabled us to achieve significant cost savings and increase both the efficiency and effectiveness of our purchasing organization.
What are the biggest challenges in a project involving multiple parties?
One of the biggest challenges is the varying maturity levels of the involved organizations. This can range from advanced systems and processes to less developed structures, making it difficult to harmonize work processes. Additionally, there is diversity in approaches to change management processes. Each organization has its own culture and methodology for implementing changes, which hampers the coordination and implementation of overarching measures.
Another issue is the standardization of specifications. The need to develop uniform standards proves particularly challenging when different requirements collide. Furthermore, timely transmission of qualitative data is a constant challenge.
Together with all stakeholders, we were able to resolve these challenges effectively.
Has the position of procurement improved within companies and towards suppliers?
The position of procurement within companies as well as in relations with suppliers has clearly improved. This positive development is mainly attributed to the increased transparency facilitated by the initiatives and processes of the European Beverage Sourcing Alliance (EBSA). Additionally, procurement has been significantly enhanced by the increased visibility and its impact on business results.
This has also led to a stronger position vis-à-vis suppliers. Many of them see collaboration with us as a valuable opportunity to drive their own growth.
EBSA has now established a strong procurement. What can you tell us about its further alignment?
Since the launch of EBSA on June 1st of last year, initially as a “one-man show”, we have made great progress. We have been able to build a strong procurement team, which now includes experts from various industries. Among them are specialists from the FMCG sector (Fast Moving Consumer Goods), the automotive industry, and the broader industrial landscape. Our team has grown to double digits.
Our goal is to provide our limited partners with optimal service at all times. We will further expand our expertise by actively seeking experts who can enrich our team with their industry-specific knowledge and experience. This way, we aim to ensure that our partners benefit not only from the best prices and conditions but also from innovative procurement solutions. In short, EBSA is not standing still.
What significance do megatrends such as digitization and sustainability have?
Digitization and sustainability play a central role for us. Given the complexity and scale of a procurement company with European connections, as well as the antitrust regulations to be observed, the use of state-of-the-art technologies is essential. Traditional tools like Excel and Outlook are far from meeting the requirements placed on us.
Sustainability is also of paramount importance for our shareholders and EBSA itself. Compliance with legal requirements, especially the Supply Chain Due Diligence Act (LkSG), is of utmost importance. We are aware of our responsibility and offer solutions that enable effective monitoring of supply chains.
What can you say about the collaboration with Kloepfel’s consulting team?
Our collaboration with Kloepfel´s consulting team has been consistently positive and productive. From the outset, the consultants have shown respectful and professional conduct. Particularly impressive was the willingness of Kloepfel’s consultants and analysts to fully engage and go the extra mile to achieve our goals. This attitude demonstrates that Kloepfel Consulting not only aims to create appealing presentations but rather focuses on delivering substantial and results-oriented profit and loss outcomes.
Contact:
Kloepfel Group
Christopher Willson
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com