Two workers fitting together large pipe pieces

KSB: Better prices at the push of a button

KSB

KSB is a leading international manufacturer of pumps and valves. These are used in a wide range of applications, from building and industrial technology, through water transport and wastewater treatment, to power plant processes. The group, with its headquarters in Frankenthal, is represented on five continents with its own sales companies, production facilities and service operations. Over 16,000 employees generate annual sales of around EUR 2.3 billion (2016).

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Supplier relationships

“Today we can clearly define the scope of the auction, set uniform allocation rules for suppliers and achieve a competitive price.”

Thomas Ihli,

Global Category Manager,

KSB AG

The request

Purchasing attaches great importance to long-term cooperation with global suppliers who offer
both high quality standards and competitive prices. Whether for production materials, capital goods, services or C-parts – price negotiations can be complex and time-consuming. Every negotiation strategy cannot be applied to every material group. In order to get the best prices quickly and easily, KSB needed a solution that shortened time- consuming negotiation processes and made the price overview more transparent.

The solution

KSB AG today gets a good overview of the market prices of its suppliers at the push of a button. The company decided on a comprehensive purchasing solution with which it can conduct auctions. The internationally leading manufacturer of pumps and valves is now using the purchasing tool to negotiate better prices. KSB was able to achieve significant savings thanks to clear allocation rules and a clearly defined auction scope.

Globally lower prices

KSB’s purchasing is organized around product categories and procures production material and services for all production locations and sales units worldwide. The global purchasing volume is approximately one billion euros per year and includes all the products that a classic mechanical engineering company needs, i.e. raw materials, components, merchandise, services, capital goods and C-parts. The internationally leading supplier of pumps, valves and related services has been working with the JAGGAER solution since 2014 and has successfully implemented online auctions. The total package was a perfect fit for the company.

The decision in favor of the solution specialist was also made because of the deep ERP integration and SAP compatibility. The SaaS solution (Software as a Service) communicates perfectly with SAP R / 3. This did not mean a change in the way of working for the colleagues in the team. The buyers could continue to work with SAP, which is why the training effort was very low. The tool introduction was also problem-free. The JAGGAER solution – especially the SRM and eAuctions modules – are used globally by KSB. The location-independent use of the SaaS solution is another advantage that JAGGAER users benefit from.

Achieved benefit with JAGGAER

  • Quick overview of market prices
  • Better negotiating position through simple comparison of offers
  • Significant savings through eAuctions
  • Specification of uniform allocation rules for suppliers
  • High degree of utilization thanks to intuitive tool operation
  • Flexibility through different auction types
  • Global usability of the solution
  • Deep ERP integration and SAP compatibility
Two workers in hard hats look at a tablet in a pipe manufacturing factory

It’s all a matter of negotiation

In addition to the JAGGAER auction module, KSB continues to use classic negotiation methods for pricing, as the tool is not suitable for all KSB products and services. However, with the help of JAGGAER, KSB was able to auction electric motors and valves for the first time. Depending on the scope and object of the award, the leading manufacturer of pumps and valves chooses between different auction types, such as between the English or the Dutch ticker. The English ticker is one of the most common types of auction and is a method to get a good overview of market prices. The competition is achieved through a ranking. On the other hand, there is no transparency for the provider with regard to the ranking with the Dutch Ticker. The competition comes about through “first come first serve”, which leads to the actual “best price” result after a short negotiation period when there is high price pressure. The free combination option gives KSB absolute flexibility in dealing with suppliers, who have reacted very positively to the new tool. Many suppliers already knew the process from other customers and got along very well with the intuitive operation of JAGGAER.

KSB itself achieves significant savings in various procurement parts with eAuctions. Purchasing can now clearly define the scope of the auction and set uniform allocation rules for suppliers. This increases the pressure on suppliers and KSB receives an actual overview of market prices and achieves competitive prices. An expansion of the all-in-one solution is definitely conceivable for KSB. In a next step, the sourcing module is interesting, with which KSB AG could optimize its inquiry processes.

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