Advancing internationalization poses challenges for SMEs

The online procurement platform for precision components CNC24 presents the results of its latest online survey on the state of the precast market. For the second year in a row, participants from German SMEs were surveyed, with 229 SMEs taking part in 2023. While the requirements for the production of precision components
quality, price and delivery reliability have hardly changed, there has been movement in the list of sourcing countries – which is creating new challenges.

Quality, price, delivery time: the top priorities of German SMEs in component procurement in 2023

Quality continues to be a priority for German companies: 63.3%
of respondents state that quality is the most important thing for them when procuring components, followed by price and speed.

Only 5.7% accept a target of over 35 days as an adequate delivery time for a production service provider, while 34.9% want to be supplied within 20 days. The biggest challenges remain high prices (59.4%), delivery difficulties (49.3%), adherence to delivery dates (48.5%), material bottlenecks (30.6%) and the uncertain economic outlook (29.7%).

The fact that 53.3% of the SMEs surveyed see the economic outlook for their
SMEs surveyed have a positive economic outlook for their company, while 41.4% are neutral. The goals for 2024 are to reduce procurement costs and delivery times and to increase adherence to delivery dates.

The fact that investments in automation hardly play a role (8.7%) is also confirmed by the unchanged figures for digitalization: neither the status of digitalization internally nor the reasons for the slow progress have changed in the last year.

China and India are becoming increasingly important as sourcing countries

However, there was movement in the regions from which components were sourced: Although Europe still leads with 78.2%, it has lost 20% compared to last year’s CNC24 survey. China (33.6%) and North America (8.7%) recorded slight growth and India tripled to 12.2%.When asked which country will become more relevant, 29.7% of the answers were India and 24.9% China.

“Contrary to social discourse, China remains an important production country for German companies. India is growing rapidly as an alternative, but poses particular challenges in the efficient handling of logistics processes. Overall, the market for precision components is very differentiated,” explains Willi Ruopp, CEO and co-founder of CNC24. Component procurement in Asia is challenging for companies in many respects: Be it communication (50.7%), delivery times including customs and logistics) (42.8%), quality assurance (40.2%), quality (36.7%), auditing of suppliers (30.1%) or adherence to delivery dates (25.3%).

“As a procurement platform with an international network of over 500 quality-tested suppliers around the world, we are a good partner here: We carry out the audits on site, employ native speakers for the important manufacturing markets of China and India to ensure efficient communication and also take care of quality assurance in our in-house measuring center,” explains Marlon Gerat, Head of Production and Co-Founder.

Fewer respondents believe that manufacturing will increasingly return to Europe: whereas 80% of respondents did so in 2022, the figure is just under 60% in 2023. In line with this, the topics of country of origin and sustainability share 4th and 5th place in the ranking of the most important criteria in component procurement.
Quality (1st place) is an absolute priority for German companies, followed by price (2nd place) and speed of delivery (3rd place).

Put to the test: procurement via digital marketplaces

Digital marketplaces aim to relieve the burden on purchasing departments and establish a leaner, more efficient procurement process with the help of digitalization and automation.

86.2% of the companies surveyed can imagine procuring their components via a marketplace, and almost 60% already procure their components via the CNC24 online platform. The predominant motivation for this was the desire for more favorable purchase prices (48.1%), but problems with their own network such as acute supply bottlenecks (38.5%), quality problems (13.3%), delivery reliability (11.9%) or the unwillingness of suppliers to handle even “small-scale” orders (25.5%) were also mentioned.

The strategic reasons such as easier access to international manufacturers (25.9%), reducing the number of suppliers (8.9%) or the lack of personnel in their own ranks (5.9%) are exciting.
Just under 80% can report cost savings as a result of working with CNC24, the result is made up of lower prices (39%), lower procurement costs (27.7%) and a reduction in quality assurance costs (18.5%).

“We are delighted that almost a quarter of our customers surveyed said that their purchasing had become more efficient as a result of the partnership with CNC24. This is our major goal and we will continue to work on this with the help of AI-supported matching, automation and the expansion of our in-house measuring center,” says Willi Ruopp, expressing his satisfaction with the survey results.

About CNC24

CNC24, a brand of CNC24 GmbH, is a digital B2B procurement platform through which individual precision components can be sourced transparently and efficiently.

Manufacturers from 22 countries produce the mechanical components individually according to customer specifications. The manufacturing processes of the leading online marketplace for mechanical engineering include turning, milling, sheet metal processing and additive manufacturing.

With its innovative platform solution, the technology company creates a transparent process for the procurement of production parts and digitalizes the value chain through to a fully automated procurement process. The company’s successful positioning as a partner for SMEs in terms of digitalization and innovation was confirmed in 2023 when it was awarded the German Excellence Award in the “Digital Startup Champions” category and the “Employer of the Future” seal. Thanks to its global network of suppliers, the company can guarantee free capacity, high material availability and on-time delivery of components at all times.

For quality control, all parts undergo an additional inspection process in the in-house measuring center before they are delivered. CNC24 was founded in 2019 by co-founders Willi Ruopp and Marlon Gerat. The start-up serves all industrial sectors with a need for production parts – from special machinery and plant engineering to IOT, medical, testing and measurement technology.

Well-known companies such as SIEMENS, DIEHL Group, Qualcomm, KRONES AG, Carl Zeiss, Vishay, BASF, CERN, FANUC, Syntegon, Jonas & Redmann, the Max Planck Institute and Fraunhofer are among its customersMore information at: www.cnc24.com

Press contact:
Elena Riedel
schoesslers GmbH

+49 171 176 3222

cnc24@sc hoesslers.com