$30,000 Savings in a Single Negotiation by Reversing Price Increases from Previous Years

ME MOBIL ELEKTRONIK GMBH

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🏗   Industry:                         Electrical Industry

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🗺  Headquarters:         Langenbrettach (Baden-Württemberg)

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🧍  Employees:                      ⁓ 130

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ME MOBIL ELEKTRONIK has been a pioneer in the development and production of electronic steering systems for commercial and special vehicles for over 50 years. As a pioneer of steer-by-wire technology, the family-owned company delivers innovative solutions to leading manufacturers of mobile machinery and special vehicles worldwide.

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"With Tacto, we can successfully renegotiate past price increases that are no longer justified. In recent months, we have achieved price reductions of over $50,000 through Tacto's price modeling. Additionally, we can validate current price increases and thus ensure fair prices along the supply chain." - Robin Lippmann, Head of Procurement & Materials Management at ME MOBIL ELEKTRONIK GMBH

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Market Situation

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Procurement is currently in a challenging situation, characterized by a persistent shortage of skilled workers, supplier insolvencies, and a still-dominant seller's market. Additionally, short-time work and a slightly declining GDP are weighing on the market and supply chains, making access to materials more difficult.

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The price increases imposed by suppliers in the past could only be passed on to end customers to a limited extent. As a result, the company's profit margins came under increasing pressure and decreased in many areas.

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This situation is a direct consequence of the economic disruptions triggered by the COVID-19 pandemic. During the pandemic, there were widespread disruptions in global supply chains, material shortages, and significant production delays. Many companies were forced to accept higher prices for raw materials, transportation, and services, while demand fluctuated and customer purchasing power declined in some markets.

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Even after the pandemic subsided, these effects have not fully recovered. In procurement in particular, many problems have persisted, as supply chains remain vulnerable, production costs have risen, and global market dynamics continue to be volatile. For companies that depend on consistent margins, passing these cost increases on to customers is becoming increasingly difficult. Customers have become more price-sensitive and expect companies to keep their prices stable despite economic uncertainties.

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In summary, the pandemic-related disruptions have had a lasting impact on procurement conditions for many companies. They find themselves in a situation where they must manage rising costs but are only able to pass these costs on to their customers to a limited extent. This represents an ongoing challenge for profitability and may require new strategies to stabilize margins and remain competitive in the long term.

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Overpaying on Procurement Costs

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ME MOBIL ELEKTRONIK also faces constant pressure to optimize costs and achieve market-competitive conditions. However, many mid-sized companies lack the resources and necessary data to create transparency in their pricing structures and assess whether they are actually paying market-fair or still inflated prices.

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Tacto gives Robin Lippmann's team the ability to automatically model the price structure of each item. This makes cost drivers visible at a glance and can serve as the basis for the next negotiation. A practical example: Using Tacto, Robin Lippmann's team discovered that they were paying significantly too much for casting material. This led to an immediate supplier negotiation, bringing ME MOBIL ELEKTRONIK back to a market-fair price level. In a single negotiation, the company was able to save $30,000 – and that is just one of many success stories. Robin Lippmann sees great potential for further optimizations.

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Fair and Transparent Prices with Suppliers

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Furthermore, with Tacto, ME MOBIL ELEKTRONIK is able to verify justified supplier price demands in a transparent manner. Through Tacto's price modeling, ME MOBIL ELEKTRONIK can precisely identify where the fair price should be and compare it with the supplier's demands. If the supplier sets unreasonably high price increases, ME MOBIL ELEKTRONIK can also point out that potentially inflated price adjustments were passed on that had previously been uncritically accepted by other buyers (including the supplier itself).

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These mechanisms lead to fair and transparent prices along the entire supply chain and promote long-term stable and trustworthy supplier relationships. Tacto thus enables not only savings but also sustainable collaboration based on transparency and mutual understanding.

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Outlook with Tacto

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Economic and geopolitical uncertainties can have significant impacts on procurement, which is why it is important to prepare early. Companies can use the current easing of the procurement market to strengthen their resilience. Through the targeted use of tools, price increases can be countered and price negotiations conducted effectively. At the same time, continuous analysis allows all important cost drivers to be monitored in order to make informed decisions.

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Furthermore, by detecting unjustified price increases early, companies can be better prepared for future crises and fend them off. All these measures lead to fair and transparent prices along the entire supply chain and promote long-term stable business relationships as well as greater resilience in uncertain times.

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Many thanks to Robin Lippmann and the entire team at ME MOBIL ELEKTRONIK for our collaborative and trusted partnership.

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Through partners and customers like you, it is possible to continuously develop our product in close exchange and close to daily operations, as well as to discuss the topics that concern industrial mid-market procurement in joint webinars.

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Learn how ME MOBIL ELEKTRONIK was able to save $30,000 in a single negotiation using Tacto.