Cost Optimization in Procurement Through Automated Price Index Integration

WEINMANN Emergency Medical Technology GmbH

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🏗️   Industry:                          Medical Technology (Emergency Medicine)

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🗺  Headquarters:         Hamburg, Germany

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🧍  Employees:                      ~ 420

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💶  Revenue                                 ~ $65M per year

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💶  Procurement Volume              ~ $27M per year

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Weinmann's mission is "simplify saving lives." Weinmann strives to make its devices as easy as possible to use for the people who save lives. Core products include ventilators and defibrillators, designed primarily for use in emergency situations. This clearly differentiates them from hospital equipment and includes gear used in ambulances and helicopters that must be mobile. Customer profiles include military organizations, the Red Cross, ambulance equipment providers, the World Health Organization (WHO), and governments. A large portion of employees work in Research & Development (R&D), as Weinmann develops nearly all products internally. Procurement also plays a significant role at Weinmann, as decisions are made here about components that directly affect patients. Quality and availability are therefore top priorities in sourcing.

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"With Tacto, I can compare actual prices paid with modeled target prices at the push of a button and retrieve this data instantly for every negotiation. Tacto offers an outstanding capability to also reverse past price increases. And that is now one of procurement's primary tasks: reversing price increases!" - Jan Herburg, Head of Strategic Procurement

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Initial Situation and Challenges

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About two and a half years ago, Weinmann's procurement had virtually no touchpoints with digitization. Work tools consisted mainly of an ERP system plus Word, Outlook, and Excel. To address this, Jan Herburg began actively searching for digital solutions for Weinmann's procurement. He encountered both point solutions and integrated platforms like Tacto that offer a wide range of functions in one package. Especially for a mid-market company like Weinmann, it's advantageous to integrate many aspects into a single solution.

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"With Tacto, I can compare actual prices paid with modeled target prices at the push of a button and retrieve this data instantly for every negotiation. Tacto offers an outstanding capability to also reverse past price increases. And that is now one of procurement's primary tasks: reversing price increases!" - Jan Herburg

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Why was cost modeling so compelling for Jan Herburg?

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A key factor for Jan Herburg was the observation that over the past two to three years, supply chains in many areas had become significantly more unstable than ever before. Supplier behavior, unforeseen bottlenecks, and dramatic fluctuations in lead times—from 3 to 30 weeks, for example—along with sudden product unavailability had become commonplace. The main causes were external factors such as the Ever Given blocking the Suez Canal and the impacts of the COVID-19 pandemic, which temporarily shut down ports in China.

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"The era of former calm and stability is unlikely to return due to global interconnectedness. This situation means we're more frequently confronted with higher costs without having the control or transparency to understand what justifies these additional costs. We also lack the ability to track when these surcharges might disappear." - Jan Herburg

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3 Needs Weinmann Wanted to Address

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No transparency over additional costs demanded by suppliers

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Long, manually-driven preparation time for price negotiations with suppliers

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No overview of price outliers and the distribution of financial volumes across suppliers

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‍Tacto as THE Solution

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This is exactly where Tacto's Cost Modeling module comes in:

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Through Tacto's Cost Modeling module, Jan Herburg can specifically search for parts where negotiation potential exists or will emerge in the future due to declining trends in certain raw material prices. For example, if energy costs are high for an item and energy prices have dropped significantly, Tacto signals a negotiation opportunity. Previously, such analyses at Weinmann were performed on an ad-hoc, manual basis for negotiation preparation and took several hours per negotiation for complex structures.

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"With Tacto, I can compare actual prices paid with modeled target prices at the push of a button and retrieve this data instantly for every negotiation. Tacto offers an outstanding capability to also reverse past price increases. And that is now one of procurement's primary tasks: reversing price increases! Additionally, I have access to this data at all times. Even if a supplier calls unexpectedly, I can simply go into Tacto and instantly see my negotiation leverage with that supplier. This means I need zero preparation time."

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Jan Herburg's clear goal, supported by Tacto, is achieving fair, market-rate prices. The supplier should be able to earn a reasonable profit, but without excessive price increases based on artificially inflated margins. The Cost Modeling module provides valuable support here. This method also helps identify "bad actors" among suppliers, as there are always some who aren't fully transparent and try to exploit situations to their advantage. With Tacto's Cost Modeling module, such suppliers can be identified at the push of a button. On the flip side, the Cost Modeling module can also validate justified price increases. When I see that a price increase is warranted, I communicate this to the supplier and accept the new price. This builds trust with suppliers.

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Additionally, Tacto helps Weinmann effortlessly filter high-revenue items and track price and volume developments at the item, supplier, and category level. Tacto flags price outliers where volume and price trends are misaligned. Such analysis can serve as the basis for items that are then automatically integrated into the Cost Modeling module for validation. This way, Tacto can help Weinmann achieve significant cost savings in procurement.

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3 Wins with Tacto:

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Compare actual prices paid with modeled target prices at the push of a button

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Cost savings by revealing negotiation leverage

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Identification of price outliers at the push of a button

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Future Outlook with Tacto

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"The synergy between Weinmann and Tacto is remarkable, both in terms of the way we work together, the chemistry between the teams, and the gut feeling. I genuinely feel that Tacto is 100% focused on mid-market companies and their needs. This gives me an extremely positive feeling about Tacto's vision and our long-term partnership."

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Thank you to Jan Herburg and the entire Weinmann team for our trusted and collaborative partnership.

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Through partners and customers like you, we're able to develop our product in close collaboration and stay connected to the day-to-day realities of procurement, as well as discuss the topics that matter most to mid-market industrial procurement teams in joint webinars.

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Learn how Weinmann uses Tacto to achieve long-term cost optimization through automated price index integration.