Interview May 11th, 2023 Interview with Stefan Knorsch
Rubina Hatziparassidis
Rubina Hatziparassidis

Stefan Knorsch, CEO of Provendor and procurement expert, explains that a single-vendor model reduces the complexity and costs of supplier management. Companies should be aware of the hidden costs in procurement and take measures to reduce costs.

Mr. Knorsch, today we will talk about single vendor procurement. Firstly the question:What is meant by the term Single vendor procurement?

Single vendor procurement, also known as the 1 creditor model, refers to a model in which only one supplier is responsible for the supply of selected goods or services. This model significantly reduces the number of suppliers, as well as the associated time and cost required to manage them.

Contact information:
Stefan Knorsch | Managing partner Provendor GmbH
Liebigstraße 2 | D-83435 Bad Reichenhall | Germany
LinkedIn profile of Stefan Knorsch
More information about Provendor

What is your personal enthusiasm for the topic and how important do you think it is for the future?

As the CEO of Provendor and a long-time procurement expert, I have personally experienced many situations where companies faced significant challenges in procuring materials and services. In particular, the complexity and time-consuming nature of managing a large number of suppliers was often a burden for companies. That's why I decided to start Provendor and support companies through our comprehensive procurement services.

A personal event that particularly motivated me to start Provendor was a situation where I myself was working as a purchasing manager for a company and we had various difficulties due to the large number of suppliers. To process the endless number of orders, a lot of time had to be spent, which then was missing to optimize the purchase prices and ensure the quality of the deliveries. By implementing a single vendor procurement model, we could have drastically reduced the number of suppliers and thus lowered our procurement costs. In addition, we would have had time for strategically important procurement tasks. This situation was an important starting point for me to help companies facing similar procurement challenges.

How are companies currently mastering the challenges in procurement and what best practices can you share with SCALUE customers?

Procurement challenges today are more complex than ever. Companies are faced with the task of managing a multitude of suppliers and materials, conducting price and quality negotiations, processing orders, monitoring delivery performance, considering ESG and CSR issues, among other things. However, many companies are not aware of the "hidden costs" that arise from the complexity of procurement. These indirect costs can be enormous and significantly affect a company's profitability. These include costs for too many suppliers or poor purchase prices due to lower purchase volumes per supplier, missing order processing and delivery routines, lengthy approval processes, and the maintenance of master data, among many others.

It is therefore crucial for companies to become aware of these hidden costs and take effective measures to reduce them. Best practices include reducing the number of suppliers by implementing a single vendor procurement model, optimizing order processing processes, monitoring delivery performance, and negotiating prices and conditions. Companies should also consider the use of technologies such as procurement analytics and AI-based solutions to automate and optimize the procurement process.

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What are the possible consequences if companies do not take action?

If companies do not take action, they may face increased time and costs associated with managing suppliers, unpredictable supply chain disruptions, quality issues, and poor purchase prices. All of this can lead to a significant loss of competitiveness that should not be underestimated.

How does Provendor GmbH currently support companies and what are the unique benefits for companies already working with Provendor? Can you explain this using a practical example?

Provendor GmbH supports companies through a wide range of procurement services such as reducing the number of suppliers, implementing spot buy, procuring C-items, providing operational support and procurement services, managing unmanaged material groups, mystery buying, and preventing maverick buying. The unique benefit for companies working with us is the direct support of our experienced staff who ensure fast and reliable supply to our customers. A practical example would be the implementation of a single vendor for a mid-sized company that, through collaboration with Provendor, was able to reduce its number of suppliers by 50% and thus lower its procurement costs by more than 30%.

Is it possible to make an ROI calculation for a single vendor procurement project?

Yes, it is possible to make an ROI calculation for a single vendor procurement project. The ROI calculation can be based on the expected cost savings and the costs associated with utilizing the single vendor procurement model.

In this example, it was assumed that the reduction in the number of suppliers and the optimization of the procurement processes would result in total annual savings of €425,000. The ongoing costs are €150,000 p.a. In this example, savings can be achieved from the first order in the single vendor procurement model. The savings through professionalization of procurement and bundling of demand have not even been taken into account.

It is important to note that this example calculation is only an estimate and that actual costs and savings may vary depending on the company and situation.

How long does it take to implement a single vendor procurement project and what can companies expect from a collaboration?

Companies that collaborate with an experienced procurement service provider like Provendor GmbH can benefit from a faster and smoother transition, as well as from the expertise and experience of the service provider in procurement services. Our clients can benefit from a fast implementation of the project, clear communication, and continuous support from our experienced staff. We work closely with our clients to understand their individual requirements and needs and offer a customized solution tailored to their specific needs.

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