Last Updated on March 12, 2024 by Lukas Rieder
Early Warning Signals from the Procurement Markets
The most important external factors for cost development affect personnel and raw material costs. Early warning indicators for these are critical.
In the short term, cost price fluctuations usually play a major role for raw materials. These are caused on the one hand by fluctuations in supply and demand and on the other hand by fluctuating exchange rates. In the medium to long term, which is the focus of early warning, it is increasingly legal requirements regarding permissible methods and procedures for raw material extraction (e.g. prevention of environmental damage, child labor) that influence raw material prices. Various raw materials will become more expensive in the medium term because their reserves are slowly running out. The trend is therefore to expect raw material prices to rise. As a result, there is an intensive search for substitute materials and for ways within the company to be able to manufacture with less scrap, setup material and cutting losses.
Only a few specialists seem to dare to make forecasts on the medium-term price development of individual raw materials. For strategic and medium-term planning, it is therefore advisable to work with scenarios (rising, constant, falling).
Early warning signals on the development of personnel costs come mainly from the labor market. The main factors to watch are the availability of suitably trained specialists and managers and the expected wage levels in the respective employee groups. The regulations to be observed with regard to social benefits, vacations and permissible working hours are becoming more and more stringent and increase personnel costs as well. Since trade unions and professional associations are the main drivers of these cost increases, their current demands, if realistic, should already be incorporated into the multi-year planning of personnel costs.
