Is the money really earned in purchasing?

Buyers like to say that the money is made in purchasing. But is that really true? I maintain that all partners in a supply chain bear their costs together!

Is there a better example of how a low purchase price does not necessarily save money than the EU Commission’s purchasing strategy for coronavirus vaccines in 2020?

Last year, through intensive negotiations, the EU Commission succeeded in acquiring the coronavirus vaccines from the various manufacturers at a significantly lower price than the UK, for example; however, the contracts were also signed later. Allegedly, the EU pays only 50% of the price per dose of the AstraZeneca vaccine that the UK pays and about 30% less for the Biontech vaccine. That sounds good and like significant savings, extrapolated to all EU citizens who want to be vaccinated. When the vaccines were delivered, we quickly realized that at least AstraZeneca supplied the UK faster and more reliably than the EU. The British had ordered faster and paid more. AstraZenica served the better customer better, which should come as no surprise to anyone who is at home in supply chain management. We can be glad that the poor customer EU is better served by the supplier Biontech/Pfizer than it is actually entitled to.

If the prices published some time ago by the newspaper WELT are correct, the EU will save around €6 per dose of Biontech and just under €1.80 per dose of AstraZeneca. If the EU had paid €20 more per vaccine dose, the additional costs would have amounted to €18 billion; not much money compared to the approximately €11 billion that each month of the coronavirus crisis costs the Federal Republic of Germany alone.

It is not the lowest purchase price that counts, but the total cost of ownership. What the supplier gets in one place, he gets back in another: The costs of a supply chain are shared by all parties involved!

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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