Sourcing Steel Parts in China : Risks and Opportunities for the German Special Machinery Industry illustrated by the example of BAUER Maschinen GmbH

Abstract

Steel Prices in Europe rise and are subject to global crises such as Covid-19 and the invasion of Ukraine. Consequently, machinery producers look for alternative sourcing opportunities abroad. Prices in China appear to be lower and more stable. Special machinery producer Bauer Maschinen GmbH in Germany wants to check if a purchasing strategy for steel parts in China is worthwhile. To achieve this, a three part strategic analysis is carried out: First, evaluate inter-nal and external inputs, second, formulate strategic alternatives via SWOT analysis, and third, select the best alternative through Multicriteria Decision Analysis. A mixed-method approach combines qualitative and quantitative sources. Expert interviews are combined with Statistical Date to triangulate conclusions. External input shows that the Chinese sourcing market is char-acterized by favorable economic conditions. Cost saving potential is promising, but administra-tive work rises. Internal Inputs show that Bauer Maschinen GmbH takes quality leadership while also having low negotiation power due to low output volumes. Existing production facili-ties in China help Bauer Maschinen GmbH to develop close supplier relationships. Out of all al-ternatives, a Safeguarding strategy is chosen for further development. Safeguarding is charac-terized by gradual development of sourcing in China, while simultaneously securing the supply chain. A contingency plan serves to shield the company against interruptions and crises.