Procurement and Logistics

WACKER’s procurement volume increased in 2015, primarily due to higher investment spending and increases in volumes. Volumes are broken down into raw materials and energy, and into services, materials and equipment, with a high proportion for investments. WACKER spent € 3.66 billion (2014: € 3.19 billion) on raw materials, other materials and services. This figure includes investment-project procurements of € 834 million (2014: € 572 million). Our procurement rate – raw materials, services and other materials as a percentage of sales – was 69 percent (2014: 66 percent). In 2015, we procured around 1,300 different raw materials as well as numerous technical goods and services for plant engineering and for maintenance. Our suppliers number about 11,500 (10,500 at Technical Procurement & Logistics and 1,000 at Raw Materials & Energy).

Energy and Raw-Material Procurement Volumes Slightly Above Prior-Year Level

At € 1.73 billion, the Group’s energy and raw-material procurement volumes were 4.8 percent higher (2014: € 1.65 billion), a mid-single-digit range growth rate. The weakening of the euro relative to the US dollar and the Chinese renminbi had a negative impact on raw-material prices. On the other hand, weak demand for raw materials and the continued drop in the oil price slowed the price increases. Prices for key petrochemical raw materials were only partially affected – and with a delay – by the steep drop in the oil price. Downtime at several crackers in Europe and Asia led to tight markets for olefins and olefin derivatives. However, prices for our petrochemical raw materials, such as vinyl acetate monomer, were on the whole significantly lower than in 2014. The price of silicon metal rose because Brazil, a major supplier, reduced production of this raw material due to water shortages. The prices we paid for gas and electricity were stable or slightly lower in 2015. Price hedging strategies meant that the effects of lower costs were not felt in full.

Procurement Volumes (incl. Procurement for Capital Expenditures)

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Procurement volumes






























In North America, we initiated the start-up of the new site in Charleston (Tennessee) at the end of 2015 and made preparations for supplying it with the necessary raw materials and energy.

Technical Procurement & Logistics

The Technical Procurement & Logistics department’s invoice volume was some 25 percent above the prior-year level due to higher investment expenditures. We were able to avoid price increases for technical materials, whereas there were moderate price increases for services. Delivery times were at the prior-year level. WACKER – including Siltronic – placed a total of around 420,000 orders worldwide. At Technical Procurement & Logistics, 10 percent of our suppliers cover 90 percent of our procurement volume.

In 2015, we signed major multi-year master agreements in particular segments such as logistics and technical services. Launched in 2013, an initiative for reducing dependence on individual suppliers continues to show measurable results and is being expanded. Last year, our Project Procurement unit handled 15 projects at various stages of planning. The largest of these were the polysilicon expansion project in Tennessee (USA) and the new dispersions reactor in Kentucky (USA).

As a result of investment projects carried out in the USA, Asia and Europe, we have worked with a large number of qualified local suppliers. We will continue this collaboration so that WACKER can benefit from the advantages of a global procurement market and increase competition among our long-standing suppliers. Our goal is to optimize our procurement costs, delivery times and quality, as well as to quickly tap additional supply sources.

Systematic review of supplier risks is an important tool used by WACKER for properly evaluating our supplier relationships. Reviews are conducted using analyses from rating agencies, our own supplier assessments and, increasingly, direct contact with our partners. With the assistance of Technical Procurement & Logistics, we reviewed 366 suppliers in 2015.

Percentage of Electronic Procurement Transactions Continues to Rise

Electronic procurement is of crucial importance at WACKER. This includes the entire procurement process – from initial inquiries at suppliers up to payment of invoices. An important indicator is the number of orders placed automatically. A global total of over 650,000 items were ordered by Technical Procurement & Logistics and Raw Materials & Energy (2014: over 600,000 items), of which around 490,000 items are attributable to Technical Procurement’s activities at our major sites. In 2015, we created roughly 70 percent of these order items through automated processes at the German sites. We obtain a particularly high degree of automation through the use of e-catalogs for procurement. Electronic ordering processes make up a consistently large share of procurement activities at our larger sites. Accordingly, we are now seeking to achieve similarly high levels at our smaller sites within and outside Germany. We currently work together with approximately 160 suppliers on the basis of e-catalogs.

Direct Contact with Our Suppliers

At WACKER, we have always valued direct contact with our suppliers. About 420 companies attended our Supplier Day held in Burghausen on June 11, 2015. Prizes were awarded to two companies, Elektro Kreuzpointner and Maasch Metallbau, for their reliability and long-term partnership with WACKER, while Kirsch Apparatebau was named Best Partner in the Equipment / Hardware category. The prize for Best Joint Innovation went to Kunert Wellpappe, and the Best Service Partner award was conferred on Sächsische Binnenhäfen Oberelbe GmbH. OOCL Logistics Ltd. was honored for its good global collaboration with WACKER. WACKER is interested in building long-term relationships with its suppliers, while at the same time reducing its dependence on individual suppliers. In Germany, which remains our largest procurement market, we cooperate with some 6,500 suppliers. The average length of business relationships between Technical Procurement & Logistics and its suppliers is ten years.

Shipping Volumes Up

Shipping volumes rose year over year. The Group’s largest logistics hub, Burghausen, increased its shipping volume by about 5 percent to around 800,000 metric tons (2014: 762,000 metric tons). The number of truckloads and overseas containers rose slightly, to 40,700 and 14,000, respectively.

Transport Volumes for the Burghausen Logistics Hub

Transport Volumes for the Burghausen Logistics Hub (graphic)Transport Volumes for the Burghausen Logistics Hub (graphic)

More Rail Shipments

At our new production site in Charleston, Tennessee (USA), we developed and installed the logistics processes required for start-up and production. At the Zhangjiagang plant, a new logistics storage and distribution center started operation in September 2015 in order to more efficiently process higher volumes of raw materials and downstream products and to serve customers more quickly. The combined road and rail terminal in Burghausen, open to public use, has significantly increased the number of goods transshipments and transport connections. Besides additional trains to the northern ports of Hamburg and Bremerhaven, new connections to Cologne and Trieste have been introduced, helping us to shift more traffic from road to rail. The German Chemical Industry Association (VCI) and the Bavarian VCI presented WACKER with the Responsible Care ® Award for its efforts in optimizing overseas shipments.

In February 2015, WACKER joined the Together for Sustainability procurement initiative. The goal of this initiative is to establish a standardized, global program for responsible procurement of goods and services in the chemical industry and to raise the ecological and social standards of suppliers.