Procurement and supplier management
Remit and strategic objectives
HHLA Group purchasing supports corporate strategy by means of its professional management of procurement activities. Purchasing is firmly established as a strategic partner within the Group. It is involved in procurement projects at an early stage, providing value-adding support and expert advice. Purchasing is a shared service provided by the Group's management holding company in Hamburg and deals with procurement activities on behalf of the majority of its domestic majority holdings. It also supports and advises Group companies as part of its holistic management of product groups, suppliers and contracts so that the service and performance requirements of internal customers are met as fully as possible.
Pioneering solutions are developed for the Group in close partnership with Operations and Engineering. In the process, HHLA draws on strategic and cooperative collaborations with select business partners. The aim is to establish a consolidated supplier base characterised by maximum value added, top quality and optimum life cycle costs. In addition to economic aspects, great importance is attached to sustainable procurement, which begins with the careful selection of suppliers. In the supplier qualification process, suppliers submit a self-disclosure confirming that they fulfil the quality standards of HHLA in the fields of sustainability, compliance, procurement and occupational health and safety.
Product groups and volumes
Procurement volumes
in the HHLA Group in 2022
The portfolio covers a wide spectrum, divided into three main product groups: technical purchasing, construction purchasing as well as information technology (IT) and indirect purchasing. Technical purchasing deals with the procurement of port handling equipment and energy products and covers material procurement as well as the procurement of services needed to service and maintain terminals and technical components. The construction department is responsible for the product groups of construction above and below ground, railway construction and facility management. In addition to project management services, these areas also include the corresponding planning and engineering services as well as maintenance and repair services. The major topics covered by the IT and indirect purchasing department are information technology services, software, hardware and telecom products. Indirect purchasing covers consultancy, marketing and HR services, office materials and personal protective equipment, among other things.
The procurement volume of the HHLA Group amounted to around € 376 million in 2022 (previous year: € 232 million) and was distributed among the above-mentioned groups. Given the high proportion of investment projects, the volume was much higher than in previous years.
Selection of suppliers and service providers
When selecting partners, great importance is attached to sustainability and compliance as well as financial stability, quality, reliability and innovative flair. HHLA requires its suppliers and service providers to comply with its Supplier Code of Conduct, which can be found on the HHLA website. The Code covers the topics of human rights, occupational health and safety, environmental protection and sustainability as well as appropriate conduct in a business environment. In 2022, 79.4 % of the procurement volume was placed with suppliers who had pledged to comply with the requirements.
Overall, the procurement volume was divided between 1,965 active suppliers during the reporting period. Around 34 % of the volume was placed with suppliers based directly in Hamburg. Around 69 % of the procurement volume was distributed between business partners in Germany. The supplier structure is generally highly dependent on our requirements. As a result of high-quality investments as part of the transformation process, the supplier structure shifted significantly in 2022 in favour of non-European suppliers and service providers.
Our subsidiaries and departments are also increasingly adopting sustainability standards in their list of requirements. For example, the medium-term aim of an emission-free fleet is now enshrined in our company car guidelines and environmentally-friendly drive technologies are being tested for port handling equipment with a view to optimising our carbon emissions. Innovation
The significance of sustainability is also reflected in legislation. In preparation for the Supply Chain Due Diligence Act, which comes into force in 2023, HHLA initiated a project to define a concept with additional measures in order to fulfil the requirements of the new law. Alongside the Sustainability and Purchasing departments, the Compliance department plays a leading role in these efforts. In future, a regular risk analysis will be carried out based on various factors in order to identify supplier risks and thus derive measures to mitigate and avoid those risks. The results will be implemented throughout the Group in 2023.
An existing element of the supplier and risk management strategy is business partner screening which, for example, makes it possible to check regular entries in various sanctions lists, and the supplier's obligation to comply with the German Minimum Wage Law (MiLoG). Compliance with these criteria is monitored by an IT-based supplier management system. This also facilitates a continual review of the degree of fulfilment and the supplier base.
Operational and strategic areas of focus
The year 2022 was also shaped by the impact of political crises and the effects of the pandemic, which were reflected in volatile prices, capacity shortages and supply chain disruption. As a result, the operational focus in terms of procurement during the reporting period was on securing our requirements and terms. In this way, preventive risk management and close dialogue with the respective departments enabled the company to make any arrangements with alternative suppliers in good time, or establish such arrangements. The purchasing department also secured stock levels for critical materials and agreed long-term conditions, as in the case of electricity.
During the reporting period, the integration of the procurement activities of holdings abroad was ramped up. Purchasing provided support for major projects in the form of process expertise and the set-up and expansion of local purchasing departments, while taking on the functional management of strategic purchasing. Due to this cross-functional approach, HHLA’s process standards can be implemented efficiently and effectively, for example in sourcing and supplier management.
From a strategic perspective, the topics of supplier management and risk management remain the dominant issues for purchasing. In the context of the Supply Chain Due Diligence Act, which comes into force in 2023, it will be essential to ensure processes are consistent and well-structured for our top product groups and suppliers. Similarly, the increasingly centralised nature of procurement activities and thus the representation of Group standards in the context of legal requirements will remain a key topic in this area. Another challenge is the systematic development of digital processes to optimise the effort devoted to regularly recurring activities. This transformation process was initiated with the launch of a new catalogue system, which has been in operation since 2021. The system optimises the requester’s processes while boosting the automation rate. In the reporting period, for example, 61.2 % of all purchasing processes were handled fully automatically (previous year: 56.5 %). This helps us to streamline processes and ensure compliance with process standards.