DGermany’s notorious hidden champions have massive problems. And a Munich software start-up is now rushing to their aid. What’s going on: Almost all manufacturing companies, especially those that are meant when the conspiratorial “backbone of the German economy” is mentioned, have acute problems with their supply chains.
There are various reasons for this: for example the Ukraine war and the economic sanctions against Russia. The corona pandemic is another reason. If factories in China close for several weeks, a port is closed during a lockdown or many workers in raw material production are absent due to illness, then parts in Germany that the local industry wants to use to manufacture goods are missing. According to the ifo Institute, in 2021 alone supply chain difficulties caused damage of more than 38 billion euros to the German economy.
But supply chains are also a pain point in the manufacturing industry for other reasons. First: This is about a lot of money. Companies spend around 50 to 70 percent of their turnover on purchased parts, i.e. items that the companies do not manufacture themselves.
Second: Politicians are taking a closer look at what is happening along the supply chain and is making buyers more responsible, for example in terms of environmental protection and sustainability. Up to 50 percent of the emissions often occur at this point. And from 2023, the EU Supply Chain Act will also oblige companies to exercise human rights due diligence along their supply chains.
Tacto ensures sustainable supply chains
In short: the more companies that produce small individual parts buy regionally or globally, the more suppliers they have in the most distant locations on earth, the greater the difficulty in having all these long supply chains under control with the required care. Medium-sized companies in Germany that manufacture modern systems or complex machines, for example, have hundreds, often even thousands, of suppliers for all those specific small and large individual parts that they do not manufacture themselves.
And now Johannes Groll, André Petry and Nico Bentenrieder come into play, the founders of Tacto. They say: We’ll take care of it. “We are working on building sustainable supply chains,” explains co-founder Petry to “Gründerszene”. “This is how we help medium-sized companies to manage their suppliers strategically, digitally and more sustainably.”
Know each other from the Technical University of Munich: Tacto founders Johannes Groll, André Petry and Nico Bentenrieder (from left to right)
Quelle: Touch
The key is software. One could also say artificial intelligence. This creates transparency about all procurement activities of a medium-sized company. It shows savings potential, draws attention to impending bottlenecks and risks, and automates tasks in sourcing and supplier management.
In concrete terms, this is how it works: In the first step, the system records all the data that a company has internally about its articles, materials, parts and suppliers. She analyzes them and prepares them. The AI then makes suggestions as to where improvements can be made.
If, for example, she sees a price increase for a certain part, the responsible buyer receives a notification. He can then use the software to contact and onboard alternative suppliers for that part. The AI also keeps an eye on which parts could become scarce and reports this in good time before the company slips into a supply bottleneck.
Digitization has top priority in medium-sized companies
All this is newer for medium-sized purchasing than you might think. The “SME shopping barometer” published in 2021 by the Federal Association of Materials Management, Purchasing and Logistics shows that a good quarter of small and medium-sized companies manage their purchasing data with nothing more than simply Excel.
Stored locally on the buyer’s company computer. Suppliers are contacted individually by e-mail. As a result, order and invoice approvals are – as you might have guessed – also done by hand.
Many medium-sized companies have long been aware that this is not optimal and that there is urgent potential for improvement, says Tacto co-founder Petry: “Digitization has arrived as a top priority in medium-sized companies and the fear of software projects has gone.”
Most of them are also aware that the computer is not the enemy of a safe workplace, but a necessary helper. “We’re more of a supportive tool than rationalizing something away,” says Petry. This helps many companies in view of the shortage of skilled workers.
Bentenrieder, Groll and Petry got to know each other through the Technical University of Munich and built their start-up in close cooperation with their customers. Right from the start, the team maintained contact with companies such as Schwäbische Werkzeugmaschinen, had their buyers test prototypes, listened to what they needed to switch from everything Excel to an all-in-one system, complete digitization of the purchasing process.
This is not the first time Petry has come to appreciate medium-sized companies as customers: “Here you work with family entrepreneurs who understand very well how start-ups work. If you convince them, a decision is made from one day to the next.”
Start-ups are working on the digitization of supply chains
Now the topic of digitization of supply chains is not new. Other start-ups are already working on solutions: the Stuttgart-based manufacturing platform Laserhub promises to rapidly speed up material ordering. Companies are looking for a specific part on the platform, and offers from possible suppliers with price and delivery time appear in real time.
In a 2020 Series A round, Acton Capital, Point Nine and Project A, among others, participated in the company. The Würzburg start-up Scoutbee, which sees itself as an AI-supported supplier search, is considered the leader and collected a whopping 54 million euros from investors such as Atomico and Lakestar at the beginning of 2020.
Tacto from Munich has now announced that it has received 5.3 million euros from investors in a seed financing round. The round was led by Cherry Ventures along with UVC Partners and Visionaries Club and supported by business angels Hanno Renner, founder of Personio, Johannes Reck, founder of Getyourguide, Forto co-founder Michael Wax and Helsing boss Torsten Reil.