Jaggaer has completed its acquisition of Ivoflow, a company that provides direct materials spend and price intelligence software. This deal combines Jaggaer’s procurement software with Ivoflow’s focus on direct materials pricing for manufacturers.
Ivoflow, based in Koblenz, Germany, was founded in 2020 and will continue to be led by Co-Founders Daniel Demuth and Nicolas Neubauer. They have joined Jaggaer with their team, bringing their expertise in manufacturer pricing analysis.
Direct Materials Focus
Jaggaer’s customers include manufacturers, universities, hospitals, and government agencies. Ivoflow’s software is designed to help manufacturers determine if the price paid for a part reflects market conditions.
The software combines purchasing records with external data, such as commodity indices, currency movements, and cost data. It then recalculates what an individual part should cost as conditions change, providing a more accurate picture of market prices.
Direct materials account for about 50% to 70% of the cost of goods sold for complex manufacturers, according to Jaggaer. However, fewer than 2% of manufacturers use a dedicated spend and price intelligence system for that area.
Commercial Implications
Ivoflow’s software uses artificial intelligence to read supplier price increase requests and identify the claimed cost drivers. It then compares them with current market data to estimate how much of an increase is justified.
For example, Jaggaer cited a case where a supplier requested a 6% increase, but the software concluded that only 1.3% was supported by the underlying costs. This approach can also be used to scan existing spend and identify categories where prices have drifted away from the market.
Ivoflow serves 17 enterprise manufacturing customers and has tracked €77.6 million in savings under management. Named customers include Georg Fischer, Sumitomo, Grammer, TI Automotive, and ZF Lifetec.
Rationale for the Deal
The rationale for the deal is to embed Ivoflow’s pricing analysis within the procurement workflow buyers already use. This will allow buyers to check whether a quoted price is fair without switching to a separate tool.
Andrew Roszko, Chief Executive Officer of Jaggaer, said, “Ivoflow will enable buyers to manage more of their direct materials within a single platform, bringing powerful market and cost intelligence into supplier negotiations.”
Ivoflow’s founders, Daniel Demuth and Nicolas Neubauer, will stay on and continue to lead the business. They said the acquisition gives the business a broader route to market while preserving its focus on manufacturer pricing analysis.
Daniel Demuth described the combination as a way to broaden the product and expand its use of artificial intelligence in manufacturing procurement. Jaggaer plans to invest in the Ivoflow team and product, including work on scenario modelling, savings probability generation, and artificial intelligence-based procurement guidance.
