As the energy sector undergoes profound change, German energy provider, Pfalzwerke is reshaping procurement into a strategic engine for growth, resilience and digital innovation. Dirk Dohmen, Group Purchasing / Services at Pfalzwerke discusses building a modern procurement function, accelerating AI adoption through a partnership with Lio and preparing the business for the future of energy infrastructure.
The objective, according to Dirk Dohmen is to “enhance procurement’s value contribution by increasing efficiency through AI, accelerating AI adoption, and actively supporting the company-wide automation agenda in collaboration with Lio. We need to We need to enhance strategic and tactical procurement as a key value driver, while establishing a highly efficient, automated and AI-enabled operational procurement as the essential foundation.”
For Pfalzwerke, procurement transformation is not simply about digitising processes or reducing costs; it’s about enabling the future of energy itself. Headquartered in Ludwigshafen in Germany’s Rhineland-Palatinate region, the company has spent more than a century evolving from a traditional regional utility into a diversified energy and infrastructure group focused on supporting the energy transition.
Pfalzwerke operates today across a broad portfolio including electricity and gas supply, renewable energy, photovoltaic infrastructure, eMobility, telecommunications, and smart energy solutions. It serves households, businesses, and municipalities throughout the Palatinate and Saarpfalz regions, as well as parts of Germany nationwide. The scale of the organisation reflects that transformation. Pfalzwerke supplies more than 4 TWh of electricity and gas annually, manages more than 700 MWp of installed photovoltaic capacity and employs more than 1,500 people across a network of specialist subsidiaries and infrastructure businesses. The company is also heavily involved in renewable energy generation, charging infrastructure for electric mobility and the expansion of future-ready energy networks designed to support Germany’s decarbonisation agenda.
As Germany’s energy sector faces mounting pressure from decarbonisation targets, infrastructure modernisation, geopolitical instability and growing demand for resilience, procurement has emerged as a strategic driver of change across the business. At the centre of that transformation is Dirk Dohmen, Group Purchasing / Services, who joined the organisation in March 2023, with a clear mandate from the board: build a modern, strategic procurement function capable of supporting the company’s ambitious plans.
“I was jumped into the company to meet a huge challenge: establish and build up a strategic procurement organisation from scratch. Because over the last couple of years there was no strategic procurement organisation at all,” Dohmen explains. “We only had operating staff for doing purchase requests. There was absolutely no strategic procurement behind that.”
“I was jumped into the company to meet a huge challenge: establish and build up a strategic procurement organisation from scratch. Because over the last couple of years there was no strategic procurement organisation at all,” Dohmen explains. “We only had operating staff for doing purchase requests. There was absolutely no strategic procurement behind that.”
The challenge of building a strategic procurement function was substantial. Pfalzwerke operates across a broad and increasingly complex energy ecosystem, spanning traditional electricity and gas provision, photovoltaic systems, eMobility and infrastructure operations. Procurement supports everything from solar installations and distribution networks to IT, HR, facilities management and a fleet of around 1,000 vehicles. The organisation manages between €200 million and €250 million in annual spend and works with approximately 300 to 400 key suppliers. Yet Dohmen quickly recognised that scale alone was not the defining issue. The real opportunity lay in creating procurement capabilities that could support a rapidly evolving business landscape.
Building procurement from the ground up
Dohmen brings more than three decades of procurement experience across telecommunications, sensors and infrastructure services. During 20 years in telecoms, he worked across network infrastructure, IT, procurement processes, branding, sponsorship, call centres and services. Those experiences proved highly transferable to the energy sector.
“The challenges are similar,” he says. “To build up networks, you have to improve the current networks for distribution of energy to the households. My work in the telecommunication area – providing coverage for every customer to make mobile calls – showed what is possible. And the infrastructure behind that was very similar from a procurement point of view”
That broad exposure has shaped his leadership philosophy. He believes modern procurement leaders must combine technical understanding with commercial awareness, stakeholder management and strategic thinking.
“You have to be open-minded in comparison to the different stakeholders in the company,” he says. “To work as a connector between the different stakeholders, you need a good understanding of the different business models working in the company to get the right answers from the procurement stuff towards the suppliers and find those good relationships between customer needs and the partners giving the support.”
For Dohmen, procurement cannot operate in isolation. It must embed itself deeply within the organisation, understanding engineering requirements, business priorities and operational realities. “It’s a kind of technical expertise on one side,” he explains. “Because if you have a huge spend for technical components you need to really understand what the business needs. You need to understand the language of the engineers.” This business alignment has become central to Pfalzwerke’s procurement transformation strategy.
Creating strategic visibility
The company’s procurement transformation is built on several core pillars: end-to-end transparency across the entire value chain, robust lifecycle management that means the creation of commodity group strategies aligned with organisational needs as well execution and continuous improvement of warehouse logistics for key inventory materials, strong supplier partnerships and digital enablement. “End-to-end transparency from the beginning up to the end and the lifecycle management, strong partnership in my opinion and what is coming more and more digital enabling,” Dohmen says. “You have to understand how you can improve processes from the analogue side to the digital and make it secure. This is essential for the next five-10 years.”
That strategic shift is particularly important in the energy sector, where procurement plays a critical role in enabling infrastructure investment, energy transition initiatives and operational resilience. “You have to be present at the beginning,” he reveals. “You have to understand what is available, what the current environment is and how we can educate the environment in a proper way that is useful and helpful and positioning us as best in class.”
Supplier relationships have also evolved significantly at Pfalzwerke. With energy infrastructure projects becoming increasingly complex and supply chains remaining volatile, Dohmen has focused on building resilience through stronger partnerships and supplier diversification. “We have to be more open when we get redundancies, while also practising the dual vendor strategy, for example, especially for components which are needed in every distribution energy network.”
That need is intensified by the pace of electrification and renewable energy growth across Europe. Distribution networks are under growing pressure to support increasing levels of solar generation and new energy demand. “The green power energy is coming more and more, but the distribution networks are not fit a future of transport pure photovoltaic energy,” Dohmen explains. As a result, procurement is now playing a central role in helping the organisation navigate supply availability, supplier capacity and long-term infrastructure planning.
Accelerating digital procurement
Technology has become one of the key catalysts for procurement transformation at Pfalzwerke. The company is rapidly modernising its procurement ecosystem, driven in part by the end-of-life status of its legacy SAP supplier relationship management system. Rather than simply replacing old technology with newer versions of the same processes, Dohmen and his team pursued a fundamentally different approach built around AI-enabled procurement operations.
That led to a strategic partnership with Lio and the implementation of a multi-agent AI procurement platform. “We conducted a thorough analysis on how to implement a multi-agent AI platform that can support requesters as well as operational procurement activities,” he tells us. “In addition, the multi-agent platform is intended to cover strategic procurement tasks, reinforcing procurement’s role as a value driver beyond operational efficiency.”
The speed of deployment has been remarkable. Contracts were signed in June, the project kicked off on 1st August, and the platform went live on 17 March, fully integrated with SAP and OCI catalogues. “That really was a successful story,” he enthuses. “I never had this in the past.”
The results were immediate. Pfalzwerke recorded more than 3,000 requests through the new system in just two months while dramatically reducing manual procurement workloads. “We had more than 3,000 requests from the new system.”
The platform is now evolving beyond workflow automation into more advanced procurement capabilities, including sourcing and negotiation agents. “We are testing the negotiation agent, the sourcing agent so that we really reduce the manual work of the people undertaking procurement activities,” he says.
The ultimate goal is not simply efficiency, but strategic enablement. “This will be helping more and more the organisation to take a deeper knowledge-based approach,” he tells us, “As they spend far too much time placing purchase orders.”
