MRO buyers braced for ‘significant change’

15 December 2017

Almost half of maintenance, repairs and operations (MRO) buyers expect to see “significant change” in the way indirects are procured in the next five years, a survey has found.

When asked, 46% of buyers polled said they expected indirect procurement strategies would change. Three quarters (73%) said their role gives them a good opportunity to drive change in the business.

The results were part of a report by RS Components, in partnership with CIPS, on the future of MRO procurement. It said inevitable advances in technology would drive the way businesses manage MRO and firms would struggle to survive if they did not adapt. 

“Technology is moving very quickly, which makes it hard to have a definitive plan for the next five years ­– organisations need to be flexible,” it said.

Industry 4.0, including the internet of things and more sophisticated data driven tools, will allow businesses to adopt preventative repair and maintenance strategies that reduce their inventories and cut lead times on spare or replacement parts, it said. Lead times for obtaining spare parts was a contribution to downtime for 65% of respondents.

Procurement needs to become an “innovative, creative, solution-finding department” instead of just controlling spend, and buyers should look to their supply chains to help them adapt and adopt their purchasing strategies and make the most of data to drive improvements. 

The report surveyed 200 procurement and supply chain professionals from a range of sectors, including manufacturing, logistics, construction and education.

It found the biggest pressures on buyers of indirects were reducing operational budgets (57%) and maintaining assets (49%).

Procurement and supply chain leaders are already looking to increase indirect procurement efficiencies through a number of methods, including supplier rationalisation (47%), finding value added services (30%), spend management systems (25%) and increasing supplier responsibilities. 

Vender consolidation is a key way of reducing costs, the report said. “Once [businesses] have consolidated supply, it is about looking for those vendors that not only have the product range and depth to consolidate, but also the digital platform and services to enable more integration so that process costs are reduced.”

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