Ethics now top three pressure for MRO procurement

posted by Marino Donati
6 October 2021

Sustainable and ethical priorities have entered the top three pressures for MRO procurement for the first time, according to research.

RS Components’ fifth annual survey, in partnership with CIPS, showed that sustainability was a rising concern of MRO procurement teams, with respondents rating it as one of their top three business pressures for the first time since the survey started.

It was cited by 46% respondents as a business pressure, behind the need to reduce operational budgets (55%) but ahead of the need to cut inventory costs (41%).

The study surveyed 1,300 people globally, in mainly senior and managerial procurement roles, and from sectors including manufacturing, public sector, transport, aerospace and defence, utilities, logistics and retail and technology.

Almost two-thirds (64%) of UK organisations surveyed for the study had a strategy in place for sustainable and ethical procurement. It was a global priority, with similar levels of commitment in Europe, the Middle East, Africa and the Asia Pacific region, the study said.

More than half (55%) of organisations had a carbon reduction strategy, up from 48% last year. Globally, only 6% said the pandemic had caused their carbon reduction strategy to be put on hold.

In the From Disruption to Discovery study, RS Components highlighted that supply chains had the potential for greater environmental harm than a company’s own operations, potentially making up more than 80% of total emissions and more than 90% of the impact on air, land, water, biodiversity and geological resources, according to consulting firm McKinsey.

In the UK 86% were recycling their waste, up from 79% in 2020. Two-thirds (66%) used renewable energy and 45% consolidated orders to reduce transportation, both up 10 percentage points on last year. Three-fifths (62%) were reducing plastic packaging (up from 54% last year) and two-fifths (41%) were using electric vehicles, up 12 percentage points on 2020.

Andrea Barrett, vice president, social responsibility and sustainability at RS Components’ parent company Electrocomponents said: “The pandemic has highlighted the need for businesses to have a strong ESG approach with their customers, suppliers, people and communities.

“For example, it’s shown how important it is to build a sustainable supply chain and strong supplier relationships. This is key to ensure resilience and continuity of service in the event of a major crisis.”

Helen Alder, head of knowledge at CIPS, said sustainability was increasingly being incorporated as business-as-usual activity.

“Not only does it help with showing customers and consumers your organisation is trying to address environmental and social issues, but it can also help your organisation manage risks such as security of supply more effectively,” she said.

More than half (54%) of those surveyed in the UK said Covid-19 had disrupted their supply chains. The figure was 65% for SMEs. Almost a third (30%) said some of their suppliers had gone out of business during the pandemic, and 19% said the pandemic had accelerated supplier rationalisation.

Just over a fifth (22%) said MRO spend had decreased because of Covid and 15% had cut procurement headcount, with 36% putting staff on furlough.

However, 36% said collaboration with suppliers was increasing.  Almost half (45%) said the status of MRO procurement in their organisation had been enhanced by the pandemic.

According to the research, UK organisations had an average of 83 MRO suppliers this year, and 151 overall for indirect supplies. Average UK indirect spend was £2.4m, up £200,000 on last year.

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