CIPS News


RS Components unveil research findings on key challenges for MRO procurement professionals globally

CIPS 27 November 2018

Action needed as technology and increased pressure to deliver cost savings are driving change

RS Components (RS) the trading brand of Electrocomponents plc (LSE:ECM), a global multi-channel distributor, has launched a white paper  offering insight and analysis following research to explore the state of play for current and future MRO procurement globally. The survey, conducted among 851 procurement professionals covered opportunities and pressures procurement professionals face around key areas including innovation, inventory management and supplier knowledge.

The survey was the second from RS, after it conducted research in 2017 on the UK market alone. This latest research involved global respondents from sectors including manufacturing, public sector, energy, logistics & retail, transport & defence and technology, covering job roles from operational through to director and senior level. It focused on the challenges and opportunities for indirect procurement and MRO supplies – a growing area facing significant and ongoing change.

White Paper report highlights include:

  • The need to reduce operational budgets was the biggest pressure faced by procurement professionals, cited by 55% of respondents. This was followed by reducing inventory costs (52%), and improving asset performance (42%) as top concerns
  • The biggest day-to-day challenge for respondents was ensuring contract compliance with preferred suppliers (47%), closely followed by maintaining ageing assets (46%)
  • Despite improving asset performance and maintaining ageing assets being the biggest day-to-day challenges, only 7% of respondents said their company has a strategy in place for the Industrial Internet of Things (IIoT). However, the growing appetite and enthusiasm for new and emerging technology is evident, as 53% of respondents said that they were having conversations with suppliers around new product innovations
  • Within the UK, the growing use of managed inventory services from suppliers was confirmed: 68% of the survey’s respondents said managed inventory services improved business by reducing the time spent raising individual orders, providing better visibility of stock and spend, and improving productivity
  • Respondents who felt pressure to secure sustainable and ethical products was up from 25% in the UK in 2017’s research, to 31% in 2018. The global figure stands at 36%
  • 32% of respondents rated counterfeit items as a significant problem. The figures were even higher for small (39%) and medium-sized businesses (37%)
  • Achieving stakeholder alignment and managing stakeholders was raised as an on-going pressure, with the research highlighting that 28% of respondents are struggling with stakeholder alignment in the MRO category. Encouragingly, the number of UK respondents citing high alignment increased to 38% (from 26% in 2017) and the overall global figure stands at 42%, suggesting an improvement, although the problem is far from solved
  • Concern over Brexit has increased since the UK research conducted in 2017: 38% of respondents were concerned about how Brexit would impact their role, this figure is now 53% amongst UK respondents while globally it is 41%.

Mike England, President EMEA, RS Components, said: “The research findings reflect the conversations that we’re having with customers, and shine a light on indirect procurement and MRO supplies. The results particularly demonstrate that change remains a key concern in MRO procurement, where teams are being pushed harder than ever to deliver savings, something a coordinated supplier strategy is essential to achieving. Reducing operational and inventory costs requires careful management, and ideally, an organisation should work with a fixed group of trusted suppliers that can provide all the MRO materials they need.

“While the average order size in MRO procurement is small, the time required to make the purchase significantly adds to its cost. Part of that is because organisations are dealing with too many suppliers without working to a streamlined process. Streamlining suppliers reduces the possibility of off-contract spend, ensures controlled pricing and means that less stock has to be held on site, since the supplier can be relied upon to deliver products quickly when needed. Additionally, when it comes to ethical procurement and avoidance of counterfeit products, organisations should be wary about making purchases outside of a trusted supplier network.”

Another hot topic, the Internet of Things, presents huge opportunities for organisations but isn’t being capitalised on at present. Helen Alder, Head of Knowledge and Product Development, CIPS said. “I still think we’re at the start of the Internet of Things journey and, while it might develop quite rapidly, that’s not what I’ve seen so far. Organisations are aware of the technology and are looking at applications but, as the research shows, not many have any sort of solid strategy in place yet.”

Mike England believes that this is also reflected in customers he speaks to: “We’re having lots of conversations with engineers and a lot of them are seeing the industry 4.0 trend, but they haven’t worked out how they’re going to embrace it on the shop floor. I think there is a role for companies like RS to help bridge that gap by providing examples of the latest technology, showing off innovation, and then providing insight into how the technology can be used to improve MRO strategy.

“For instance, one of the key applications IIoT could be used for in an MRO setting is helping organisations move from a reactive or even preventative maintenance approach to a predictive maintenance strategy, in which machines are monitored and alert to required maintenance well before they fail. Engineers and procurement teams won’t attempt a large-scale overhaul of all their equipment and processes in one go, so a phased test and learn approach is the most sensible way to explore the benefits of new technology. However, it’s important that companies get moving with this test because while progress is relatively slow now, the pace of change will speed up over the next two to five years, and anyone burying their head in the sand will be left behind,” he added.

RS will use the research White Paper as a blueprint for change. In addition to covering research outcomes and providing results analysis, the White Paper outlines MRO strategies that procurement and supply professionals can employ to help achieve success.

Helen Alder concluded: “If you’re trying to add value and to do something differently to improve your organisation, a big part of the answer is to look outside your company and talk to your suppliers, other non-competitive businesses and organisations like CIPS. Suppliers are particularly useful because they will also have knowledge of what other companies are doing and can share that best practice with you.”

RS Components launched Connected Thinking in 2016, an online information portal offering advice and best practice for organisations, giving them inspiration and practical insight on the topic of MRO procurement. Connecting Thinking features senior sector, RS and Chartered Institute of Procurement & Supply (CIPS) experts – with which RS has a knowledge partnership.

The White Paper can be found on the CIPS website

-Ends-

About RS Components

RS Components, Allied Electronics & Automation and IESA Ltd are the trading brands of Electrocomponents plc, a global multi-channel distributor. We offer more than 500,000 industrial and electronics products, sourced from over 2,500 leading suppliers, and provide a wide range of value-added services to over one million customers. With operations in 32 countries, we ship more than 50,000 parcels a day.

Electrocomponents is listed on the London Stock Exchange and in the last financial year ended 31 March 2018 had revenues of £1.71bn.

For more information, please visit the website at www.uk.rs-online.com.

Editorial Contacts:

CIPS

About The Chartered Institute of Procurement & Supply

The Chartered Institute of Procurement & Supply (CIPS) is the world’s largest procurement and supply professional organisation.  It is the worldwide centre of excellence on procurement and supply management issues.  CIPS has a global community of over 200,000 in 180 different countries, including senior business people, high-ranking civil servants and leading academics.  The activities of procurement and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability. 
www.cips.org

Twitter: @CIPSNews

 

                                                           

Aakriti Kaushik
PR Manager – Northern Europe
RS Components
aakriti.kaushik@rs-components.com
+44 (0) 7795 400651                                  

PR Agency Contact:

Gina Tunley

Target PR Ltd

Gina@targetpr.biz

+44 (0) 7817 178705

Further information is available via these links:

Twitter: @RSComponents; @designsparkRS

RS Components on Linkedin

http://www.linkedin.com/company/rs-components

Connected Thinking on LinkedIn

https://www.linkedin.com/showcase/connectedthinking

Relevant Links: 

RS Components

www.rs-online.com

DesignSpark

www.rs-online.com/designspark

Electrocomponents plc

www.electrocomponents.com

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