GETTING A GRIP ON MRO SPEND

With MRO costs increasing, organisations are seeking to develop closer relationships with suppliers, so they can identify opportunities for efficiencies in their category management strategy and reduce the risk of counterfeit items entering the supply chain.

Organisations are spending 20 per cent more on maintenance, repair and operations (MRO) than they were in the last 12 months, according to the 2025 Indirect Procurement Report , produced by RS and the Chartered Institute of Procurement Supply.

Some of this may be down to price inflation but it’s also an indication that organisations are trying to get more out of existing machinery, rather than investing in new equipment, suggests Agata Evans, Senior Procurement Manager for MRO at Aston Martin. “MRO is becoming a priority for organisations and they are trying to be more proactive about repairing equipment now, so they can avoid more expensive problems of having to replace equipment later on,” she says.

At the same time, the average number of suppliers organisations use is up by 18 per cent, from 75 in 2023 to 92 this year, and the proportion of businesses using more than 250 suppliers has increased from 6 to 15 per cent.

While many organisations are looking to consolidate their supplier base – half of those surveyed say this is a priority – it may also reflect the realities of working in the current turbulent environment. “Over the last few years, we’ve been in multiple crises mode, and the number of businesses going into administration has had a huge impact on supply chains,” says Jane Lynch, Professor of Procurement at Cardiff Business School and Director of the Centre of Public Value Procurement. “Having more than one supplier is about mitigating risk and ensuring security of supply.”

This may even lead to a change in how organisations view the balance between economies of scale and the number of suppliers, she suggests. “One of the textbook characteristics of procurement maturity is optimising the number of suppliers to ensure greater value,” she says. “But our view on what a mature procurement function looks like today may be very different to some of the textbook frameworks, models and typologies that we’ve been trained to use in years gone past.”

Evans says that, despite the apparent contradiction, it makes sense for organisations to be both trying to consolidate their supplier base but also to expand it in certain categories to reduce risk. “At RS, for example, we need specialised suppliers for specific products and services,” she explains. “But even though we’re consolidating in one area, we’re diversifying in different ones so we are not too heavily reliant on a small group of suppliers.

“Consolidation gives us simplification of what we do, but we need to think about resilience as well. To have a resilient supply chain, you can’t rely on too small a group, and that means increasing the number of vendors you’re working with, in a controlled way.”

Breaking down supplier performance
Organisations are also taking steps to better manage their supplier base. Half of the procurement professionals surveyed say between 50 and 100 per cent of their MRO spend is with a Tier 1 supplier, and 82 per cent of firms have contracts in place with this group of suppliers. Three-quarters (75%) of Tier 1 supplier contracts are actively managed.

The use of key performance indicators (KPIs) is vital to effectively managing supplier performance, and the most common metrics used are on-time delivery (68%), quality (65%) and price (59%).