MRO in a fast changing world

MRO professionals are facing with constant pressure on costs as well as demands to be sustainable says Peter Malpas, President EMEA, RS Group 

 Indirect procurement professionals with responsibility for maintenance, repair and operations (MRO) face a wide range of competing demands.  

 Those surveyed for the latest Indirect Procurement Report produced by RS and the Chartered Institute of Procurement and Supply (CIPS) listed their top business pressures as pressure to improve asset performance (32%), sustainable and ethical procurement (32%), reduced operational budgets (30%) and continuous improvement initiatives making the category more of a focus (30%).  

 The need to reduce inventory costs and increase in the amount being spent on indirect materials such as MRO followed closely behind at 28% and 27% respectively.  

 Here Peter Malpas, President EMEA at RS Group, reflects on these findings and the wider changes affecting the world of MRO.  

 Perennial cost pressures
The need to reduce costs is a recurring issue – it has certainly featured in most customer discussions I've had in my three decades in this industry. But I’m pleased to see that budgetary pressures are now driving a focus on total cost of ownership for MRO. 

One of the biggest challenges I see is that individuals in companies are being forced to focus on the wrong things, particularly when cost pressures hit. It’s not that hard to find the lowest price for the widget.

But the true cost of ad hoc purchases is often much higher than buying from a trusted supplier. This is because of hidden costs, like shipping and the wasted internal effort involved in setting up new suppliers and raising purchase orders. 

According to our latest report, the average number of MRO suppliers used is 75. This surprises me as most of the companies I speak to have many more, and often this stretches into the hundreds. I believe that supplier rationalisation is key to success. 

Get the message across
Ensuring people comply with procurement policies can be a tough task. MRO professionals can navigate this by explaining to stakeholders the benefits of supplier arrangements and warning them of the hidden costs of going ad hoc. Compliance marketing should constantly remind everyone of the need to use approved vendors.

MRO strategies need to adopt a LEAN approach, focusing on the internal customer and eliminating waste. Championing a methodology known as ‘5S’ throughout the organisation can reduce operational consumables and promote labour efficiency. Originating from Japan, the approach focuses on making manufacturing as effective as possible. The five Ss are: 

• Sort – remove unnecessary materials from the work location 

• Set – ensure everything is where it can be easily accessed to do the job 

• Sweep – keep the work location and tools clean 

• Standardise – make sure work processes are consistent 

• Sustain – encourage self-discipline and a sense of ownership to keep processes running. 

 Maximising efficiency in manufacturing does not stop here though. Companies must consider measures like introducing a structured Cleaning, Inspection, Lubrication & Tightening (CILT) programme. 

 Condition-based monitoring will identify impending component failures and firms should be using new technologies to reduce energy use and increase efficiency. When it comes to procurement, open bin vendor managed inventory solutions like RS ScanStock® ensure parts are there when you need them. 

 Streamlining back-end processes using digital procurement platforms will save on hidden costs and the Industrial Internet of Things (IIoT) will play an increasing role in ensuring continuity of production. 

Keep your supply chain clean
More than half of respondents surveyed for our report say that ESG was important for delivering their company’s strategy.

At the same time, counterfeit parts are a concern for more than 40% of respondents, and rightly so. They can fail and damage a plant, putting it out of action for unacceptable periods. It’s just one avoidable cause of downtime. Although 19% of those surveyed say the lead time required to get hold of repair and maintenance parts is the main driver of downtime, there are many things you can do to avoid it. 

You can anticipate component failure by using IIoT-enabled devices in a strategic approach to spare parts management, under a well-managed maintenance programme. 

It’s vital to ensure you hold the right inventory, both from a specification and a volume perspective. It is also critical to review the number of suppliers being used for indirect procurement and to think carefully about how their performance is being measured. 

 Everyone in the organisation has a part to play, so engaging and persuading all stakeholders of the value of getting it right is key. Because if we do get it right, improved processes and therefore reduced costs will follow. 

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