Digital solutions are increasingly helping organisations manage the MRO category to deliver cost and time savings
Procurement teams and engineers face many challenges regarding the maintenance, repair and operation (MRO) of their organisation’s assets and facilities. The supply chain for indirect materials is complex due to the number of stakeholders involved, a fragmented supply base and the quantity of products that are split across categories.
There is also constant pressure from senior management to reduce costs. One way to respond to these challenges is by streamlining processes – and here is an example of the benefits this can generate.
The challenge
A leading telecoms provider, with thousands of sites across the UK, realised that it had a poor procure-to-pay process with lots of duplication and double handling of parts in some cases.
Engineers would identify a requirement then email or phone a central team about it. The central team would check pricing, stock and place an order. Sometimes the order was delivered directly to the relevant site, but often they arrived at a central store.
This situation meant a huge supply base with no supplier leverage and no standardised support. The absence of standardised suppliers also resulted in time delays and lack of productivity. The customer was therefore looking to simplify its indirect procurement processes, remove duplication and create efficiencies.
The solution
RS had already worked with this company for a number of years, fulfilling around 2,200 orders per annum, before becoming involved with devising a solution to make procurement more efficient and effective.
A working group was setup with the customer’s finance, operations and procurement teams so that all stakeholders were involved with the change. Having gained an understanding of the company’s process, RS advised that its digital procurement platform, RS PurchasingManager™, would help reduce duplication while at the same time increasing end user empowerment and visibility.
RS PurchasingManager™ is strategic procurement solution in which buyers can create account structures across their organisation as well as assign spend controls, cost centres and approval limits to manage all RS online purchasing. The system allows the end user, usually an engineer, to go onto the RS website and choose the product they need, order the item and see when the delivery will be made. After an order is made, a confirmation request goes to a senior colleague, who can quickly approve the cost and the order is processed.
In the case of this customer, this process was ideal. The customisable approval functions in RS PurchasingManager™ allow the organisation to monitor spending while striking a balance between time spent on approving orders and the ultimate cost given that 80% of their orders cost less than £250 but 50% of their total spending went on orders over £250.
The outcome
The introduction of RS PurchasingManager™ has resulted in a range of benefits, the most obvious of which is financial.
Both the cost per order and time spent on orders have been greatly reduced. Previously these came to £65 for process costs per order and 78 minutes spent per order. Now these figures are £22 and 26 minutes. This means greater visibility of costs for the customer while also freeing up time for procurement professionals and engineers.
These savings translate into a 66% reduction in costs for more than 2,200 orders placed with RS each year. This amounts to around £94,500 in cost savings in transactions with RS alone – a substantial figure for any business.
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