How to improve spend visibility

Today’s digital procurement solutions provide greater insight into MRO procurement

Since the start of the decade, those responsible for maintenance, repair and operations (MRO) procurement have faced a raft of challenges old and new. Tackling these challenges has given new impetus to the adoption of digital technology which, as well as solving immediate issues, will have long-term benefits for the future of MRO procurement.

These procurement tools deliver real savings in time and money but to access their full value, procurement professionals need to go beyond the traditional transactional approach to suppliers and move towards working with them as partners. By forging strong relationships with suppliers, they are better placed to tap into their knowledge of digital technology.

Uncovering the true cost
A long-standing issue within MRO procurement is lack of spend visibility, which 18% of respondents to the 2024 Indirect Procurement Report produced by RS and the Chartered Institute of Procurement and Supply (CIPS) cited as their biggest challenge.

As consultancy firm McKinsey point out, this is central to the procurement function. “A procurement organisation’s primary objective is usually to optimise external spend with suppliers – commonly 40-80% of a company’s total cost – and realise a source of competitive advantage in terms of cost, quality, availability and (increasingly) sustainability,” it states.

But as CIPS points out, spend visibility gets harder when a company has a “long tail” of suppliers. “The ‘tail’ may not represent the majority of an organisation’s expenditure, but it often covers 80% of the suppliers, who often generate most of the corporate ‘noise’ about supply issues,” says CIPS guidance.

Digital demand
Fortunately, there are ways to drastically reduce this figure. By taking a holistic view of the indirect procurement process, RS can offer solutions that save quantifiable amounts of time – and, therefore, money. Specialists in eCommerce will get right into the detail of their end-to-end procurement process, putting real timeframes and real costs into their calculations and producing a true cost for that company.

RS can then recommend digital tools such as its procurement platform RS PurchasingManager™, which reduces these costs. A well-known confectionery manufacturer, for example, saved more than £30,000 per annum in indirect procurement costs (the equivalent of 3.7 working weeks) when it adopted RS PurchasingManager™.

RS PurchasingManager™ is a free, web-based order management tool that can dramatically streamline the buying process without having to invest in upgraded IT systems or software. It is a self-administered system that can be set up quickly and doesn’t require extensive staff training.

Solution for all types of business
As well as automating large sections of the purchasing process, RS PurchasingManager™ allows staff to place their own orders, under specified controls, with a full suite of online management reports. It’s a flexible tool that meets the needs of a wide range of businesses.

It’s a flexible tool that meets the needs of a wide range of businesses. Installed in a small business of say 10 employees, it can provide a level of functionality they wouldn’t otherwise have without significant investment in a costly purchasing system. It can also be used in large multi-site companies with numerous end users, providing them quick and user-friendly access to more than 750,000 items at RS while removing many layers of process from business operations.

RS PurchasingManager™ is helping organisations streamline their processes, either on-site, remotely or in the field. Its enhanced reporting capabilities enable users to analyse spending, anywhere in their business. It tells them what they are buying as well as who is buying, how often and for what purpose. These insights can highlight trends and indicate how assets are performing – and all of this data, up to 13 months’ worth of purchases, is available to view at any time.

One large utilities company in southern England where multiple remote users were buying low value goods through trade counter networks transformed its MRO purchasing by working with RS. The company regained control of purchasing fast-moving, low-value items using inventory replenishment system RS ScanStock® and rolling out RS PurchasingManager™ for all end-users.

Many companies are looking to digitise procurement like this. They realise now is the time to look at digital technologies that can help their people stay focused on keeping the business running, rather than worrying about where the next pack of fasteners is coming from. By collaborating with partners to find these solutions, they can step off the hamster wheel of MRO procurement and make their business processes more effective and more resilient.

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