Strategies for managing MRO

How your supplier can support you in your search for the right solutions for your business 

Maintenance, repair and operations (MRO) procurement is complex. Engineers who are based across multiple sites may be making thousands of low-value purchases, meaning agreeing upon and adhering to a single MRO purchasing strategy is difficult. This is also means that while inventory is high on the agenda for category managers, many companies haven’t dedicated enough time to dealing with it. The result? Huge inefficiencies.

Annual research by RS and the Chartered Institute of Procurement and Supply (CIPS) reveals that this is a long-standing issue for indirect procurement professionals and an important topic of conversation when planning future relationships with suppliers. Over the years, the Indirect Procurement Reports produced by RS and CIPS highlight the continual adoption of new services and innovations to manage this complex area of business too.

Enlisting suppliers to help manage MRO
The RS and CIPS research demonstrates that procurement professionals talk to suppliers about how they can support the management of MRO, for example, through inventory management solutions and value-added services.

Outsourcing services to suppliers is a growing trend. For many organisations, the attraction of outsourcing is that it frees up employee time by removing responsibility for complex MRO purchasing and allowing them to concentrate on work that adds value to the business. The advantages of a popular MRO strategy such as vendor-managed inventory (VMI), for example, include a reduction in the time spent raising individual orders, better visibility of stock, improved productivity and increased product availability.

VMI solves many of the issues around time and inefficiency because a supplier such as RS takes over your inventory and ensures products are constantly restocked to the right levels while also providing a clear breakdown of all the spending and usage so that further efficiencies can be made in the future. 

Reducing the risk of counterfeit goods
On top of these benefits, VMI can play a vital role in combating counterfeit products. This is rightly an area of concern for many MRO professionals. “Counterfeiters are becoming more and more sophisticated, which means that there is always a risk as soon as an organisation makes a purchase outside its trusted supplier network,” says Helen Alder, Head of Knowledge and Learning Development at CIPS.  

“The chance of this is even higher in the MRO category, as maverick spend is a well-known problem. As soon as people go online and select the cheapest option that isn’t from a trusted supplier, they open themselves to a risk that can’t be underestimated. A faulty part could cause extensive damage and downtime: in the worst case, it might even injure an employee. It just isn’t worth that risk for the sake of saving a few pounds.” 

By moving on to a VMI system with a supplier that they know and trust, organisations can be sure that all the products they receive are genuine – thus avoiding counterfeit goods as well as the damage and downtime that they can cause. 

Sharing best practice
A final advantage of VMI and the other strategies for MRO is that they deepen the relationship between businesses and their suppliers. 

This has benefits in the short and long term. Alder asks: “Where do you go if you’re trying to add value and 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.”

So, as well as identifying areas of the MRO procurement process that your organisation could outsource, keep in regular dialogue with your trusted suppliers and involve them in your strategy. Also be sure to challenge suppliers to provide solutions and thought leadership that will help your organisation, now and in the future.  

For more MRO insight, click here