The survey, conducted among 851 procurement professionals - all members of the Chartered Institute of Procurement & Supply - covers the opportunities and pressures procurement professionals face around key areas including innovation, inventory management and supplier knowledge.
Mike England, EMEA president, RS Components, said: “The research findings reflect the conversations that we’re having with customers, and shine a light on indirect procurement and MRO supplies. The results particularly demonstrate that change remains a key concern in MRO procurement, where teams are being pushed harder than ever to deliver savings, something a coordinated supplier strategy is essential to achieving. Reducing operational and inventory costs requires careful management, and ideally, an organisation should work with a fixed group of trusted suppliers that can provide all the MRO materials they need.
“While the average order size in MRO procurement is small, the time required to make the purchase significantly adds to its cost. Part of that is because organisations are dealing with too many suppliers without working to a streamlined process. Streamlining suppliers reduces the possibility of off-contract spend, ensures controlled pricing and means that less stock has to be held on site, since the supplier can be relied upon to deliver products quickly when needed. Additionally, when it comes to ethical procurement and avoidance of counterfeit products, organisations should be wary about making purchases outside of a trusted supplier network.”
The report also highlights another hot topic, the Internet of Things (IoT), which can have huge opportunities for organisations but isn’t being capitalised on at present. Helen Alder, head of knowledge and procurement, CIPS said: “I still think we’re at the start of the IoT journey and, while it might develop quite rapidly, that’s not what I’ve seen so far. Organisations are aware of the technology and are looking at applications but, as the research shows, not many have any sort of solid strategy in place yet.”
Mike England believes that this is also reflected in customers he speaks to: “We’re having lots of conversations with engineers and a lot of them are seeing the industry 4.0 trend, but they haven’t worked out how they’re going to embrace it on the shop floor. I think there is a role for companies like RS to help bridge that gap by providing examples of the latest technology, demonstrating innovation, and then providing insight into how the technology can be used to improve MRO strategy.
“For instance, one of the key applications IIoT could be used for in an MRO setting is helping organisations move from a reactive or even preventative maintenance approach to a predictive maintenance strategy, in which machines are monitored and alerted to required maintenance well before they fail. Engineers and procurement teams won’t attempt a large-scale overhaul of all their equipment and processes in one go, so a phased test and learn approach is the most sensible way to explore the benefits of new technology. However, it’s important that companies get moving with this test because while progress is relatively slow now, the pace of change will speed up over the next two to five years, and anyone burying their head in the sand will be left behind,” he added.
RS will use the research White Paper as a blueprint for change. In addition to covering research outcomes and providing results analysis, the White Paper outlines MRO strategies that procurement and supply professionals can employ to help achieve success.
Helen Alder concluded: “If you’re trying to add value and to 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.”
The White Paper can be found at https://www.rs-connectedthinking.com/en/insights-1-1/indirect-procurement-report-2018-drivers-of-change.