Consolidating suppliers can save time and support safety compliance
End inefficient, costly procurement processes
Procurement teams and engineers face several challenges regarding the maintenance, repair and operation 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 number of products that are split across categories. In addition, there is constant pressure from senior management to reduce costs.
As one of the largest industrial suppliers, RS Components is in a unique position to understand the complex needs of its customers, and to help these businesses streamline their processes and make cost- efficiencies. The crucial fact for organisations to appreciate is that indirect procurement process costs can be twice as much as the amount spent on the products themselves. So if your organisation spends £100,000 on purchasing products over the course of a year, you will spend a further £200,000 on processing or ‘soft’ costs.
As such, there is significant value in reducing process costs rather than focusing solely on purchase price. Streamlining processes can bring other major advantages too.
There are some businesses and services that we all rely on without being aware of them. Cadent is one such firm, with 3,000 engineers and an extensive pipe network that connects individuals and organisations with the gas that they need. The company’s National Distribution Centre is in Birmingham. It has a number of manned and un-manned sites around the country And on any given day, new supplies may be needed at 25 different locations, so finding an efficient way to handle orders is essential.
There is also an important compliance angle to consider. Certain products are critical, as they have been written into Cadent’s standard operating procedures and not using them invalidates the company’s work. Safety and compliance are paramount concerns for Cadent.
The company’s standard operating procedures specify that its engineers use cold-shrink tubes and end caps to seal off pipe joints for gas connections in residential and commercial premises. The benefit of cold-shrink products is that no hot work permit is required – and therefore neither is a risk assessment nor method statement. This, in turn, saves time and resources too.
Cadent began using cold-shrink tubes and end caps a number of years ago, purchasing them directly from an OEM. Following some internal changes Cadent turned to RS Components to help support. “Most important is compliance,” says Abrar Ahmed, MRO Senior Buyer at Cadent. “We need to purchase items from a contracted supplier rather than an un-contracted one. “It’s very important in this line of work. Worst-case scenario: we purchase an item that’s caused an accident and there’s no contract in place; who is liable?”
The best way for Cadent to ensure compliance with the stringent safety requirements required of gas companies was to work closely with a trusted contract supplier. As Abrar notes: “With a contracted supplier, there’s a genuine binding agreement in place. And with RS Components, you know that anything you buy through them is verified to a certain quality.”
Furthermore, as the relationship between Cadent and RS Components developed, more opportunities for support have developed too. “During my time managing the contract, I learnt about Product Plus,” states Abrar. “It was a case of if something was already working well for other firms, then let’s see if we could make use of it too.”
Product Plus allows authorised employees to source a vast number of products, including items not published on the RS Components website: over a million items from more than 2,500 manufacturers. Whereas sourcing items across multiple vendors is inefficient and time-consuming, consolidating purchasing with Product Plus reduces purchase orders, saves time to source items and helps companies to leverage spend. The Product Plus team will advise whether an alternative compliant product offering functionality or value for money benefits is available. The team also provide a quote and expedite orders for delivery to site or a local branch of RS Components.
The network of local branches is also a useful part of the support that RS provides for Cadent. Core items that they need frequently are delivered on a regular basis to Cadent’s National Delivery Centre from the RS Local Birmingham Branch. Larger items come directly from the RS Components warehouse in nearby Nuneaton.
“When gas-related roadworks are being carried out, or if there is an emergency gas leak and we need to turn off the gas, OFGEM regulation requires us to provide heating and cooking appliances to end users,” Abrar explains. “As a result we require supply of a high volume of alternative heating and cooking appliances every year. They are quite big so we receive palletised quantities straight from the warehouse.”
Working closely with RS Components has brought numerous benefits for Cadent. Product Plus has enabled the company to consolidate its tail-end supply and reduce the number of suppliers. This means better control of the supply chain process.
Innovations such as this have clear advantages, notably saving time on orders. For example, Cadent is working on smart meter installations as part of the government roll-out. The procurement team provided a specification for the parts required for this – and most of them are now sourced via Product Plus rather than from several different suppliers.
“Product Plus definitely works for Cadent, it saves time, effort and most importantly, it keeps our sourcing compliant”Abrar Ahmed, MRO Senior Buyer, Cadent
With the high volume of sales involved, the time-savings add up. Over the past 12 months, two-thirds of Cadent’s total spend with RS Components went on 25 key parts that are sourced through Product Plus. “Product Plus helps to free up some time from a purchasing point of view that if RS didn’t provide this service, we could potentially be doing this ourselves, starting from scratch every time,” says Abrar. “This way I just make a phone call or email RS Components. They provide me with a quotation and lead time or give me some alternative compliant options. Then it’s just a matter of raising the order. It saves a lot of time.” “Product Plus definitely works for Cadent,” agrees Abrar. “It saves time, effort and most importantly, it keeps our sourcing compliant”.
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