Reap the benefits of better management of MRO – now and in the future
Effective management of Maintenance, Repair and Operations (MRO) carries many benefits. With those responsible for indirect procurement citing reduced operational budgets as their biggest business pressure, for example, it makes sense that increasing efficiency would help to stretch that investment further. It goes beyond that, however. The right approach to MRO is an advantage to the whole business, not just those involved directly affected – just as, conversely, poor management of MRO can hinder or even harm an organisation (see The Meaning of MRO for more about how).
This article explores the latest in MRO best practice, sharing what you need to know and how to achieve it.
Ensure robust oversight of supply chain
In-house audits are no longer enough: if you’re responsible for procurement, you need to know what’s going on with your suppliers as well.
Why? The supply chain disruption caused by COVID-19 highlighted the importance of working with trusted, verified suppliers. Not having the right items in the right place at the right time can bring the whole business to a halt – and cause huge financial losses. It’s not worth it to save 50p on a safety switch from a random website rather than ordering from the reputable brand that you’ve done due diligence on.
There are reputational risks too. Can you be sure that your supply chain is free of slave labour? Are you sourcing from businesses that uphold the standards of sustainability that you – and your customers – expect?
The solution? To minimise the risk of supply chain disruption as well as ethical and environmental harm, introduce a thorough audit process for all suppliers. Of 1,001 respondents to the 2020 Indirect Procurement survey by RS Components and the Chartered Institute of Procurement and Supply (CIPS), 40% said this was already in place, but for the rest, there was only an internal approval process for some suppliers. Shockingly, 2% had no audit process and a further 9% didn’t know.
Prioritise value, not just the item price
With financial pressures being the biggest challenge faced by indirect procurement professionals, it’s unsurprising that saving money is a high priority. However, the price paid on the item should never be the only consideration.
Why? The cheapest purchase may end up costing more over time. If it’s poorer quality, for example, it will need replacing more often – nullifying any savings and proving a false economy. If it turns out to be counterfeit, then the cost in terms of damage, repairs and potential reputational risk are likely to be far greater.
The solution? Adopt a value mindset and consider the total cost of ownership. This is the favoured approach of buyers for many leading brands, who recognise that the initial purchase price gives an incomplete picture. Again, trusted suppliers have an important role to play. Work with them to explore the solutions available to help you take control of procurement, inventory and maintenance – solutions that cut costs by increasing efficiency, not sacrificing quality.
Think long term as well as short
Responding to day-to-day demands, whether that’s managing stakeholders over multiple sites or maintaining ageing assets (or likely both), is a fundamental part of overseeing MRO. It is not, however, the only requirement. Effective management of indirect procurement requires planning for the future too.
Why? The businesses that MRO supports are always changing – and that means indirect procurement will also need to change. Right now, you may be wrangling with Industry 4.0 and its effects. New technologies bring new challenges – but new opportunities too. How will you respond?
The solution? Once more, you are not alone. Trusted suppliers will have experience of working with a wide range of other businesses both in your sector and other fields – so make the most of that knowledge. Draw on their expertise. Ask them what trends they see coming down the line and how you can be ready for them. They can support you with the issues you are facing today and help you prepare for the issues of the future.
To learn more about how MRO is changing and developing, read Trends in MRO.