Digital tools add value by giving back time you can spend on core business functions and more, says Ed Orgill, Head of the Value-Added Solutions sales team at RS
One of the biggest and most consistent challenges that my team and I have seen in recent years is that those working in manufacturing and production are being asked to do more with less.
Our observation is borne out by the findings of the 2022 Indirect Procurement Report from RS and the Chartered Institute of Procurement and Supply (CIPS), in which 53% of survey respondents said they face reduced operational budgets and 47% said they need to reduce inventory costs. With 82% of those surveyed also naming inflation and higher costs as the biggest procurement challenge over the next twelve months, external financial pressures are exacerbating this situation.
One way to respond is by pursuing a strategy of procurement efficiency, which 49% of respondents are now doing compared to 45% in 2021. Digital solutions have a big role to play in this, with 42% of those surveyed citing pressure to drive operational efficiency as a top reason for adopting new technology within procurement.
“The right source-to-pay tool can massively reduce the time, and therefore money, spent ordering parts”Ed Orgill, Head of Value-Added Solutions Sales, RS
The right source-to-pay tool, for instance, can massively reduce the time, and therefore money, spent ordering parts by giving an engineer an easy place to find what they need. No more searching to find who has parts available and what the best price is. Instead, they can focus on doing their job and adding value to the business.
Greater governance brings greater efficiencies
As well as making the procurement process more efficient, RS Procurement Solutions and in particular source-to-pay tools, such as RS PurchasingManager™, provide a governance structure that allows you to put controls in place for spend. This process reduces opportunities for maverick buying to slip through.
Maverick purchases make it harder to drive down costs and harder to get the most out of procurement contracts that have been agreed. With digital procurement tools, however, orders go through an approval pathway that is quicker and easier to trace than a piece of paper or email and this process reduces opportunities for maverick spend to slip through. In the indirect procurement report, 70% mentioned better spend visibility and 39% mentioned the ability to identify off-contract spend as benefits of a digital procurement service.
Saving time saves money
I get to see the efficiency savings that digital procurement solutions bring to businesses first hand.
Recently, we worked with a large equipment repair organisation where the management recognised that they had people making purchases in lots of different ways and were interested in how digitising procurement could make it more efficient. In their existing system, which involved repair centres around the country as well as 250 field engineers, a team of planners took calls from the engineers about what parts they needed and then sourced these parts on their behalf, leading to time-consuming questions such as who can supply this, do we have an agreement in place and what payment method should we use?
As always, our team did site tours to meet key maintenance and purchasing stakeholders and gain an in-depth understanding of how they currently operated. We then mapped out every stage of the process. Based on this, the number of sites and engineers and the number of orders placed every day, we could put a value on the time involved and play it back to the organisation: 8767 days per year of people’s hours, amounting to £6.37 million.
Having identified opportunities to eliminate costs, improve efficiency and add benefits, we re-engineered the procurement process. Using our digital RS PurchasingManager™ system, we calculated, these figures would fall to 2257 days and £1.63 million.
Being able to share this information in monetary terms is powerful, but the savings aren’t unique to this organisation. Among the benefits of a digital procurement service mentioned in the RS and CIPs report, 46% cited reduced time to order products and 47% cited a reduction in process costs.
You need stakeholder buy-in
Make sure you take people on the journey with you. The report found that the average number of stakeholders involved in change and transformation practices is seven, with 43% of respondents saying they viewed implementing changes as quite or very difficult.
“Introducing digital tools fundamentally changes the way people work”Ed Orgill, Head of Value-Added Solutions Sales, RS
Introducing digital tools fundamentally changes the way people work so it’s not something that can just be driven from the top because you won’t get the buy in and then you don’t get the success.
One of the key considerations is the appetite for change. Do those involved see the need to make improvements? Working with a partner who will engage with different stakeholders will help to demonstrate the benefits that digital systems bring.
Engaging with stakeholders can also uncover further opportunities to deliver value. At the large equipment repair organisation, for instance, visiting sites and talking to those involved in maintenance and purchasing revealed other areas where digital tools could drive efficiency and savings.
We saw how they were storing products on site and repeatedly ordering the same items that were of low value but took a lot of time to procure, so suggested implementing our inventory solution RS ScanStock® in some sites and our industrial vending solution RS VendStock® in other locations. Both offer easy access to the most frequently needed items while reducing the overall number of orders being raised and both solutions use the best of RS’s digital capabilities to deliver parts to the people who need them at site or out in the field.
You need a partner you can trust
It’s vital that you work with a trusted partner who can really deliver on the commitment they’ve made. What experience do they have of organisations with similar challenges to yours? Do they have case studies of businesses where they’ve implemented digital solutions? Are they interested in learning about your specific pain points?
Within my team, we strive to understand the process from the customer’s point of view and learn about the challenges in their world. Only then can we build a tailored combination of value-added services, including managed inventory services and maintenance solutions as well as digital procurement tools, to successfully solve their problems and give them back time to deliver on their core business functions.
Learn more here about RS Procurement Solutions and how they can improve procurement efficiency within your organisation.