The coronavirus pandemic had a major impact on indirect procurement but specialists for Maintenance, Repair & Operations (MRO) report opposing trends
“It’s been difficult for procurement, it really has,” says Pauline Harrison-Johnson, Head of Categories for Operations at the University of Birmingham. “We’re being tasked to make more savings and we need to make sure that we supply our stakeholders with what they need.” For her, these stakeholders include staff at the University’s College of Medical and Dental Sciences doing life-saving research into coronavirus.
Pauline Harrison-Johnson’s experience of procurement over the course of the coronavirus pandemic is not unique. During a series of virtual roundtables hosted by RS Components, many MRO experts shared similar statements about how COVID-19 has affected their work. They also discussed supply chain risks and how to minimise them and why value is a more important consideration than cost price alone when it comes to procurement.
Here we share their reflections on the coronavirus pandemic and its impact. The outbreak and lockdown restrictions that followed from March 2020 both created new challenges and exacerbated old ones. Yet at the same time, the crisis also provided opportunities for some to make positive changes and improvements. Whether it’s strategic activity, contract compliance, digitalisation or relationships with stakeholders, roundtable participants report parallel trends that look set to influence developments in MRO for years to come.
1. Strategic activity abandoned – and undertaken
For all contributors, priorities changed. In some cases, this meant abandoning planned improvements. “We were working towards a comprehensive programme of proactive preventative maintenance,” says Kevin Cheetham, Category Buyer at brick manufacturer Ibstock. With the arrival of COVID-19, however, this asset transformation programme was put on a backburner”. “We had to re-evaluate our spending priorities and focus only on essential items,” he continues. “Although our careful cost management through the period means we are now in a strong a strong position as we come through the pandemic to start looking at growth and investment projects again.”
Richard Warren, EMEA Procurement Director at electronic instruments producer Ametek Global, reports that plans for a new online purchasing system to facilitate procurement were put back. “The project was just about to start when the first lockdown happened so we had a five month pause because we just couldn’t do it,” he says – although it eventually went ahead successfully.
At equipment manufacturer JCB, it was plans to rationalise the supplier base that “went out of the window,” says Group Buyer for Corporate and Operations, Vicky Cresswell. “Covid caused some delays to what we were planning to do on MRO,” she explains. “It’s just been a case of shelving that project with having to deal with shortages in supply.”
“COVID-19 caused some delays to what we were planning to do on MRO”Vicky Cresswell, Group Buyer for Corporate and Operations, JCB
Others found the disruption offered a surprising but welcome opportunity to reconnect with core business activities. Declan Ratchford, Category Manager for utility firm Southern Water, says the pandemic “allowed people to really see what to focus on… and then understand what the priorities are.” For him, this meant “having time to spend on procurement strategies without getting dragged into things that are non-value add as you would normally do in an office.”
At flooring and textile manufacturer Milliken Industrials Ltd, plant staff had more time available while business was quieter, allowing them to undertake a thorough stock check of MRO. This put them in a better position once demand picked up again, according to Sourcing Manager Linda Fairclough. “We’ve been working with suppliers to make sure we have what we need in the right places with the right stock,” she adds. “It’s been a challenging year, but I’ve got to be honest, a lot of what’s come out of it has been good.”
2. Contract compliance deteriorated – and improved
Ensuring contract compliance has long been a challenge for MRO professionals. For some, it became even harder as the pandemic created delays and shortages. In the words of Lisa Billington, Senior Category Leader, European Services, at analytic instruments and lab equipment manufacturer Thermo Fisher Scientific, “Compliance has got worse because everyone’s had to get on with the job so alternative options have had to be executed to ensure requirements are still met.”
Elsewhere, the situation was the opposite. “We’ve had the reverse,” responds Robert Evans, Procurement Director at foam manufacturer Vita Cellular Foams UK. “We’re using about 1,000 less suppliers than we did. So many are working and ordering from home, we are driving more traffic to the likes of RS Components as they have a digital solution. Currently people can’t pop down the road to, say, their local hardware provider and often these don’t have an online solution.”
3. Digitalisation accelerated – and stumbled
Another trend affected by COVID-19 is digitalisation. “From an MRO perspective,” reports Angus Hanney, Category Solutions Director for EMEA at commercial real estate firm CBRE, “It has accelerated the introduction of technology where we’re working with our supply partners to introduce apps to be able to check stock levels and order automatically. It has also accelerated the delivery of materials to a drop box, smart locker or client location as opposed to going to the distributor to pick it up.”
“COVID-19 has accelerated the introduction of technology”Angus Hanney, Category Solutions Director, EMEA, CBRE
Manging Director for UK & Ireland at RS, Emma Botfield, felt that new technologies had increased in importance during the pandemic too. “The one thing technology has proven is that bringing people together to genuinely share ideas is easier to do,” she said. “While face-to-face interaction is still important, the RS Connect virtual events that we held, with suppliers and customers talking about different problems and solutions, showed the beauty of being able to use digital technologies as well.
“There is a richness that can come from using different types of technology.”
Again, however, experiences vary. A commodity manager for an energy company found the digitalisation of procurement was not enough to ensure that the company would receive deliveries as anticipated. As a result, he and his colleagues spent a lot more time on the phone with suppliers checking product availability as well as prices – an experience which for him highlighted the limitations of digitalisation at present.
4. Relationships strengthened – and soured
Several participants talked about increased levels of collaboration, internally and externally, since the advent of COVID-19. “We looked to really engage with suppliers a lot more,” comments Chris Harvey, Senior Category Manager at energy and telecoms firm SSE. “There was more of an expectation of the role that could be played to assure the business that operations could continue and there would be no disruptions.”
“One of the things that I’ve seen in my organisation during the pandemic and heard in a lot of feedback from customers,” Botfield says, “is that during the pandemic there was a real emotional connection. We had a common problem and we all worked to solve that as best we could.”
Unfortunately, while the pandemic has supported the growth and development of strong, mutually beneficial relationships, it has also exposed the opposite. Pauline Harrison-Johnson describes the inflated prices she encountered as “disappointing” and feels it “frayed” the trust between customer and supplier. Similarly, an Indirect Procurement lead at a food manufacturer says, “It’s become more evident when suppliers for whom we are not important have let us down.”
For many MRO professionals, this behaviour will shape their future purchasing strategies. Such damage to relationships is not easily repaired and, going forward, indirect procurement spend will likely be directed elsewhere. As Robert Evans puts it, “We now need to get out and see the suppliers, the ones that have looked after us during COVID.”
For more insight into how COVID-19 has affected MRO, download the RS and CIPS 2020 Indirect Procurement Report