Technology to help drive efficiency, reduce long-term costs and avoid downtime is being adopted at a rapid pace in the sector. Here’s what you need to know.
In maintenance, repair and operations (MRO) procurement, one of the biggest effects of the pandemic has been a switch to digital solutions to manage the process.
“Electronic purchasing is becoming more and more important,” said one interviewee in RS Components’ fourth annual survey of the state of MRO procurement, conducted in partnership with the Chartered Institute of Procurement & Supply (CIPS).
Half of UK respondents are now using eProcurement to manage stakeholder purchasing, 31% had a strategy in place for automating transactional tasks through eProcurement and 23% for spend management systems.
“COVID has exposed how fragile some supply chains are. We’re starting to see a rapid increase in eProcurement adoption.”Alex Davies, Head of Value-Added Services Delivery for EMEA, RS Components
The crisis has accelerated the adoption of digital technologies across all industries, according to research by Google. A study by PwC came to the same conclusion. “The crisis has triggered a tremendous acceleration in the digital transformation of the global economy,” says Dejan Ljustina, leader of the firm’s technology practice.
In MRO procurement, supply chain disruption has been a key driver of change, says Alex Davies, Head of Value-Added Services Delivery for EMEA at RS Components. “COVID has exposed how fragile some supply chains are. We’re starting to see a rapid increase in eProcurement adoption.”
Even companies without sophisticated IT systems have been moving to digital, says Davies: “Web order management systems − like RS Purchasing Manager − enable customers who aren’t on a mature eProcurement platform to digitise and streamline the way they work.”
A safer way of working
But the digital transformation does not stop at eProcurement. Davies highlights the business benefits of vendor managed inventory (VMI) solutions that automatically re-order supplies as they are used.
“Open bin solutions, where you’ve got workplace essentials that are sited really close to where an individual works, ensure that employees have rapid access to the things they need,” he adds.
This is particularly important in the pandemic, as these solutions ensure a continuous supply of personal protective equipment (PPE) to keep people safe. Bin stock and industrial vending solutions also promote safer working practices and social distancing.
“When it comes to PPE, industrial vending solutions not only mean that the products are really close to people, but there is an audit trail of who has taken what. Essential products are available to everybody all the time − 24/7, 365 days a year,” says Davies.
Digital solutions also provide a rich source of data, which in turn helps to reduce waste and provides insights into how the business operates – these insights can then be used to inform future process initiatives.
“All the pressures are going to be exacerbated by the pandemic, because businesses are going to operate with fewer people and will have to be much leaner. Things like condition monitoring are critical in helping businesses to move away from being reactive,” adds Davies.
“A long tail of MRO spend is associated with unplanned purchases that are a result of a breakdown. And that long tail can be incredibly challenging,” he says. “Critically, if businesses adopt predictive maintenance technologies like condition monitoring, or oil analysis, that’s going to inform them and enable them to manage their assets more efficiently.”
Fewer breakdowns, more uptime
More than two-fifths on the procurement professionals in the 2020 survey said managing ageing assets is a day-to-day challenge for them, highlighting the need for greater use of technologies powered by the Industrial Internet of Things (IIoT).
“As the amount of reactive maintenance goes up, the intelligent organisations are the ones who use this as a catalyst to accelerate the journey towards a planned preventative maintenance strategy.”Richard Jeffers, Director, Industrial Digital Solutions, RS Components
A third say they face pressure to improve asset performance and increase machine uptime, and although only 6% said their company had an IIoT strategy in place and 15% have a strategy for condition monitoring, the situation is improving.
Condition monitoring can revolutionise asset performance, avoiding costly breakdowns and allowing companies to carry out predictive maintenance based on the actual performance of components in service.
“As the amount of reactive maintenance goes up, the intelligent organisations are the ones who use this as a catalyst to accelerate the journey towards a planned preventative maintenance strategy rather than a reactive one,” says Richard Jeffers, Director of Industrial Digital Solutions at RS Components.
“Actually, you’ve got to protect that longer-term work because it is what’s going to break you out of the reactive cycle in the long term,” he says. “The digitalisation of maintenance just makes it easier to identify the leading indicators of failure, because the data is there for you. It’s just a better set of tools to allow you to manage maintenance more effectively.”
Dr John Glen, CIPS Economist and Visiting Fellow at the Cranfield School of Management agrees. He says condition monitoring has already proved its worth where pandemic social distancing rules have prevented maintenance contractors coming on site to deal with unplanned outages.
Companies that have already adopted it, especially in sectors where the pandemic has caused a surge in demand, will gain a competitive advantage over companies that haven’t. “It will pay big dividends at the end of all this for people who invested early in predictive maintenance technology,” he adds.
Technology has the power to improve efficiency, strengthen procurement controls and deliver much greater visibility over MRO spend. It will also be the key to helping businesses survive the pandemic and thrive in the long term.
To quote a recent Accenture report on the digitalisation of procurement: “The question is not why go digital, but when?”
For in-depth data and analysis on how COVID-19 has impacted indirect procurement, download the 2020 Indirect Procurement Report here.