Achieving stakeholder compliance for indirect purchases is difficult in one location. So how can organisations effectively manage multiple sites?
Anyone involved in procurement strategy knows that achieving a joined-up approach to MRO purchases is incredibly complex. The challenges are magnified when an organisation has multiple sites (perhaps in different countries) with hundreds of stakeholders potentially ordering products.
One such company is Schneider Electric. The global manufacturer of energy management and automation solutions has more than 90 sites across Europe, the Middle East and Africa – the result of a series of acquisitions, which has led to a mix of purchasing approaches and legacy supplier relationships.
“Due to the number of sites, we see a lot of different stakeholders and industries, and when you bring all that together you have a mix of approaches to MRO purchasing,” says Hugo Barbier who worked as Procurement Manager at Schneider. “Over a period of two to three years, I tried to consolidate our business into recommended vendors.
“It’s been a real challenge because when you come to a site the engineers prefer to work with the local vendor who’s got the reactivity, who’s got the stock, and they can just walk across the road to and buy whatever they need,” he adds. “But doing that means the procurement team and the business as a whole don’t have any spend visibility. Rationalising suppliers is about having better spend visibility, and when you have that you can actually drive your purchase strategy across multiple sites.”
“Rationalising suppliers is about having better spend visibility, and when you have that you can drive your purchase strategy across multiple sites” Hugo Barbier, Procurement Manager, Schneider Electric
Effective stock management
The other significant issue with managing MRO over multiple sites is controlling stock. “We had been stocking too many products – and products that aren’t used have a cost, so we tried to reduce and optimise our stock-holding,” explains Barbier. “Our recommended vendors offered solutions to reduce our stock and provide better availability of products.”
By using large, preferred suppliers such as RS, Schneider can easily access data to see what they have been ordering, how much has been spent and the frequency of purchases. “We have audits with our recommended vendors but with off-contract spend we didn't know what the suppliers were doing, we haven’t checked them and this was one of the main risks for our supply chain,” says Barbier. “Our recommended vendors can help us to monitor the stock to manage any potential shortage.”
Brick manufacturer Ibstock has found a similar situation across its 20 productions sites across the UK. “We have 20 factories and our inventory across those sites goes into seven figures,” says Kevin Cheetham, Category Manager at Ibstock Brick. “To try to address that, we’re identifying what we have and if it’s obsolete and being kept ‘just in case’, we’ll get rid of it.
“Once we know what we’ve got across our 20 sites we will have transparency, so we can hopefully significantly reduce our inventory.”
“Suppliers like RS can help customers find out how to buy products across several sites more efficiently”Mike England, Chief Operating Officer, RS Group
Making use of suppliers
It’s clear that the answer to the question, “How can you manage MRO across multiple sites?’ is ‘Suppliers”. First, the right suppliers have to be found and brought on-board, then non-contract suppliers removed from the supply chain. Once the majority of MRO spend comes through trusted suppliers, it’s possible to leverage the data and insights those companies can provide so that cost efficiencies can be achieved.
“Suppliers like RS can help customers find out why they are buying products across several sites in a certain way, when they could be buying them more efficiently,” says Mike England, Chief Operating Officer, RS Group. “Data for procurement professionals will be key but it’s vital that you use that data to form a trusted partnership with suppliers, rather than as a stick to beat them up with.
“When it comes to stock control, the RS ScanStock® service manages stock levels in a customer’s premises, which frees up the time of both the procurement team and the engineers,” he adds. “These types of solutions can form part of the strategy of dealing with MRO complexity across multiple locations.”