Whether you see it as a threat or an opportunity, MRO procurement is changing, and success for your organisation will depend on how it adapts
Virtually every organisation in every industry in the UK is facing change over the next five to 10 years. Whether that change comes from new technology, disruptive competitors or external economic or political factors such as the ongoing effects of Brexit or the coronavirus pandemic, it has never been more important to have a clear vision for the future.
This forward-looking approach also needs to apply below the boardroom level and for those in involved in the maintenance, repairs and operations (MRO) procurement process there is an urgent need to face up to change and look to prosper.
“People are naturally nervous of change,” says Peter Malpas, President for EMEA at RS Components. “Technology is moving very quickly, which makes it hard to have a definitive plan for the next five years – organisations need to be flexible.”
The 2017 Indirect Procurement report, conducted by RS and the Chartered Institute of Procurement and Supply suggested that procurement professionals are aware of change, with 46% stating that they expect to see significant change in MRO procurement over the next five years. However, in a follow-up webinar hosted in November last year, 97% of the attendees said that they were not testing new technology as part of a preventative maintenance strategy.
This suggests that there is a lot to do for UK organisations to truly embrace change in their MRO strategy, but also points to opportunities to reduce costs for the most forward-thinking companies. “Change driven by technological advances is inevitable,” says Helen Alder, Head of Knowledge at CIPS. “The pace is picking up rapidly and any business that doesn’t adapt will struggle to survive.
“In terms of MRO procurement, teams are challenged to think outside the box for different solutions,” she adds. “There is a need for the procurement function in an organisation to be more of an innovative, creative, solution-finding department rather than just controlling spending.”
"The best approach for companies is to benchmark themselves against other organisations; to talk to them and learn what they are doing"Peter Malpas, President for EMEA, RS Components
Malpas and Alder believe that businesses need to have a two-pronged approach to change – strategic and practical. By making incremental changes to processes and technology, companies can learn and adapt, while senior decision-makers also need to look at the big picture and see where their organisation fits into it.
The practical approach
“Organisations can move towards electronic ordering with self-serve, web-based or eProcurement systems,” says Malpas. Suppliers that can provide both consolidation of their supply and move more quickly into the digital space will immediately offer benefits.
“In addition, organisations should use suppliers to understand how to make the best use of data and data insights,” adds Malpas. “As more organisations adopt digital channels to place their orders, the use of data within the supply chain is increasing. It is then critical how procurement teams use that data to drive improvement – this will determine success or failure.
“Finally, I believe the best approach for companies is to benchmark themselves against other organisations; to talk to them and learn what they are doing.”
The strategic approach
While no one can predict the future, and it’s hard to be sure how technology will change MRO in 10 years’ time, it is possible to be better informed about trends so that you can position your organisation to take advantage of change rather than being left behind.
According to the RS and CIPS research, 54% of procurement professionals want access to knowledge services to help them plan for the future. “Knowledge services can provide insight into technology and innovation, how a business goes on a journey towards supplier and product consolidation, and towards preventative maintenance in an increasingly digitised IoT-enabled and hi-tech world,” says Malpas. “People want to read articles, watch videos and obtain information from experts that they can then apply to their own business.”
"There are lots of companies putting out knowledge: the key thing is to find sources that can be trusted"Helen Alder, Head of Knowledge, CIPS
However, Alder points out that the sources of knowledge are crucial to delivering value to an organisation. “There are lots of companies putting out knowledge: the key thing is to find sources that can be trusted,” she says. “CIPS has a massive role to play in giving its members quality-assured checked guidance via our knowledge partners on a range of issues, but the key thing is that it’s quality-assured and relevant.”
The message is clear – by working with suppliers, industry bodies and other organisations also facing change, it should be possible to navigate through uncertainty and realise the benefits of better and more profitable working practices in MRO in the future.