There’s an old adage that asks the question, how do you eat an elephant? The answer, as you may already know, is one mouthful at a time.
Sometimes the only way to make progress towards a goal is to break your objective into bite-sized pieces and get there one step at a time. That outlook was attributed with helping the British cycling team rise to global dominance in its sport. And it’s something that many industrial and manufacturing businesses may find beneficial too.
A cycle of improvement
Over the course of 76 years, the British cycling team had managed to win just one medal. That all changed in 2008 at the Beijing Olympics, where the track team won seven gold medals. There was no single, cataclysmic event that transformed the team’s ability. Instead, there were many small, iterative improvements – a succession of marginal gains that soon added up.
Measuring progress, identifying anything that can be enhanced to maximise results, and being relentless in the pursuit of excellence – this is the core of a continuous improvement strategy. Not only is it an effective way of making progress, it’s also an impactful way of ensuring everyone across an organisation feels able to do so too.
For many, the Japanese kaizen philosophy springs to mind where continuous improvement is concerned. It’s often credited with helping the Japanese car industry earn its reputation for quality and reliability. Famously, individual workers were empowered to bring the production line to a halt if they spotted faults or doubted that work was being done to a high enough standard.
In the 2019 survey of CIPS members, which formed the basis of our Indirect Procurement Report 2019 - The Future of MRO, 39% of UK businesses said continuous improvement initiatives are high on their agenda. So much so that they are making Maintenance, Repair and Operations (MRO) spending more of a strategic business focus.
“Expectations have increased due to higher demands from organisations to deliver with a transparency that’s critical to long-term partnerships”Peter Malpas, President for EMEA, RS
Taking a proactive stance
By its very nature, a large part of MRO is all about stepping in and fixing things when they go wrong. Aspects of it are inherently reactive and are likely to remain that way in the near- to medium-term. The emphasis, on those occasions, is to respond quickly and limit downtime. But there’s a lot more to a successful MRO strategy than getting better at acting on a problem.
Condition monitoring is one important facet of making MRO more proactive. You can take a tech-led approach to this, by relying on data from internet-enabled sensors to track a machine’s performance and behaviour. But if you’re dealing with older or less sophisticated equipment, there are still options, like oil analysis. A sample of the oil from a piece of machinery contains a lot of performance-related information – from the presence of sediment to the quality of the oil itself.
Given that only 7% of UK businesses say their organisation has strategies in place for the Industrial Internet of Things, it’s safe to assume that for many there will be no great leap forward with tech-driven condition monitoring in the near future. But whether it’s from a sensor or an oil sample, this kind of data puts you in a proactive position – rather than wait for an issue to arrive, you can see it on the horizon and take preventative action.
An analysis of your MRO purchase history can also be revealing. Being able to see what has been bought, and when and where it was shipped, is a great way of pattern-spotting. It’s also the first step towards an understanding of whether you’ve been buying the right things and keeping them in the right places.
This is one of those areas that can benefit from the marginal gains outlook. First, isolate a list of core repeat-purchase items and then map them on to the locations where they are most likely to be needed. By maintaining a stock of frequently needed items near the sites where they will be required, it becomes possible to reduce the time from order to delivery, and thereby minimise downtime risks.
As in the case of condition monitoring, the starting point is reliable up-to-date data.
“Condition-based monitoring can identify pending component failures, allowing actions to be taken to extend the life of the component”Peter Malpas, President for EMEA, RS
Reducing operational budgets is the number one priority for 62% of those surveyed for the Indirect Procurement Report 2019. Achieving that aim is not a simple question of finding the lowest prices but of focusing on total MRO costs – everything from finding and ordering an item to the admin costs involved in processing the payment, and all points in between.
Isolating areas for ongoing continuous performance involving your suppliers can boost your results. For many businesses, vendor-managed inventory (VMI) solutions are a great fit with a drive to locate fast-moving, low-value items closer to their point of use. Around 25% of businesses told us they were looking at VMI.
VMI can improve contract compliance and quality assurance, in addition to guaranteeing stock availability and eliminating admin bottlenecks. And as each of those steps is finessed, the whole end-to-end process is improved.
Our own internal research has shown that more than 80% of inventory movement tends to come from a small proportion of product lines. That means customers often spend a lot of time managing the supply of these low-value lines, which doesn’t make a great deal of commercial sense. Taking that hassle away can be hugely beneficial, as we have seen first-hand.
RS ScanStock® is a VMI service that lets us take responsibility for controlling and replenishing products for a customer. A dedicated account manager visits the customer site on a regular basis to check on the use of a core set of items. When necessary those items are reordered to keep the wheels turning – sometimes literally.
Further to that, the closer the relationship between the supplier and the customer, the greater the likelihood of further benefits. It’s very difficult to have full visibility of all a supplier’s value-added services if you only view them as a place to order things from. But once they have a better understanding of your needs, they may be able to offer you suggestions for further improvements.
Adding value is the key to continuous improvement – especially for procurement professionals. Instead of the pursuit of lower prices, the pursuit of lower costs can bear more fruit. More efficient processes will go on delivering benefits long after a single order has been placed, while data analysis can aid decision-making and help refine strategies over the long term.
If you would like more information, please contact us here.