Experts in indirect procurement share how they’re adapting to the new world of MRO
Since the start of the decade, there have been enormous changes in the field of Maintenance, Repair and Operations (MRO). At a series of roundtable events hosted by RS in late 2021 and early 2022, experienced indirect procurement professionals gathered to reflect on findings from the annual Indirect Procurement Report produced by RS and Chartered Institute of Procurement and Supply (CIPS) – discussions which included what business as usual now looks like for them and how they have adapted to it.
Supply chain disruption continues
First came coronavirus and widespread industrial shutdowns. Then Brexit and new border checks, followed by the Suez Canal blockage and transport holdups. The opening years of the new decade have been characterised by major disruption to global supply chains. The effects of this continue to reverberate and MRO professionals are having to rethink how they operate.
According to Martin Allen, Commercial Manager at PP Control and Automation, “The supply of parts has become really important, even down to fasteners in small components which a lot of people would have disregarded. When we still have a product to get out the door, all parts start to become equally significant. “Whereas before there was an expectation that everything was available instantly, that’s not the case and you need to put a bit of time and effort into ensuring that it is.”
Prices are rising – and quickly
Supply chain disruption and the associated shortages in both raw materials and manufactured products have driven up prices significantly. Inflation is at its highest level in decades. Together this creates more uncertainty and makes it harder for those involved in indirect procurement to accurately predict and plan.
“We’ve seen a big step up in the rate of our price increases coming in and often a shorter period between them, especially when they’re based on commodities”, says Kevin Parke, Director of Procurement at RS.
Relationship building can be tougher because of hybrid working patterns
Managing stakeholder alignment has long been a challenge for those in MRO. Remote work only exacerbates this. Finding ways to build relationships when you’re not always meeting face to face is therefore a priority in the new world of hybrid working patterns. This extends to relationship building with external stakeholders, such as suppliers, too.
“You lose some of the personal element you had with stakeholders, those corridor conversations and face-to-face meetings. Those elements have gone when you’re back-to-back on virtual meetings as it can be a bit at arm’s length”, says Danielle Goodrick, Knowledge Product Manager at CIPS.
But the talent pool is widening
That said, new hybrid ways of working have benefits as well. Companies are no longer limited by geography, nor job hunters by commute times, to the same extent as in the past. This expands the talent pool available for recruitment and has the potential to improve diversity within MRO.
“We’ve found an opportunity by saying why does everybody have to live in a 40–50-mile radius of the office when for many jobs we can do remote working? Let’s cast the net further out,” urges Helen Alder, Head of Knowledge at CIPS.
“Businesses in the southeast can offer jobs to people in the north because they don't have to commute anymore.”
And new ways of operating can be a welcome improvement
Similarly, many of the new processes and systems that emerged out of necessity during lockdown turned out to be effective.
“We are finally moving to e-signing, which is great. Before, you would print the document, whether an invoice or contract, put it in a folder and put it on the manager’s desk. They would sign it, put it back in the folder and it would get scanned back to you. It could take a day, a week, or longer.
“Now you write directly to the manager saying here is an invoice for this, please approve by return email and he does. No paper and it happens in the same hour”, says Julie Swanepoel, Procurement Officer at SUEZ Recycling and Recovery UK.
Resilience is essential in the face of ongoing uncertainty
What characteristic do those organisations that survived, and even thrived, during this challenging period share? Resilience. Given the increased awareness that similar risks are always a threat, it remains vital going forward as well.
“The resilience required within business is coming to the forefront.”Emma Botfield, Managing Director for UK and Ireland, RS
As are digital tools, whether for communication or processing systems
In addition, the tumult of the last few years has accelerated the adoption of digital technologies that can improve how indirect procurement operates.
“You need to develop, especially working remotely. You need to make sure you’ve got the information you need and you’re not needing to go to the office to check if you’ve been sent an invoice or a quote.
“One of the main questions we ask our suppliers is can you support e-Procurement? Electronic invoicing should be standard.”Category Manager, Manufacturing Sector
“One of the main questions we ask our suppliers is can you support e-Procurement? Electronic invoicing should be standard. All the paper copies that people send is just unreal.
“Something else we have done to communicate with stakeholders is put purchasing news on the login screen for our company system, so wherever they are logging in from, they can see what the news is and what’s happening”, says a Category Manager from the Manufacturing sector.
More than ever, those in indirect procurement need suppliers they know they can trust
No company exists in a vacuum. Recent crises have demonstrated that businesses need to ensure they have good relationships with their upstream and downstream. As part of that, MRO professionals need to build strong, reliable partnerships with suppliers to minimise risk.
Says Grace Dowland, former Regional Sourcing Lead at SUEZ Recycling and Recovery UK, “We have a quite an intensive onboarding process for new suppliers. We’re asking a lot more questions than we would have done before with regards to things like ISO certification 9001 and IT security. Do we have a supplier already on the system that could be used?
“You have to be really careful about due diligence.”
And who will support them in this new world of MRO
These same partnerships can also offer positive benefits, whether through products, technologies, services – or all three. The right supplier can provide solutions to help you navigate challenges and take advantage of opportunities in the months and years ahead.
“You can see which suppliers you go to – who you can trust, where you know you can get your materials. The whole aim is to have a supplier that can support you”, says a Category Manager from the Manufacturing sector.
For more insight on the Indirect category of supplies for MRO, read the RS & CIPS 2021 Indirect Procurement report here.