The costs associated with indirect procurement can be double the amount spent on the products themselves. A simple statistic that hides some tricky challenges.

The costs associated with indirect procurement can be double the amount spent on the products themselves. A simple statistic that hides some tricky challenges.

As one of the largest providers of industrial supplies, RS is in a unique position to understand the needs of its customers, help them improve their processes and drive efficiencies.

Procurement teams and engineers face many challenges when it comes to the maintenance, repair and operations (MRO) of their organisation’s assets and facilities. The supply chain for indirect materials is complex due to the stakeholders involved, a fragmented supply base and the sheer number of products split across multiple categories. In addition, there is constant pressure to reduce costs.

So if your organisation spends £100,000 on purchasing products over the course of a year, you may be spending a further £200,000 on processing or ‘soft costs’.

The challenge
The UK arm of this diagnostic imaging and healthcare equipment business is looked after by around 250 field engineers. While a manufacturing plant is likely to have its own dedicated stores area and personnel, field engineers have no central facility to rely on. Yet there can be no delays when they need to get on site to repair or service an item.

An MRI scanner is one of a hospital’s most significant assets. These impressive pieces of machinery require significant financial outlay. They are at the forefront of life-changing and sometimes life-saving treatment, too, and are utilised to the maximum possible extent.

Using magnetic fields and radio waves, MRI scanners produce detailed images of the inside of the body, and can be used to examine bones and joints, internal organs, the brain, and even blood. Taking one offline is not a small undertaking; when an MRI scanner needs to be serviced or repaired, time really is of the essence.

The right product needs to be available at the right time to get it fixed. And engineers need to be able to access purchasing systems no matter where they are. The same time sensitivities relate to other important medical equipment too.

If engineers can’t access an ordering system, they face a number of constraints and challenges.

• Do they return to base to place an order, which will use up valuable time?
• Do they attempt to circumnavigate purchasing processes by placing an order without a PO or any other necessary admin?
• Do they ignore contract compliance and find an alternative supplier for the sake of convenience?

For this company, this often meant field-based engineers would travel to their nearest RS Local branch to see if a part was available. If it wasn’t in stock, they would have to return to base to place an order online. The costs and time involved in such an approach soon add up.

Even when items were available, there could still be challenges. Engineers were issued with cards allowing them to place orders of less than £100, while more expensive items would require separate internal authorisation, sometimes creating delay, always adding additional process costs.

The solution
When the engineer can’t get to the ordering system, the ordering system needs to come to the engineer. That became the basis for RS' response to this customer’s situation.

Building on an existing, successful relationship with this customer, RS Components developed a solution ideally suited to field engineers – a version of RS PurchasingManager® optimised for mobile use.

It takes all the capabilities office-based users of RS PurchasingManager® are already accustomed to out into the field. From product identification to raising purchase orders, and with a searchable catalogue that can be tailored to suit a customer’s requirements, RS PurchasingManager® is a free, web-based order management tool.

Using this system, the customer can now track, manage and authorise field engineers’ orders in a streamlined and controlled manner. It has also made it possible to review demand in a more accurate way, through detailed purchase history analysis.

The outcome
Some results are measured in terms of stripping cost out of a process and saving money. This project has done that, helping reduce annualised source to pay process costs by £24,100, which is a reduction of approximately 25 minutes per order.

Some of the other key achievements have been around the amount of time saved placing orders, and in establishing robust processes. The easier it is for an engineer to follow a process, the less likely they are to deviate from it. When ordering very specific parts, such as those used in medical equipment, there is a clear need to purchase from particular suppliers.

But with smaller, low-value consumables, there are always going to be other potential sources to turn to. And when the pressure is on to get a job done fast, there may be the temptation to pick something up en route to a site, without thinking about following due process.

Yet this customer’s use of RS PurchasingManager® mobile demonstrates the success of encouraging engineers to stay within purchasing compliance.

For more information on RS PurchasingManager visit here.