Individual purchases related to Maintenance, Repair & Operations are often low-value items, yet the overall process making those purchases can be twice as much as the actual product itself.
The RS and Chartered Institute of Procurement & Supply 2021 Indirect Procurement Report highlights the key challenges businesses face when procuring MRO supplies. The number one business priority is the need to reduce operational budgets, with the procurement process under the spotlight to help deliver this objective.
49%say managing multiple stakeholders over multiple site is challenging.
37%say spend visibility is a challenge.
45%state ensuring compliance in contract buying is a daily challenge.
24%state a lack of investment in procurement technology is holding them back from controlling costs.
32%state that finding the right people who understand best practice procurement for this category is a challenge.
The Covid-19 pandemic has accelerated the shift from manual requisitioning to digital for our customers...
- Gain Control
- Reduce Operational Costs
- Streamline Processes
Saving £94,500 per annum 66% cost reduction per order
Saving £30,492 per annum 3.7 weeks per annum
Saving £24,100 per annum 25 mins per order
By taking a TCO approach to MRO procurement we can take a comprehensive look at all the costs associated with buying and owning supplies, rather than just the direct product cost.
Our experience suggests that the costs associated with the procurement of indirect materials can outweigh the product costs by up to 2:1.
If your business spends £100,000 on purchasing products per annum, a further £200,000 will be spent on the processing, or 'soft costs', making the Total Cost of Ownership £300,000.
Cost reduction exercises are often focused on reducing the unit cost rather than examining the savings that can be made if reviewed in the context of the Total Cost of Ownership.
These process costs are often hidden and require a methodical review to uncover and optimise efficiencies.
By identifying and understanding the procure-to-pay process, businesses can drive efficiencies and unlock significant savings by removing wasteful steps within the current cycle.
Most procurement processes consist of around 9 steps including searching for the product, requisitioning and approvals, and receipting and payment. Each of these steps adds cost and complexity into the process.
Typical manual procure-to-pay cycle for MRO supplies
Calculate your total cost of procurement with our calculator
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