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 Components is in a unique position to understand the needs of its customers, help them improve their processes and make efficiencies.
Procurement teams and engineers face many challenges when it comes to the maintenance, repair and operation (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 University of Sheffield is one of the 24 Russell Group universities – committed to research, as well as providing an outstanding teaching and learning experience. It also prides itself on having excellent links with business and the public sector.
Based in Sheffield, the University has a vibrant and successful Faculty of Engineering, which is number one in the UK for engineering research income and investment. The Faculty has more than 6,700 students and an annual research income of over £120m. In 2017, it opened a student-led workshop and makerspace facility called the iForge, located in the Diamond – a University building renowned for providing practical engineering learning and teaching opportunities.
With more than 800 registered users, the iForge provides everything students need to bring coursework and personal projects to fruition. As well as acting as a space in which to build and create, the iForge underpins a commitment to equipping undergraduates with in-demand industry-ready skills.
Free issue, low-cost parts and spares are readily available to all iForge users. But ensuring availability within a controlled, planned environment was proving to be a challenge. Which is explored in Indirect Procurement Report 2018 - Drivers of Change, jointly produced by RS Components and the Chartered Institute of Procurement and Supply (CIPS).
There were two main elements of this challenge:
• Ad hoc ordering and laborious stock-checking processes were creating huge amounts of admin and eating into productive time. Approximately half a day a week would be taken up simply assessing stock levels
• If components were not available, students would either have to wait or find a workaround. That often meant buying their own materials, which a lot of the time were low-priced, substandard items that risked projects failing and could even represent safety concerns.
To solve both sides of this problem, RS Components has made the process of maintaining healthy stock levels easy and time-efficient. Plus, it has guaranteed iForge users have access to high-quality items. All within sensible budgetary constraints.
RS deployed its ScanStock™ managed inventory service at the iForge. ScanStock™ reduces the time and cost of replenishing low-value, fast-moving industrial supplies. Thanks to the team at RS managing the system and strategy, it takes the complexity away too – from the installation of storage facilities and labels with barcodes to taking responsibility for regular stock checks and replenishment.
Resistors, LEDs and other low-cost items are made available via storage cribs. These are topped up regularly following routine, scheduled stock-taking visits every two weeks from a dedicated RS account manager to keep things running smoothly. A monthly summary is provided to the University of Sheffield providing visibility of all invoices and costs
It is also now possible to start to predict which items are likely to be in high demand by analysing data relating to course content, modules being studied and ongoing projects.
One of the most immediate and visible benefits to the iForge of working with RS Components has been effectively outsourcing the management of stock levels to ScanStock™. Ordering the most-needed items virtually takes care of itself, while careful regular stock checks avoid any unexpected shortages.
For students who have come to rely on the iForge this means a steady supply of the products they need is always on hand. Furthermore, the quality of those products is assured, so they needn’t worry about parts failing, leading to problems with their finished work, and they don’t have to source their own, cheaper parts.
“The iForge gets a lot of use and is growing all the time. We hope one day it will have its own dedicated building,” says iForge Lead Technician Ryan Jones. “The feedback we get from students is overwhelmingly extremely positive. But as the facility grows, the pressure to keep it operating smoothly grows with it and the more time can be taken up keeping everything in order. ScanStock™ has freed up a lot of time for us.”
But there have been other, less tangible benefits from RS Components’ deepening relationship with the University of Sheffield. Students are now coming into regular contact with – and getting invaluable exposure to – a leading industry partner. This is opening them up to new skills and insights.
Beyond this, RS is getting more heavily involved in iForge activities, even sponsoring a recent hackathon event, providing not just components but practical hands-on advice and guidance on the day, too.
Growing a relationship like this, and finding new places to add value, is one of the core ways RS sets itself apart in a competitive market.