Given the volume of MRO purchases an organisation makes, managing stock and keeping track of spend can be difficult, but businesses will benefit from reviewing their strategy
Order and visibility are not words you would normally associate with stock control of MRO parts and products. Despite their best intentions, organisations often have disorganised stockrooms spread across multiple sites and no one within the business has a clear understanding of exactly what they own versus what is being purchased.
This is confirmed by recent research conducted by RS and the Chartered Institute of Procurement and Supply, which surveyed procurement and supply professionals about MRO. When asked about the their biggest day-to-day challenges, 36% of the respondents complained about a lack of spend visibility on indirect purchases.
So, while issues of stock visibility are not unusual, there are a number of problems associated with this that are likely to add significant costs to organisations in the long term. First, there is a cost associated with holding stock that is never used. Second, significant time may be wasted as engineers search for parts in stockrooms; and, finally, engineers may be independently reordering the same parts that are already held onsite – which costs your company unnecessary expense.
“Systems like ScanStock and PunchOut simplify ordering and reduce the time taken on the purchase process”Mike England, President EMEA, RS
For many organisations, the first thing the procurement team does is to look at where money has been spent and then identify for efficiencies. However, with MRO purchases it is often impossible to tell exactly what has been spent due to the huge range of suppliers. As such, consolidating suppliers down to a small number of key companies, which can provide clear data on all purchases is an important step in managing inventory.
Another common stock issue to crop up in MRO is who to contact when devices require aftercare. Abrar Ahmed, MRO Category Buyer at Cadent, wants his company to have more clarity about where products were purchased.
“Only recently I found that there was equipment that had been purchased by a third party or directly from the manufacturer, which hasn’t been used for more than a year,” he explains. “This equipment needed re-calibrating or repairing, which only the manufacturer could do, so this will end up costing us twice.”
With an established relationship with a trusted supplier, this sort of issue can be avoided and provide both engineers and procurement teams with peace of mind.
Good suppliers should also be able to lean on technology to help organisations they work with manage their stock efficiently. In many cases eProcurement solutions can be used to provide the spend visibility and simplified ordering that companies such as Cadent and Arqiva are looking for.
RS has a number of useful tools that are designed to help with stock control. “We offer customers a system called PunchOut, which plugs into their existing eProcurement set-up and provides access to products, technical data, imagery and stock availability,” says Mike England, President EMEA, RS. “It simplifies ordering and reduces the time taken on the purchase process.”
“We simply didn’t have clear visibility of what we had in stock and things were getting missed”Chris Peck, Purchasing Manager, Mace Industries
In addition, suppliers such as RS can offer a ‘managed inventory’ service, ScanStock, where the supplier takes responsibility for controlling and replenishing agreed products on the organisation’s behalf. This reduces the time spent on MRO purchases by both stakeholders and the procurement team, while also giving the business a clear overview of what is being spent.
Mace Industries – a Corby-based manufacturer of conveyor-belt or chain-driven movement solutions – has seen significant benefits of using ScanStock in recent years. “We were ordering hundreds of parts, and it was easy to overlook when these items were running low in our store, or we could have over-ordered,” says Chris Peck, Purchasing Manager at Mace Industries. “We simply didn’t have clear visibility of what we had in stock and things were getting missed.”
By introducing ScanStock, where an RS representative visits the site every week and does a full stock check on product bins and then re-orders any parts that are required, it has been possible to reduce time taken up by Mace Industries employees and provide Peck’s team with great spend visibility.
“I can largely leave this side of the business alone, which means my time and the resulting cost from that is saved,” says Peck. “From a productivity point of view, ScanStock has helped massively – our engineers know exactly where all the products they need will be and that they will never be scrambling around for key parts, which could delay our operations.”
For any organisation struggling to keep on top of its MRO purchases, the key is to recognise the issue, and the potential costs associated with poor stock management. After that, it makes sense to partner with your trusted suppliers to find solutions that will improve efficiency and save your business money.