How private label products can offer a competitive alternative without compromising on quality and choice
The onus on engineers and others who are involved in maintenance, repair and operations (MRO) to both reduce costs and maintain quality is growing. In recent research carried out by RS and CIPS (the Chartered Institute of Procurement & Supply) 57% of procurement and supply professionals in the MRO space said they were being asked to reduce operational costs, while 46% were being challenged to deliver annual cost savings.
However, as no well-run business would reduce the quality of their work, or cut corners or costs that might put the safety of their employees at risk, the challenge is to achieve good value in MRO purchases while maintaining high standards for quality and performance. The answer, according to Kurt Colehower, President, RS Pro, is RS Pro, where quality and performance at a fair price defines the customer value proposition.
“RS has been providing MRO products under a private label since the company was founded 80 years ago, so it’s in our DNA,” says Colehower. “Continuing to put the customer first we keep evolving, making our offering relevant to the market. Over the past three years we have positioned RS Pro to be the first choice for customers in search of trusted value.
"We have positioned RS Pro to be the first choice for customers in search of trusted value "Kurt Colehower, President, RS Pro
“A big part of this has been simplifying what we offer so that it’s clearer for customers,” he adds. “We did this by taking four separate private label brands and consolidating these into one, single, global brand - RS Pro, where each product carries the RS Seal of Approval, acknowledging our commitment to quality and performance.”
Colehower believes that organisations and the maintenance engineers who actually use MRO products on a day-to-day basis insist on three key requirements:
“If you are considering switching to a private label set of products it’s crucial that you can order the parts you need,” says Colehower. “RS Pro offers a great choice – we have more than 50,000 products across all of the key categories that RS operates in.”
“At RS we put significant effort and rigour into qualifying our manufacturing sources, along with checks on the products, before we apply the RS Seal of Approval,” explains Colehower. “This means that customers know they are buying quality parts that adhere to the required standards and compliance certifications – they can then be confident that the product will perform as expected.”
“RS Pro products offer excellent value,” says Colehower. “We ensure our products are competitively priced, which means that for customers who are under pressure to cut their procurement costs, they can achieve that by buying RS Pro, but without any worries about the range of products or their quality.”
One company that has embraced RS Pro is Severn Trent, which supplies water to more than 4.3 million homes. Like many companies in the utilities sector it is committed to delivering better value for shareholders and customers by making efficiencies across the business, and one of the areas identified was the supply chain.
"Our community of maintainers have been really impressed with the quality of RS Pro products compared to other own brands we had used in the past" Phil Donnelly, Supply Chain Transformation Analyst, Severn Trent
Its Supply Chain Transformation team have worked closely with RS as part of a framework agreement to improve the quality, cost and efficiency of its MRO supply chain.
In particular, Severn Trent has focused on standardising its product range. “We had been ordering in the region of 20,000 different products a year and these items were being held in various stores around our business without a huge amount of visibility of what we had,” explains Rachel Passey, Supply Chain Transformational Lead. “In January 2016 we started going through data that RS supplied, meeting manufacturers that RS introduced us to and making decisions around a smaller, consolidated range of products we wanted to purchase for MRO.”
Severn Trent has now been able to standardise its products in many areas (particularly tools), making the ordering process faster and easier for employees. In some cases it has adopted RS Pro products as a trusted option. Using RS Pro has given its maintainers access to a consistent selection of products and tools, which are of a high quality and cost-effective.
“Our community of maintainers and other end users have been really impressed by the quality of RS Pro products compared to own brands we had used in the past – they provide great value for money,” says Phil Donnelly, Severn Trent’s Supply Chain Transformation Analyst. “There have been instant savings on the high-spec items that have been replaced and we would also expect to have other soft cost savings since there is a much simpler catalogue of products to order from.”
Over the past two years Severn Trent has been able to reduce the number of branded MRO products it uses from 755 to just 231 – a fall of 69%. In addition, 121 of these products are now RS Pro, which will save the company around £8,000.
Another firm that is seeing the benefits of adopting RS Pro products is manufacturing giant Tata Steel. Working closely with the RS Local branch in Cardiff, Tata Steel has been able to select RS Pro products that meet all of their requirements.
“Martin Pritchard, our RS Key Account Manager, updates us on a fortnightly basis about any new products or additions to the RS catalogue,” explains Rob Choat, Electrical Engineer at Tata Steel. “He had been talking to us for some time about the benefits of RS Pro and how these products might suit our needs.
“Our main priorities for MRO products are quality and price – the advantage of using RS Pro is that the quality is very good and up there with the leading brands, while the pricing is extremely competitive,” he adds. “There’s also a really good range of RS Pro products now, which gives us more choice.”
Over a 12-month period RS has calculated that RS Pro alternatives have saved Tata Steel at least £30,000. What’s more, RS has identified a further £13,000 plus of potential savings the firm could make by choosing RS Pro in the future.
“The benefits over the past year of choosing RS Pro have been that we have maintained the quality of the products but vastly reduced the cost,” says Choat. “This helps me because it is much easier to get requisition orders through when you can show the savings you are making – it makes my job much easier.
" By switching to RS Pro we have maintained the quality of the products but vastly reduced the cost"Rob Choat, Electrical Engineer, Tata Steel
“We had some pushback initially to some of the RS Pro products,” he adds. “There were some engineers who had been trained on certain multimeter products and didn’t like the idea of switching. However, over a period of time, and with support from RS, we’ve won those people round and they now admit that the RS Pro multimeter meets our needs.”
The overall result is that Tata Steel now has access to a wide range of RS Pro products that have high availability, industry-standard quality and are competitively priced. These products have been seamlessly integrated into the daily maintenance work stream while maintaining Tata’s high standards.
What both Tata Steel and Severn Trent have in common is a close and productive working relationship with RS as their MRO supplier. This is something that Colehower believes is crucial to making the move to RS Pro as easy as possible, and also a key part of RS Pro’s future development.
“When it comes to improving and expanding the RS Pro range, we consider input from a variety of sources,” he explains. “We take feedback directly from customers around what kind of products they need and can’t currently get, or modifying products to add slightly different features.”
“We also pay close attention to the range of products that we offer customers and look for opportunities where we can introduce RS Pro options where there isn’t a value product currently available,” he adds. “We also speak to our suppliers and manufacturers who build RS Pro products for us – they have lots of product ideas and insight into what type of products are selling around the world and what the latest trends are.”
Colehower believes that while the MRO industry is mostly business-to-business transactions, the principles of how procurement and engineering teams buy products are similar to that of consumers on the high street.
“There are times when you need to buy a premium product that has certain features you need, but there are a large number of instances where those additional features and a premium product are not required, and then you start to look for a lower cost, quality alternative, and this is the space that RS Pro fills,” he says. “It is also why we are seeing more acceptance from end users for making RS Pro their first choice for value.
Choat from Tata Steel is a convert: “I would definitely recommend RS Pro – the products are of a high quality and cost-effective, so you can’t really ask for more.”