Kitting efficiency

Procurement teams and engineers face many challenges regarding the maintenance, repair and operation of their organisation’s assets and facilities. The supply chain for indirect materials is complex due to the number of stakeholders involved, a fragmented supply base and the quantity of products that are split across categories. In addition, there is constant pressure from senior management to reduce costs.

 

As one of the largest industrial suppliers, RS is in a unique position to understand the complex needs of its customers and to help these businesses streamline their processes and make cost efficiencies.

 

The crucial fact for organisations to appreciate is that with indirect procurement process costs can be twice as much as the amount spent on the products themselves. So if your organisation spends £100,000 on the purchasing products over the course of a year, you will spend a further £200,000 on process or ‘soft costs’ such as those linked to inventory and purchase to pay.

 

As such, there is significant value in reducing process costs rather than focusing on the purchase price of individual items.

 

One example where RS has helped a customer to achieve soft cost-savings is through its kitting service. A leading power company recently chose to upgrade all of its radiators.

 

The task involved working on hundreds of radiators spread over more than 80 sites, which would take six months to complete. Each job required 23 different product lines to be delivered to engineers in time for them to complete each installation. In addition, as each site was different in terms of size, number of radiators and existing equipment, a different ratio of products had to be supplied depending on the location.

 

The customer was looking for a way to get all the parts it needed delivered to sites on time while also minimising the number of suppliers needed to get all the products required for the work.

 

RS offered the customer a kitting service to meet the needs of their project. This is a service provided by RS Local branches nationwide. The project was managed by one key contact at RS who ensured the process ran smoothly.

 

Once the customer had defined a final list of products, RS provided a bespoke method of order placement, which channelled orders for this project to one of our RS Local’s so they weren’t mixed up with the customer’s regular requirements. The parts would be delivered into the RS Local, assembled into kits and dispatched at the right time to the right location. The project was monitored via regular calls between the customer’s procurement and electrical teams, RS Account Management and the RS Local to ensure that everything was kept on track.

 

With the radiator project now complete, the customer has been happy with how the kitting service was implemented during the six-month project. By grouping products, the company was able to leverage economies of scale to make significant savings on the product price.

 

The customer’s procurement process was easier and required far less administration from sourcing products through to payment, which we typically see organisations making soft cost savings in this area. The RS kitting service meant raised one purchase order, processed one invoice and the kits were delivered on demand.