Focused on reducing operational budgets, minimizing inventory costs, and improving asset performance, procurement professionals across the supply chain worry about these issues on a daily basis. The hurdles are especially high for maintenance, repair, and operation (MRO) buyers, whose biggest day-to-day challenges also include ensuring contract compliance with preferred suppliers and managing aging assets, according to new research from Chartered Institute of Procurement & Supply (CIPS).
Conducted with RS Components, the new survey highlighted the fact that MRO buying teams are being pushed harder than ever to deliver savings—something that’s not always easy to achieve in today’s unpredictable business climate. Here are four more trends that will be on the minds of all MRO buyers during the coming year:
1. Attaining Good Stakeholder Alignment
According to CIPS, achieving stakeholder alignment and managing stakeholders is an ongoing concern for buyers. In fact, it says 28% of companies struggle with stakeholder alignment in the MRO category. “Encouragingly, the number of UK respondents citing high alignment increased to 38% (from 26% in 2017),” CIPS reports, “and the overall global figure stands at 42%, suggesting an improvement, although the problem is far from solved.”
According to CIPS, MRO procurement’s level of complexity—with thousands of low-value purchases made by engineers who are often based across multiple sites—makes agreeing and adhering to a single MRO purchasing strategy difficult. “There needs to be a mixture of good communication, leading by example, and in some cases adopting an old-fashioned carrot-and-stick approach,” said CIPS’ Helen Alder in the report. “If you’re trying to change practices or bring in policies that will help the business but might be unpopular with stakeholders, you need to do a lot of groundwork.”
2. Adding More Managed Inventory Services
An inventory management and order fulfillment approach that requires collaboration between suppliers and their customers (e.g., distributors, retailers, OEMs, and product end-users), vendor managed inventory (VMI) is becoming a popular procurement option for companies across many industries. CIPS says 68% of companies are using managed inventory services to reduce the time spent raising individual orders, gain better visibility of stock and spend, and improve productivity.
According to the survey, 46% of buyers say managed inventory is one of the most important conversations they have with suppliers when planning future relationships. (Other popular conversation topics include knowledge services to help procurement, updates on new product innovations, business services to help procurement, and delivery options.)
3. Avoiding Counterfeit Products
Counterfeit items were rated by 32% of companies as a “significant problem,” CIPS reports, while 24% rated it as a “moderate concern.” The figures for those rating counterfeit as a significant problem were even higher for small- and medium-sized business (39% and 37% respectively).
When it comes to counterfeit items, CIPS has led a campaign in recent years to raise awareness of the problem, but Alder still advises organizations to be on their guard. “Counterfeiters are becoming more and more sophisticated, which means that there is always a risk as soon as an organization makes a purchase outside its trusted supplier network,” shee notes in the report. “The chance of this is even higher in the MRO category, as maverick spend is a well-known problem.”
4. Embracing the Industrial Internet of Thing (IIoT)
Despite improving asset performance and maintaining aging assets being the biggest day-to-day challenges for MRO buyers, CIPS says that only 7% of respondents said their company has a strategy in place for IIoT (i.e., the application of the Internet of Things [IoT] in the manufacturing environment). “However, the growing appetite and enthusiasm for new and emerging technology is evident,” CIPS notes in its report, “as 53% of respondents said that they were having conversations with suppliers about new product innovations.”
“I still think we’re at the start of the Internet of Things journey,” Alder adds. “Organizations are aware of the technology and looking at its applications—but not many have any sort of solid strategy in place yet.”
