Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I’ll be examining a whitepaper from Global eProcure called “MRO Procurement: A Primer of Success.”
This whitepaper begins by identifying all of the reasons that MRO procurement is problematic, mentioning some traditional problems as well as some interesting, less apparent tidbits such as:
- Typically, over 70% of the MRO items in inventory turn less than once every two years
- Spot buys, which are unplanned purchases for items not set up in inventory, can account for up to 50% of the annual (MRO) spend
- Data management across plants is a challenge…same item identified many ways in different systems
The whitepaper then dives into some pretty decent detail on developing a sourcing strategy for MRO, going past the age-old distributor vs. manufacturer question and breaking down distributors into four categories, each with their own advantages and disadvantages. It describes how to build a market basket of MRO items similar to building a core list of office supplies as taught in the article “Office Supplies Sourcing Secrets” and the accompanying podcast. The whitepaper continues with a very detailed example of how to analyze bids from MRO suppliers.
Perhaps the most important piece of advice comes at the end of the whitepaper, however: “Is the procurement professional done when the MRO supplier selection process is complete? Far from it! Once the supplier selection process is completed, it is necessary to communicate, actually over communicate, the decision across the organization. It is critical that this communication be specific as to why the decision has been made and what the benefits the company can expect to result for this decision. The user community will not all be happy with the selection and some pushback can be expected. During the early implementation phase it will be necessary to work very closely with the supplier to proactively address user issues/concerns.”
Good job, Global eProcure.
If you’re new to MRO procurement or even if you think you could use a refresher after years in MRO procurement, I highly recommend that you download this whitepaper from Global eProcure’s Web site.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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