Today’s digital procurement solutions provide greater insight into MRO procurement
Since the start of the decade, those responsible for maintenance, repair and operations (MRO) procurement have faced a raft of challenges old and new. Tackling these challenges has given new impetus to the adoption of digital technology which, as well as solving immediate issues, will have long-term benefits for the future of MRO procurement.
These procurement tools deliver real savings in time and money but to access their full value, procurement professionals from across different industries are forging strong relationships with suppliers and tapping into their knowledge of digital technology.
“There’s been a really noticeable change in the way that people are working with and adopting new technologies and digital tools,” says Emma Botfield, Managing Director for UK & Ireland at RS. “Customers are working with their suppliers as partners, rather than that transactional customer/supplier relationship.”
Uncovering the true cost
A long-standing issue within MRO procurement is lack of spend visibility, which 18% of respondents to the 2024 Indirect Procurement Report produced by RS and the Chartered Institute of Procurement and Supply (CIPS) cited as their biggest challenge.
As consultancy firm McKinsey point out, this is central to the procurement function. “A procurement organisation’s primary objective is usually to optimise external spend with suppliers – commonly 40-80% of a company’s total cost – and realise a source of competitive advantage in terms of cost, quality, availability and (increasingly) sustainability,” it states.
But as CIPS points out, spend visibility gets harder when a company has a “long tail” of suppliers. “The ‘tail’ may not represent the majority of an organisation’s expenditure, but it often covers 80% of the suppliers, who often generate most of the corporate ‘noise’ about supply issues,” says CIPS guidance.