In this guest post, Procurement Leaders invites CoreTrust’s James Hallock to examine the often overlooked category of maintenance, repair and operations (MRO) and provide some insight around where the opportunities for savings and control are.
Have you ever paused to ponder your spend in the MRO category? If you’re like most procurement professionals, you may have notâ€•and for some very good reasons. MRO embodies so many SKUs, suppliers and in-house buyers that it practically defies definition.
But if MRO falls under your jurisdiction, it’s your job to somehow tame the beast. Experience has shown that a disciplined approach to the category can return savings of 15-18%, not counting the time gain from managing fewer suppliers. Given that two-thirds of MRO order volume is for less than $250 in goods, a new procurement mindset should also help curtail widespread inefficiencies.
Be forewarned that the road to better MRO procurement is not well traveled, which is why few companies embark on the journey. It’s tough to know where to begin, especially if spending spans multiple offices, factories, warehouses or retail outlets. MRO is a highly fragmented space, where leading US suppliers such as Grainger and Fastenal together share only about 10% of the US market.
It’s a similar story in many territories; most companies engage a few dozen MRO suppliers in a single location. The data gets messy fast, so you’ll need a roadmap to arrive at savings:
The good news is that tackling just your top five spend areas can impact at least half of your overall MRO outlay. And following your new savings roadmap will help you navigate other ubiquitous, multi-owner categories such as office supplies and business services.
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.
James Hallock is vice president of development for CoreTrust, an 850-member GPO for large corporations and private equity firms that provides access to a contract portfolio spanning multiple categories of indirect spend.