Driving efficiency in indirect procurement

As disruptive new technology continues to drive change in procurement, the world of indirect procurement, or maintenance, repair and operations (MRO), will also be affected. Indirect procurement and MRO supplies make up a complex category and there lies an opportunity to drive efficiencies in this area.

Connected Thinking is a thought-leadership website from RS that provides insight into MRO procurement to support procurement and business leaders as they face up to change. It features industry experts voicing their thoughts on digital transformation, management, ethical procurement, strategy and many other topical issues.

RS is also the exclusive MRO knowledge partner to the Chartered Institute of Procurement and Supply (CIPS). This led, last year, to joint research on indirect procurement and MRO supplies in the UK and the trends impacting procurement teams from a cross-section of business and industry.

The research has provided a bellwether of indirect procurement and how procurement professionals view this part of their business. Not surprisingly, the most powerful theme to emerge from the responses was “change” as 74 per cent of respondents expected either “some change” or “a great deal of change” to their indirect procurement strategy over the next five years.

“Change, driven by technological advances, is inevitable,” says Helen Alder, head of knowledge at CIPS. “The pace of the fourth industrial revolution, which encompasses the industrial internet of things, is picking up rapidly and any business that doesn’t adapt will struggle.

There is a need for the procurement function in an organisation to be more of an innovative, creative, solution-finding department rather than just controlling spending

“In terms of MRO procurement, teams are being challenged to think outside the box for different solutions. There is a need for the procurement function in an organisation to be more of an innovative, creative, solution-finding department rather than just controlling spending.”

The research showed procurement teams working in MRO face increasing pressure to reduce operational budgets within their business, while also coping with day-to-day challenges such as maintaining ageing assets and managing multiple stakeholders. All this appears to make implementing a broader change programme within the indirect procurement process a daunting task for many organisations.

Other topics covered by the research and RS white paper include attitudes towards risk and counterfeit goods in the MRO supply chain, supplier consolidation and Brexit.

At a follow-up roundtable event hosted by RS, senior procurement experts from organisations, which included Schneider Electric, Cadent, Siemens and Ibstock Brick, discussed the white paper in detail. Most felt the findings resonated with their own circumstances and agreed that the difficulties of implementing change can be at least partly overcome by working more closely with suppliers.

“Suppliers can help procurement teams to adapt to and adopt change to their indirect procurement purchasing strategy,” says Mike England, managing director for Northern Europe at RS. “Organisations should use suppliers to understand how to make the best use of data and data insights.

“As more organisations adopt digital channels to place their orders, the use of data within the supply chain is increasing. It is then critical how procurement teams use that data to drive improvement. The challenge for all of us, businesses and suppliers, is to put ourselves in the shoes of an engineer in five years’ time and work backwards.”

The white paper, Preparing for Change: The Evolution of MRO Procurement, is available as a free download from Connected Thinking alongside exclusive articles, videos and infographics focusing on indirect procurement