RS Components (RS) has launched ‘The Future of MRO’ – an Indirect Procurement Report following research on the category of Maintenance, Repair & Operations (MRO). The annual White Paper report is in its third year, and follows a survey conducted among 735 procurement professionals globally – all members of the Chartered Institute of Procurement & Supply members – covering the opportunities and pressures procurement professionals face around key areas including innovation, inventory management and supplier knowledge.
RS surveyed global respondents from sectors including manufacturing, public sector, energy, logistics & retail, transport & defence and technology, covering job roles from operational through to senior and director level. It focuses on the role that technology has to play in the future of MRO, innovative approaches to and uses of data, and how MRO professionals can increase the strategic value their work delivers.
The Future of MRO report highlights include:
- A growing pressure to reduce costs – 62% in 2019, presenting one of the key challenges facing individuals. Another main pressure cited was improving asset performance, which has increased from 33% in 2018 to 39% in the latest survey
- Encouragingly, there has been a growth in companies having strategies in place for MRO, with calibration of test & measurement equipment up to 33% vs 28% in 2018, and use of Vendor Managed Inventory standing at 26%
- 7% of UK survey respondents said their organisation had strategies in place for the Industrial Internet of Things
- The biggest day-to-day challenges for respondents remain: ensuring contract compliance with preferred suppliers (48%), maintaining ageing assets (39%) and managing stakeholders over multiple sites (45%)
- Those in more senior roles feel they have more opportunity to drive change than those in junior procurement roles (71% versus 61%)
- Despite uncertain economic conditions, the importance of sustainability has not been lost. The number of respondents regarding sustainable and ethical procurement as a priority stands at 35%
- Businesses on average use 39 different suppliers providing industrial supplies for the category of MRO
- While getting colleagues to stick to an approved roster of suppliers is a daily battle facing procurement professionals, increasing the risk of procuring non-compliant goods, 73% of UK companies surveyed state they have no concern about counterfeit goods
Pete Malpas, Regional Vice President for RS Components in Northern Europe, explains: “In keeping with the past two editions, change is a dominant theme in the 2019 report. But this time the emphasis is on delivering through change. Change is a process – a journey rather than a destination – and as such, we believe that it is both inevitable and a source of tremendous opportunity.
“There are also many factors that haven’t changed in the last year: the importance of cost reduction is still prevalent, and we anticipate a growing need for more creative and strategic ways of creating value to positively influence cost in the near future. Key to this will be the role of technology, using innovative approaches to data which will allow MRO professionals to increase the strategic value their work delivers,” he adds.
Helen Alder, Head of Knowledge at CIPS, agrees: “Procurement can encourage extremes – there are people who feel their role is to focus on securing the lowest price. Then there are those who want to add value to the business by identifying long-term solutions. Getting the best possible price is always going to matter; no business wants to spend more than it has to, after all. But the lowest-priced supplier, just like the lowest-priced parts, won’t always offer the best long-term value. To really add value to the organisations they work for, procurement professionals must think about that total cost.”
IIoT offers the potential to improve MRO procurement and with 7% of companies stating they have an IIoT strategy in place, it’s still a small number.
“In an ideal world, all the machines in a factory would be equipped with sensors monitoring and logging every aspect of their performance. But the reality is that most manufacturing, engineering and industrial sites are working with a combination of plant, machinery and equipment both old and new, with 54% of UK respondents referencing ‘ageing assets’ as the biggest driver of downtime,’ says Pete. “Collecting data from machines that can inform predictive maintenance is relatively easy though – with a variety of options when it comes to adding sensors to pieces of equipment negating investment in new, IIoT-enabled machines.”
The Future of MRO report, from RS Components, covers what can be done with the tools, information, and data available without investing heavily in new technology. Within the report, Dr Carlos Lopez-Gomez, Head of Policy Links at the Institute of Manufacturing in the University of Cambridge, outlines his findings from analysis of more than 1,000 examples of the adoption of digital technology in industrial settings across the world. Severn Trent Water also shares its experience of the changes it has been going through where its MRO purchasing is concerned.
RS Components launched Connected Thinking in 2016, an online information portal offering advice and best practice for organisations, giving them inspiration and practical insight on the topic of MRO procurement. Connecting Thinking features senior sector, RS and Chartered Institute of Procurement and Supply (CIPS) experts – with which RS has a knowledge partnership.
The White Paper can be found at https://www.rs-connectedthinking.com/en/insights-1-1/indirect-procurement-report-2019-the-future-of-mro.