All eyes look to MRO
For the sixth straight year, Purchasing selects its top MRO buyers based on nominations from peers, managers, and suppliers. The eight members of the team for 2007 demonstrate that MRO is strategic, impacts the bottom line, and, at some companies, is becoming increasingly global.
By Susan Avery -- Purchasing, 8/16/2007 2:00:00 AM
Bob Calvez
Global commodity manager-MRO
United Technologies Corp., Farmington, Conn.
THE MRO BUY: $250 million, consisting of all supplies in the factories, from facilities maintenance to machine maintenance to operations.
As global commodity manager-MRO, Bob Calvez is bringing UTC's MRO integrated supply program to the company's sites outside of North America. He's involved in setting up the program in Singapore, and in strengthening one in China. He's working to expand integrated supply to Poland. UTC's supply management operation received Purchasing's Medal of Professional Excellence in 2006.
Calvez has worked in MRO purchasing since 1978 and began his career at UTC in 1993 at Pratt & Whitney Canada (P&WC). He represented P&WC on the UTC MRO team of operations, maintenance and procurement professionals that selected an MRO supplier for North America in 1998. He joined the UTC global general services group in 2001 to manage the contract and has been involved in implementing it at many of the company's sites. He was promoted to his current post in 2006.
His big challenge lies in selling the MRO integrated supply program to the individual UTC sites; management has not mandated that they use it. Today, more than 80% of UTC's MRO spend in North America goes through the program, and, Calvez says, "we are making progress in other regions." He attributes that success to the company's internal structure: Use of teams that encourage sharing of best practices across UTC.
Brad Gray
Purchasing, global director
The Dow Chemical Co., Houston, Texas
THE MRO BUY: $5 billion, consisting of capital equipment and such items as pipe, valves and fittings (PVF), instrumentation, electrical and process automation.
Brad Gray is responsible for setting global sourcing strategy for all MRO and capital categories at the Dow Chemical Co., and manages a staff of more than 130 people worldwide. He has 24 years of supply chain and purchasing experience and is a member of the company's global purchasing leadership team.
Under Gray's direction, Dow's MRO team has centralized the buy and taken it global. The team purchases MRO and capital equipment for 270 plant locations in 170 countries, working "to leverage our global spend while achieving Dow's critical deliverables," he says. These consist of continued expectation of improved safety and environmental performance of suppliers, commitment to meet schedules, delivery of products that ensure Dow's assets can operate to plan and lower overall cost of ownership. In addition, the team works to find suppliers in developing regions of the world.
Purchasing has had significant positive impact on the company's overall drive for financial discipline, Gray says, and integrating suppliers into the supply chain is essential. "Since Dow treats purchasing as a strategic investment, purchasing's management practices help to maximize the company's return on investment."
David Stockwell
MRO category manager
Compagnie de Saint-Gobain, Paris, France
THE MRO BUY: $40 million, consisting of such categories as power transmission; electrical; safety; pipes, valves and fittings; industrial supplies and fasteners.
After 10 years as supervisor of store and parts for Saint-Gobain Containers Inc., David Stockwell was named MRO category manager for Saint-Gobain Corp. (SGC), a post he's held for five years. He's responsible for inventory management and purchasing for the storerooms at Saint-Gobain Containers' 14 plants in the U.S. Saint-Gobain Containers makes glass containers for food and beverage. He works at its Muncie, Ind., headquarters facility.
As part of Saint-Gobain's worldwide Procure initiative, which covers 50 spend categories, Stockwell and his team have negotiated national agreements with suppliers for six MRO categories. These agreements cover nearly 200 manufacturing facilities in the U.S. and Canada.
Saint-Gobain's strategy is to leverage spending to obtain lowest total cost of acquisition. To that end, Stockwell communicates regularly with his team in the U.S. and Canada; they meet annually to discuss supplier agreements and any related issues.
"For us, this is a team effort," he says. "In a company this size, it's important that everyone is on board and working together."
The team depends on suppliers for ideas to improve productivity and reduce cost. In an effort to standardize use of safety supplies, a supplier suggested a substitute glove at one plant that eventually saved $80,000 across 14 plants. To further leverage spending, the team involves manufacturers in tri-lateral negotiations with distributors.
Daken Skouson
Senior global sourcing manager
Newell Rubbermaid, Atlanta, Ga.
THE MRO BUY: $150 million, consisting of general supplies, plant property and equipment and utilities.
For Newell Rubbermaid, working as one company and leveraging buying is the first prong of a two-prong sourcing strategy. The other is collaboration.
The strategy holds for MRO. "We make sure we communicate best-in-class results or opportunities across the company and not just individual business units," Daken Skouson says. Newell Rubbermaid manufactures products for consumer brands including Rubbermaid, Sharpie, Parker and Paper Mate.
The MRO team communicates weekly by phone and meets twice a year at a company-wide MRO conference. At the conference, they discuss opportunities, talk strategy and set direction. These conferences are also an opportunity for suppliers to introduce new products.
One benefit of the sourcing strategy is reduced waste. Skouson recalls an example in which a facility had some leased forklift trucks that it did not need. Working together, the MRO team was able to find another facility that needed the trucks and transferred the lease to that location. In previous years, the forklifts would have stayed where they were until the lease ran out, while the other facility ordered new trucks for its location.
"By streamlining the business and the need for equipment at each facility we help to reduce waste within the company," says Skouson. "It's a good example of the ways we are able to collaborate, yet drive the business toward becoming one company and leverage the value we have now."
On the MRO team are: Carmen Bordogna, Kevin Daughertt, Mary Bray, Andrea Mitchell, Tom Hudak, Jim Beranek, Sarah Setzkorn, Darren McIntosh, Sharon Mulder, Cathy Sutton, Chris Smith, George Rooke, Lynn Henchey, Shannon Goodwin, Thierry Chardon, Craig Horner and Ronald Wray.
Geof Voorhees is vice president of indirect sourcing for Newell Rubbermaid. 
Eric Knoerr
Procurement manager
VF Corp., Greensboro, N.C.
THE MRO BUY: $66 million, consisting of corrugated packaging, lift trucks and batteries, machine parts, wireless RF equipment and utilities.
At VF Corp., Eric Knoerr's challenge is to build consensus across the global company.
VF owns popular brands Lee, Wrangler, The North Face and Nautica, and is organized into coalitions of these brands—jeanswear, outdoor, sportswear and imagewear (work clothes brands and official licensed sports apparel). Each operates autonomously. VF procurement services sets strategy, encourages best practices sharing, and works to leverage spending.
Knoerr, who is a mechanical engineer by training, manages strategic sourcing and strategic cost reduction projects. He's "always looking for the next opportunity, using what I know about the operation and planting seeds appropriately." In other words, Knoerr builds teams, creates process and tracks savings and performance.
Take corrugated packaging, for example. Using an e-sourcing tool from Iasta, he's held three sourcing events (domestic and global) that cut costs 5–10%.
More importantly, he takes strategy further. "As I become familiar with a category, it becomes obvious that the next step is demand-side optimization of materials and processes," he says.
Knoerr has involved two primary corrugated suppliers in a project that consists of a review of current specs and requirements, and through use of new technologies and processes, will ultimately reduce consumption. The project establishes guidelines to optimize the way corrugated packaging is used. "Corrugate Optimization" is expected to reduce packaging costs for VF by 10%.
Steve DeFord
Commodity manager, enterprise sourcing—indirect operations
Rockwell Collins, Cedar Rapids, Iowa
THE MRO BUY: $180 million, consisting of facilities services and chemicals, real estate, manufacturing supplies, logistics/freight, security and environmental services.
Purchasing's medal of excellence winner for 2005 finds that strategies it uses for core MRO items can be applied to broader categories such as logistics and security services. Result: $2.9 million in savings.
Sales at Rockwell Collins have nearly doubled since 2001, putting a strain on resources to provide MRO and indirect goods and services to its 20 locations. To meet demand of internal customers, Steve DeFord and his team take innovative approaches to reduce total cost of ownership (TCO): First they focus on sourcing reviews, then on effective tools and, finally, on compliance.
Take freight, for example. By consolidating the supply base, entering into long-term agreements and using freight payment auditing tools, the team avoided significant cost increases, and delivered 18% savings.
For janitorial, the team implemented a standard facilities services model across U.S. locations that reduced costs 19%.
The company's sourcing strategy is to create a seamless alliance with key suppliers, using the most effective and efficient procurement processes, driving compliance to an optimized supply base while minimizing TCO. "While that sounds like a mouthful, it comes down to putting good tools in place, using them with great suppliers and continually improving processes to benefit internal customers," says DeFord.
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Dieter Kirstein and Ron Robinson
Senior sourcing managers, MRO and corporate supplies and services
Harman/Becker Automotive Systems, Farmington Hills, Mich.
THE MRO BUY: $125 million, consisting of products and services not listed on a bill of material such as tool crib items (janitorial, electrical, industrial supplies, spare parts), and temp labor, security, and facilities.
Dieter Kirstein and Ron Robinson are members of a relatively new global indirect supply and procurement group led by Christopher Flum, vice president of global indirect supply and procurement. Robinson, who's responsible for purchasing MRO and corporate supplies and services (CSS) for North America and the Far East is based in Farmington Hills. Kirstein, responsible for buying MRO and CSS for Europe, is in Karlsbad, Germany.
The global indirect supply and procurement operation's definition for MRO includes services.
The team's challenge is gaining trust from key internal customers such as employees manning the tool cribs and facility leaders. "With every location buying individually, the supply base was too large and didn't have enough strategic suppliers with established contracts and fixed pricing," says Flum. "Even if several plants used the same supplier it would be common to have a different price and/or contract for each site."
The team worked to reduce the supply base, identify key strategic suppliers and negotiated agreements.
Robinson led a team to evaluate and implement a Web-based software tool to manage temporary labor. The team reduced the supply base from 20 to one, selecting a certified minority business enterprise.
Kirstein led a team which consolidated the printer spend at four sites, which were using different model copiers and printers provided by different suppliers. The team selected one supplier and negotiated an agreement that includes replacing devices with multifunction products, servicing, refilling and disposing toner and issuing electronic invoices. Results: savings of up to 90%.
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