MRO strategy steering teams share forecasts
By Susan Avery -- Purchasing, 3/1/2007 7:00:00 AM
Global purchasing at The Dow Chemical Co. in Midland, Mich., takes a long-term strategic view of its MRO supply chain. J. Brad Gray, global purchasing director, leads the company's capital/MRO sourcing activities. He's based in Houston.
A 24-year Dow employee, Gray sees his role as working with global purchasing's internal customers in manufacturing and engineering on solutions that balance low cost with reliability, delivery and, most important, safety. These internal customers are located at more than 170 facilities around the world.
Representatives of the three groups—global purchasing, manufacturing and engineering—work together on category teams to develop specifications, analyze the market and develop sourcing strategies for capital and MRO buys. To do this the teams use a formal process developed internally called Value Based Sourcing.
"Once we agree on which sourcing strategy to pursue, we work on the contracts," says Gray. "If the buy is global, then the category team leader takes the lead on setting up the contract. If it is regional, we have a group of buyers around the world who do the same with local suppliers." Buyers with responsibility for capital and MRO around the world report to Gray.
 Gray: “We’re communicating our requirements to help suppliers be more creative.” |
Global purchasing is working to consolidate the MRO supply base, where it makes sense for both Dow and its suppliers. As Gray sees it, there is no one right, or optimum, number of suppliers. "We are constantly looking at the balance of supply and demand in each category. Then, depending upon the market, we may have to increase the number of suppliers we are purchasing from in order to meet reliability and delivery requirements of our facilities."
With leaders of some key suppliers for capital and MRO—those that provide critical items or take a large portion of the spend—Dow has formed strategy steering teams. Through these teams, purchasing shares forecasting information with the suppliers. "We're communicating our requirements five and 10 years out to help suppliers be more creative and become more involved in helping us solve our problems," says Gray.
While both Dow and its suppliers view these teams as a competitive advantage and have agreed in their contracts not to share details of their activities, Gray cites one of the company's relationships with a supplier, ABB, as an example of a strategic steering team. ABB provides Dow with a process control system for its plant operations. Previously, Dow had been using its own system. Having ABB on a strategic steering team provides opportunity "to work together to solve problems both in process control and other areas," he says.
Now Playing:
