Building trust internally and with suppliers is key to success at MRO
By Susan Avery -- Purchasing, 9/30/2008 9:39:00 AM
Despite recent uncertainty of world financial markets, or perhaps because of, indirect and MRO purchasing professionals meeting in Denver this week recognize an opportunity to differentiate themselves and their companies by taking the function to a new level. MRO stands for maintenance, repair, operations.
These MRO purchasers attending the Institute for Supply Management’s 11th Annual ISM Indirect-MRO Group conference are making a transition from tactical to strategic and in so doing are aligning themselves with both internal clients and suppliers.
Nancy Q. Smith, director of strategic partnering for Exemplary Performance, provided attendees with the ammunition they need to go back to their companies and collaborate with internal customers or stakeholders. She calls them clients.
“Expectations of purchasing professionals are expanding, and you are in a unique position to drive excellence like no other function,” she said. “Purchasing needs to build trust and it all starts with gaining an understanding of the mindset of internal clients.” To do this, she suggests purchasing not only to have a good knowledge of the function, but also the company’s business, and to ask lots of questions of its internal clients.
Terry Wahlgren, director of global indirect materials and services at Eaton Corp., backed this up in his case study presentation. At Eaton, which received Purchasing’s Medal of Professional Excellence in 2007, the objective of MRO strategy is to satisfy plant sites’ material and service requirements by aligning with leveraged core competent suppliers which ultimately minimizes total cost. His team works closely with internal clients to understand business requirements on materials, tech support (personnel) and technology and then select the sourcing model that best fills them. These are integrated supply, commodity manager or digital self service (electronic catalogs.) Eaton also outsources some of its MRO and indirect purchasing.
Says Wahlgren of his team’s activities: “We try to help our internal stakeholders and customers conduct business better.”
In another case study, Steve DeFord, commodity manager, indirect operations, at Rockwell Collins, talked about the obstacles in front of purchasing professionals responsible for MRO and indirect. Two he mentioned are struggles with the perception that MRO is not strategic and purchasing from too many suppliers.
Centralizing MRO and indirect sourcing helped to realize some efficiencies at Rockwell Collins, he said, but it comes with its own set of challenges. Among these are implementation. “It all comes down to putting good tools in place, using them with great suppliers and continually improving processes to benefit internal customers,” he said. Rockwell Collins received the Medal of Excellence in 2005. DeFord is a member of Purchasing’s All-Star MRO Buy team for 2007.
Drew Schramm, senior vice president, global supply and logistics at Herman Miller opened the conference with a keynote on “How to Balance Green with Getting the green.” While Schramm spoke mostly on the topic as it relates to purchasing direct materials and design for the environment, he did offer up advice that applies to MRO and indirect sourcing. As a manufacturer of office furniture, Herman Miller receives RFPs (request for proposal) and RFQs (request for quotations) from purchasing pros with responsibility for indirect sourcing. These RFPs and RFQs all are starting to ask for more information on the company’s sustainability, he said so he reminded attendees to be careful for what they ask and added that it is important for the supplier to be financially stable first. “Commitment is expensive,” he said. “There is opportunity cost.”
At the start of the conference, Michael Smith, chairman of the ISM Indirect MRO Group, said, “These are very interesting times. Purchasing professionals are facing a lot of challenges. But improving your skills is important to your organization. This is a great time to differentiate yourself.”
Douglas Henninger, purchasing agent with the Denver Water Dept. and a past president of the National Association of Purchasing Management—Denver, added a few words and welcomed attendees to his hometown.
Joel Thomas is conference chair. For more information go to: www.indirectmro.com.
See also: 2007 MRO All Stars: All eyes look to MRO
See also: Purchasing pros build a strong case for centralizing MRO buying
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