The bucks stop at MRO
Savings in direct materials are important, but they're not enough in a slowing economy. Leading companies are now focusing on their MRO spend. Here is how Dow Chemical, Hallmark Cards and Owens Corning are making their MRO buy a competitive advantage.
By Susan Avery -- Purchasing, 3/1/2007 7:00:00 AM
MRO purchasing has taken on new importance in today's economy.
Having squeezed many costs out of their direct-materials spend, companies now are turning to the MRO buy for the savings that can lead to competitive advantage.
In his work with purchasing professionals and suppliers, Tim Underhill, of Strategic Business Solutions, says both parties are working together to improve efficiency. "They want to drive costs out of their operations and are looking to MRO as an area where they think there are some tremendous opportunities."
Long seen as labor intensive and mired in paper, MRO purchasing has increasingly become more strategic. It's an evolution that started in the 1990s, when many corporations deployed e-procurement systems and purchasing card programs that significantly streamlined processes and generated data for spend-analysis initiatives. With the data in hand, purchasing organizations then:
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Centralized the MRO buy at the corporate level,
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Consolidated MRO buying across locations in North America, and, in some cases, around the world,
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Took a commodity management approach to the buy,
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Reduced the supply base and entered into more regional and national agreements,
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Looked to suppliers for such value-added services as product substitution, inventory management and technical expertise.
In so doing, MRO buyers have gained new stature. They're extending their purchasing strategies to locations overseas. And they've attracted the attention of professional recruiters, with some now taking positions as vice presidents of purchasing or supply management.
Three leading companies—Dow Chemical, Hallmark Cards and Owens Corning—have made many of these moves and now consider their MRO purchasing operation a competitive advantage. Here's a look at some of the things they are doing with MRO and results they're experiencing.
Dow Chemical: MRO strategy steering teams share forecasts
Hallmark Cards:
Suppliers have interest in improving the business
Owens Corning:
MRO suppliers help uncover hidden factory
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