Buyers break the mold

As daily challenges build, MRO buyers are changing the way they work. Many are starting to rely more on their suppliers for help—with cost, service and inventory.

By Susan Avery -- Purchasing, 3/2/2006

Talk to an MRO buyer. Never in the history of the profession has the job changed as much as it has in the past five years. Under continuing cost pressures, purchasers with responsibility for maintenance, repair and operations (MRO) buying are doing more with less. They are thinking strategically now—more of them manage commodities or categories of spending that for some buyers include all indirect purchasing. They are leveraging the spend across plants located throughout North America.

And, they are relying more than ever on their suppliers.

"At no time has purchasing's relationship with both its manufacturer and distributor suppliers been more critical," says Eugene F. Brieck, director of purchasing, Ash Grove Cement Co., Overland Park, Kans., and a member of Purchasing magazine's MRO All Star Buyer team in 2004. Brieck's words nicely sum up the thoughts of purchasing professionals with responsibility for the MRO buy responding to a recent Purchasing poll.

Among other findings from the poll: Current business conditions are strong so MRO buyers are dealing with longer leadtimes—and, in some cases, product shortages. Relieving this headache, of course, is in their job descriptions: They simply cannot let a manufacturing or assembly line go down. But, they also can't let inventory levels creep up. Add to that dilemma the matter of rising energy prices, and the conclusion is that MRO buyers today probably face more challenges than ever before.

Technology is helping—somewhat. More MRO buyers are using e-auctions, e-catalogs and other online tools daily. Still, most MRO buyers would like to add one or two more skilled purchasing professionals to their staffs.

Brieck is relying on his strategic approach with his suppliers to help him manage the increasing complexity of his job. He manages national agreements for Ash Grove Cement's nine cement-plant operations in the U.S. The privately held company produces more than eight million tons of cement annually making it the fifth largest cement manufacturer in North America. Brieck purchases MRO items such as power transmission products (electric motors, gear drives, engineered chain, belts, bearings and hydraulics) both through distribution and direct from the manufacturer. He also buys raw materials such as clay, silica and gypsum; heavy equipment such as trucks, loaders and excavators and off-road rubber tires. In addition, he manages the company's coal purchase and the rail transportation for plants receiving coal by train.

To keep a check on prices, he's just increased the frequency of his price reviews from quarterly to monthly. His biggest success recently is a new national agreement with a manufacturer of electric motors that, as part of the company's Maintenance Excellence Process (MEP), is helping to reduce maintenance costs per ton of cement produced. MEP, which aligns with Lean Manufacturing techniques, is one way Ash Grove Cement distinguishes itself from its competition in an industry filled with big plants outfitted with lots of equipment that can breakdown, and where there is little product differentiation.

For the electric motor buy, Brieck led a team of maintenance and engineering professionals that spent a year hammering out requirements and evaluating suppliers, a process that included site visits to manufacturing facilities in the U.S. and Mexico.

Typically Brieck surveys plant maintenance personnel first to determine the brand with the widest appeal. "We then try to select the top two or three players in the industry to approach for an agreement in order to support our decision to recommend one over the other," he says. These are not purely price negotiations. Benefits include buyback of dated and obsolete product, extended warranty, assured availability of goods, start-up support, technical assistance, local distributor inventory and 24/7 service. "We return all benefits resulting from consolidation to the plants for credit to their general ledger."

After evaluating suppliers, he negotiated a national agreement with a motor manufacturer for premium efficiency IEEE 841 electric motors for use in Ash Grove Cement's nine plants and to equip a new plant the company is planning to build in Southern Nevada. Brieck is purchasing the 14,000 NEMA-frame electric motors through three distributors that help to resolve installation issues at the plants as well as problems with expired warranties. What's more, use of the new motors is helping to reduce the company's cost of electricity to power the plants.

Looking at the big picture, Brieck's responses to Purchasing's poll dovetail with findings of extensive research Grainger conducted recently in developing a new program to help MRO buyers with unplanned MRO purchases. From conversations with purchasing professionals at big companies nationwide, Grainger finds that "as customers better understand MRO, they are changing their buying practices to better leverage dollars spent," says Deb Oler, vice president of sales and marketing operations at W.W. Grainger, in Lake Forest, Ill. "By having fewer sources to go to they are helping improve productivity and efficiency. If they find a supplier that can get product to them quickly they're also helping reduce inventory levels."