MRO buyers expand influence
Purchasing survey poll results: They are controlling areas of spend beyond MRO
By Susan Avery -- Purchasing, 3/2/2006
MRO buying professionals contacted by Purchasing recently say they have taken on more responsibility over the past five years. Ronald D. Casbon, director, indirect materials procurement, materials management, Bayer Corporate and Business Services LLC, Pittsburgh, Pa., has seen his role expand to include areas such as services.
Other buyers say their duties have changed as their companies have outsourced parts of the MRO purchase. Says one buyer in Indiana, "We now spend as much time, if not more, managing the integrators and commodity managers as we did when the work was done in-house." His company has outsourced MRO purchasing for two plants and is moving to a commodity management strategy at others. MRO buyers are thinking differently now. They are less focused on tactical activities such as writing POs and concentrating more on strategic sourcing. A procurement manager in Atlanta ticks off some of his responsibilities—spend analysis, supplier relationship management, contract development and management, compliance metrics and reporting. He spends $70 million on MRO for plants in North America that includes such commodities as chemicals, safety equipment, material handling equipment, electrical supplies and HVAC (heating, ventilation and air conditioning). Likewise, Casbon now identifies and implements a more detailed and structured sourcing strategy for Bayer’s indirect buy. "The MRO purchasing professional today must be focused on suppliers and solutions for managing internal process costs as well as the cost of goods and services," he says. William J. Kohnen, purchasing manager, Analog Devices, Santa Clara, Calif., agrees. As compared to five years ago, his responsibilities have shifted. "Having already taken out major product cost savings by leveraging spending with fewer suppliers, our focus now is on reducing process costs and improving service for our internal customers." Kohnen manages purchasing for the Western U.S., and buys capital equipment services, raw materials and MRO items that consist mainly of clean room supplies for semiconductor fabrications facilities. To make time for more strategic activities, MRO buyers are using such tools as purchasing cards to streamline processes, improve efficiency and reduce costs. Facing challenges MRO purchasers who develop sound sourcing strategy for the buy find that challenges arise as they implement new agreements with suppliers. Most MRO buyers at the corporate level responding to Purchasing’s poll say they often run into roadblocks at the plant sites. As buyers know, off-contract, or maverick buying, can cost a company thousands, if not millions, of dollars annually. "Adherence from internal customers or individual plants to corporate strategic MRO contracts remains a challenge," says Amy Mahkovic, purchasing specialist, Kennametal Inc., Latrobe, Pa. "On the other hand, MRO buyers also need to assure that a national, strategic MRO supplier provides the plants with the same level of service and delivery as they’ve been accustomed to with a more local supplier," she says. Mahkovic supports her company’s locations worldwide by helping source such MRO items as steel drums, lubricants and nuts and bolts. She also buys janitorial, security monitoring and grounds maintenance services. Kohnen of Analog Devices agrees. "The biggest challenge is keeping up with internal customers’ changing needs and integrating the requirements with our MRO strategy in the most efficient manner." Relying on suppliers Another one of MRO buyers’ biggest bugaboo is time, or the lack of it. It can, in fact, hold back buyers from bringing such benefits to their companies. Many MRO purchasing managers don’t have necessary approvals to hire more help. Enter manufacturer and distributor suppliers. Attesting to that is Glenn P. Hicks, Jr., senior buyer, MAC Equipment Inc., Kansas City, Mo. His alliances with his company’s MRO suppliers are key. In fact, they’ve helped him to meet requirements of internal customers while keeping inventory levels at bay. "Our inventory team has allowed MAC the luxury of not carrying vast amounts of slow-moving inventory by returning slow moving inventory." His company has partnered with one of the nation’s largest MRO and power transmission products distributors, instituting a kanban system and consignment program. At Sony Chemicals Corporation of America, David Staples has worked with suppliers to dramatically reduce inventory levels from more than 30 days to less than 20 days. The senior buyer has asked suppliers "to take an aggressive role in inventory management with consignment agreements and with drastically shortened leadtimes." For Bayer’s Casbon, "suppliers are very willing to work with us to identify cost drivers and take action to help us reduce costs through technology adoption or process change." Nearly all the buyers polled say they share their success with suppliers. Often, this means awarding the suppliers new or additional business. E-tools that make costs more visible and easier to manage (along with a structured sourcing process involving cross-functional participation by all business units) also have helped Casbon meet some of the challenges of his ever changing profession. Such is the case for Mahkovic at Kennametal too. She’s successfully negotiated agreements with suppliers of janitorial, grounds maintenance and other services using an e-auction tool. In fact, she sees MRO buyers making more use of such tools as time goes on, especially focusing on more continuous improvement programs and early supplier involvement in the development of new products. Others see their roles taking on a more global flavor. Still others see themselves more involved in product standardization efforts across their companies and taking more responsibility for contract compliance.
View All Blogs
Now Playing:
