PURCHASING magazine has selected its MRO champions for 2005.

And the consensus is: MRO purchasers at companies across the country face roughly the same challenge. That is, to control costs while maintaining supply in an environment of almost constant change.

Yet an environment of change provides MRO buyers with great opportunity to promote and champion their profession. Recently, Ron Pittington created an MRO purchasing operation from scratch at his company, Pilgrim's Pride, while Craig Culver at Woodward Governor leads a newly formed team of purchasing professionals dedicated to applying strategic sourcing to an indirect buy that was largely unmanaged. Jason P. Trevison of BMW Manufacturing and Les Long of Whayne Supply each created electronic purchasing systems at their companies.

The list goes on.

Each of PURCHASING's MRO champions was nominated by his or her manager or colleagues for their use of innovative programs to rein in spending on MRO goods and services and/or their success at managing relationships with suppliers. PURCHASING editors selected the champions based on recent accomplishments. MRO stands for maintenance, repair and operations, the goods and services that keep an operation running.

In previous years, PURCHASING magazine honored the achievements of purchasing professionals with responsibility for the MRO buy by naming them to an All-Star team. Prior All-Star MRO buy team members include purchasing professionals from such companies as Sonoco Products, Valmont Industries, United Airlines, BorgWarner, Motorola, Intel, Tenneco Automotive, Xerox, the U.S. Postal Service, Kraft Foods, Hallmark Cards, Miller Brewing, Dana Corp. and Lockheed Martin. These stories can be found in the magazine's archives at www.purchasing.com.

PURCHASING's MRO champions for 2005 are:

• Craig Culver, global commodity manager, Woodward Governor, Fort Collins, Colo. Woodward designs, manufactures and services energy control systems for aircraft engines, turbines and other power equipment.
• David A. Fry, senior operations procurement manager, Kellogg Co., Battle Creek, Mich. Kellogg produces cereal and convenience foods.
• Cynthia Gross, strategic sourcing manager, indirect, Boston Scientific, a medical device manufacturer based in Natick, Mass.
• Les Long, manager, purchasing & office services, Whayne Supply Co., a Caterpillar heavy equipment dealer in Louisville, Ky.
• Chris Martus, director, MRO and capital buying, MeadWestvaco Corp., a packaging and paper company in Richmond, Va.
• Ron Pittington, director of procurement-mechanical, Pilgrim's Pride Corp., poultry processors in Pittsburg, Texas.
• Brian Ross, MRO/chemicals commodity manager, United Technologies Corp., Hartford, Conn. UTC provides high technology products and support services to the building and aerospace industries including jet engines, electronic controls, elevators, air conditioners, fuel cells and helicopters.
• Jason P. Trevison, MRO buyer, BMW Manufacturing Co., Spartanburg, S.C. The only BMW auto plant in the U.S. makes the Z4 Roadster and the X5 sports activity vehicle.

What makes an MRO purchasing champion?

The purchasers selected by PURCHASING magazine have what it takes—knowledge, leadership skills and experience—to meet the challenges faced every day by those in the profession: consolidating the supply base, streamlining processes, managing inventory, to name just a few.

MRO champions are good communicators and team players. They know how to get things done. They are innovative. And, perhaps more important, the MRO champions recognize that in order for their companies to meet their customers' expectations, purchasing must be able to not only manage but optimize relationships with suppliers. "We cannot achieve our goals without fully utilizing the capabilities of our suppliers," says Chris Martus, director of MRO and capital buying, MeadWestvaco, Richmond, Va. "They must be the technical experts and on the forefront of new products, applications or systems that impact their products and ours as well at MeadWestvaco."

His strategy is to consolidate MRO purchasing with a small group of select suppliers to better leverage spending, control consumption and manage transaction processes. More than 40% of the company's $250 million MRO and packaging spend is with eight industrial distributors. Now, he has better visibility and control over MRO consumption and spending. "By working with a smaller, more focused group of suppliers we are able to not only better leverage our spending, but speed standardization, reduce inventory, optimize our supply chains, improve our systems, outsource activities, reduce waste or enact any number of other improvement programs," he says.

Pilgrim's Pride's Pittington built an MRO purchasing department from the ground up; he was given the task as his company was integrating the buying operation of the ConAgra chicken division. He also recognizes that suppliers can and indeed do contribute to a company's bottom line.

"We are evaluating suppliers that want to partner with us and share synergies between our two companies," says Pittington. "We are looking for suppliers willing to share information with us. We need to understand their business and they need to understand ours, communicate with us, make recommendations and select the best solution."

Based on his 35 years of poultry industry purchasing experience, Pittington created spend categories for Pilgrim's Pride by evaluating the MRO buy in terms of size and scalability. He hired category managers and negotiated national agreements with preferred suppliers. Purchasing specialists (a new post) now have responsibility for implementing the agreements at the company's 180 locations across the U.S. and Mexico.

In the past 18 months, Pittington and his group have consolidated spending of and negotiated national agreements for several categories of MRO spending, including bearings and power transmission products.

Craig Culver, global commodity manager for logistics and indirect materials and services, Woodward Governor Company, and his team exemplify the meaning of the words Purchasing MRO champion. His team consists of Linda Kotsides, supplier manager, indirect materials & services; Masha Roberts, supplier manager, indirect materials & services; Mary Chris Arnesen, global trade compliance manager; Dennis Hartley, supplier manager, logistics; and Sarah Bartmann, buyer, indirect materials & services. Woodward designs, manufactures and services energy control components and systems for industrial and aircraft engines, turbines and other power equipment.

Implementing a program with a global vision across all locations is the challenge facing Culver and his team. Others familiar to many MRO buyers include getting end user buy-in and cooperation and lack of spend data visibility.

Culver and his team manage the indirect buy by commodity. Since 2003, they have strategically sourced more than half of Woodward's $100 million indirect spend, including temporary help, logistics, travel, office equipment and supplies, and IT and telecom; reduced the supplier base and exceeded cost-reduction goals of both years. For example, when a contract for bulk carbon dioxide at the company's Rockford, Ill., site was up for renewal, the team quoted the business to national and regional suppliers. It awarded the business to a regional company that had recently built a carbon dioxide plant in the area and realized savings of $50,000, 50% of the previous 12-month spend.

Suppliers have been key in achieving these goals, says Culver. "Strategic suppliers are closely involved in ongoing commodity management. This enables them to help monitor compliance, evaluate for ongoing cost savings and deliver to the requirements."

Likewise, Kellogg's Fry also understands the value of a supplier relationship. With 27 years of purchasing experience, he knows that a buyer can't continually beat up a supplier for a lower price. "We can't ask suppliers to cut their margins," he says. "That's the wrong way to go. We have to come up with different ways to accomplish the same end result at a lower cost structure."

As such, Kellogg continues to increase its leverage with suppliers. For its plants, the purchasing operation has an agreement with an integrated supply provider that it has decided at this point not to extend to plants Kellogg recently acquired from Keebler. "When it makes sense, I negotiate agreements with suppliers for all the plants," Fry says.

While the producer of cereal and convenience foods has a national agreement with a lift truck manufacturer, through which it leases the vehicles, each plant was managing maintenance and service on its own, as recently as 18 months ago. Fry chose to lease the vehicles because the lease agreement has a pre-determined life cycle for a piece of equipment.

"The lease agreement was only 50% of the total cost equation," says Fry who worked to leverage the maintenance of Kellogg's fleet of lift trucks. He selected a national provider of lift truck maintenance to service the vehicles at the company's plants and distribution centers. He then did the same for the company's lift truck consumables-tires, lights and other parts. "Now we have a complete package to leverage the total cost of managing a fleet of lift trucks," says Fry, whose been told by his supplier and some dealers that there are very few companies that have looked at the buy from this perspective and tied it all together.

Cynthia Gross, strategic sourcing manager, indirect, leads MRO initiatives aimed at reducing the supplier base and total cost of ownership while maintaining or improving service levels at Boston Scientific, Natick, Mass. She's on a team that develops sourcing strategies across the company's 22 manufacturing sites in three countries. As part of her job, she identifies a single source for MRO items (by country) and works together to consolidate as many purchases as possible with it.

In Ireland, for instance, the company's business partner for MRO supplies is on track in the first year of the program to reach $1 million spend from almost zero the year before, with a savings of $150,000 (15%). "The business partner placed onsite representatives in two of the larger sites to do requisition reviews and provide continued support as we drive consolidation and compliance by reducing the supplier base by more than 200 suppliers to one," says Gross. "Other efforts allow us to still buy from valued manufacturers through this source, reducing our purchase orders, receipts, and invoices."

At United Technologies Corp. in Hartford, Conn., Brian Ross, MRO/chemicals commodity manager, leads a cross-divisional initiative called UT500 to drive $55 million in savings in the factory supplies commodity through process, policy and sourcing strategies in North America, Europe and Asia.

Ross's team is on track towards meeting its goal. The team is managing a formal cost reduction program with suppliers that allows for supplier reps to present cost savings ideas (price, delivery, process savings, inventory reduction, energy savings) to the site which is dispositioned (approved and implemented or rejected) and rolled up to a corporate savings value. These ideas are shared across the corporation to enable standardization and adoption of best practices.

The team also manages an inventory reduction program that resulted in $5 million in cash flow savings for UTC through the use of supplier provided e-platforms. Reductions helped promote the elimination of significant square footage dedicated to non-product materials. This focus also has increased inventory visibility across facilities, resulting in several instances in which downtime was eliminated or minimized at both UTC's manufacturing facilities as well its suppliers'.

PURCHASING magazine selected Jason P. Trevison, MRO buyer, BMW Manufacturing Co. LLC, Spartanburg, S.C., as a member of its team of MRO champions for his use of innovative programs to streamline the purchasing process for the automaker's only U.S. plant.

"Before we in BMW's technical purchasing department could spend more time on strategic sourcing and supply management activities, we needed to automate processes," says Trevison.

The system works like this: a buyer generates an Excel spreadsheet of spare parts from the company's ERP system (SAP) and e-mails it to the appropriate supplier. The supplier enters pricing and leadtime and e-mails it back to the buyer. After analysis and negotiations, the buyer uploads the spreadsheet into the ERP system which updates an existing scheduling agreement. An MRP system batches requirements and emails a purchase order in PDF format or PO via EDI to the supplier. The supplier confirms receipt using an online PO confirmation system via the BMW supplier website. If the supplier misses the planned delivery date, the system sends an auto expeditor e-mail reminder to the supplier requesting delivery status.

Similarly, Les Long, manager of purchasing & office services, Whayne Supply, Louisville, Ky., was looking to reduce costs associated with the MRO purchasing process-and to discourage maverick buying. He and his team created an electronic catalog using the Lotus Notes e-mail system. The shop-supplies catalog contains more than 4,000 items frequently purchased by mechanics at Whayne Supply's 18 locations. Whayne Supply is a Caterpillar heavy equipment dealer.

In the catalog, an approved standards section lists items evaluated by a Service Supplies Product Evaluation team formed as a result of a Six Sigma project to improve stocking of MRO supplies at Whayne Supply. "In trying to combat maverick spend we had heard from our mechanics that many of the items in stock did not perform the jobs as well as items they could purchase locally," says Long. "In our evaluations, we found this to be surprisingly true. Now, we only set up items in stock which the mechanics have approved."

Long and his team have trained buyers at the company's locations how to use the catalog and also how to help source items from new suppliers. "We have included in our Lotus Notes shop supplies catalog a way for these buyers to suggest products for testing," he says. "This way, they don't take it upon themselves to order items and do their own evaluations. The benefit of having spread the purchasing authority to branch areas is making them part of the solution and not part of the problem."