Purchasing's 2008 MRO All Stars: And the winning teams are...
This year, Purchasing honors three groups from ITW, Graco and Owens Corning that have what it takes to be All-Star MRO buying teams.
By Susan Avery -- Purchasing, 8/14/2008
Collaboration is what it takes to win—and to be named a Purchasing All-Star MRO Buy team.
In this the seventh year that Purchasing recognizes the accomplishments of MRO purchasing professionals, the editors are honoring teams from three companies with the magazine's All-Star MRO buy team designation.
MRO stands for maintenance, repair and operations.
In the past, we selected individuals who demonstrate excellence at MRO buying through the use of innovative programs to reduce costs and/or manage relationships with suppliers for a spot on our team. The designation still represents these ideals. But this time, as readers have asked, we put the spotlight on teams from three companies: ITW, Graco and Owens Corning and their achievements in MRO purchasing.
Each team can boast of achievements that go beyond cost reductions and, even, MRO purchasing. The teams we recognize have all successfully taken on tasks new to purchasing, like materials management, and by working—collaborating—with suppliers and other departments at their companies, are adding value to the bottom line. Here are their profiles:
Illinois Tool Works (ITW), Glenview, Ill.THE TEAM: Gary Anton, vice president of strategic sourcing; Mike Kamradt, director of corporate strategic sourcing; Jeff Garing, OEM/MRO manager.
WHY IT'S A WINNER: ITW's team has consolidated the MRO supply base to 15 preferred suppliers and is bringing its MRO programs to more than 800 of the company's business units that operate in a decentralized corporate culture. Now it is expanding this strategy to include some direct spend categories.
ITW prides itself on its decentralized corporate culture and years of success give management little reason to change direction. But it recognizes that there are benefits to be gained from leveraging the purchasing power of a $16 billion manufacturing company.
It decided to start with MRO.
In keeping with Lean thinking, Gary Anton, Mike Kamradt and Jeff Garing make up the team of purchasing professionals who set to work first to consolidate the company's MRO buying with a smaller number of preferred suppliers.
"Really the heart of what we are trying to do is collect spend data and approach suppliers and say we'd like to buy as a $16 billion company," says Anton of the effort.
Working with representatives of the company's more than 800 business units, the MRO buy team selected preferred suppliers for 15 MRO product categories such as bearings and power transmission products, electrical and safety. The team selected suppliers that would be willing to work to identify cost savings opportunities within the company's plants. It also looked for suppliers capable of expanding their scope when the team was ready to take its strategy global.
"Part of the strategy obviously is piece price savings," says Kamradt. "But we're taking a different strategy than in the past. We are stepping up and asking suppliers to document for us so we can document for our stakeholders."
Without a mandate, Anton, Kamradt and Garing is selling the value of purchasing through the preferred suppliers to the business units. They are successful. While the plants see savings resulting from price discounts due to the leverage, they also benefit from having suppliers—distributors and their suppliers, the manufacturers—on site performing such activities as inventory management, product substitutions and energy audits.
Some suppliers have identified substitutions for bearings and compressors for some of the business units. Others are helping with conservation activities by working to reduce amounts of paper and chemicals used by the plants.
Now, the team is starting to look at expanding its purchasing strategy to encompass some direct (and related) buys such as fasteners and some electrical/electronic categories where it sees opportunities to reduce inventory levels.
Graco Inc., Minneapolis, Minn.THE TEAM: Vic Anderson, commodities manager for facilities and IS; Stephen Catt, capital equipment commodity manager; Rachel Stoehr, facilities supplies commodity manager; Terry Hallgren, buyer assistant; Laurie Olson, MRO strategic sourcing manager.
WHY IT'S A WINNER: The MRO sourcing team at this mid-sized company is successfully making the transition from tactical to strategic. It is implementing an e-procurement system that's streamlining internal processes, leaving the team time to build relationships with suppliers—and requisitioners within Graco.
In her organization, Laurie Olson is replicating ideals long demonstrated in the purchasing of direct materials at the fluid handling products company. They are leadership and a clear focus.
Olson is taking a commodity management approach to the buy and has structured the MRO sourcing team so that individuals are responsible for big categories of spend such as facilities services and IS (information systems), facilities supplies and capital equipment. The team also is leading the effort to implement the Oracle iProcurement system.
"We are raising awareness and beating the drum that there is more to purchasing than piece price variance," says Olson. "I've seen individuals on the team step out of their traditional roles and become players who are leading the organization in this change."
Rachel Stoehr, who has responsibility for sourcing facilities supplies, has written a manual on the use of Oracle iProcurement and conducts training for groups of individuals at Graco sites around the country. Previously, requisitioners were using a system developed internally to place orders for goods and services with MRO suppliers. The iProcurement system "punches out" to websites of suppliers with whom the team has negotiated national agreements.
Stephen Catt, who's responsible for capital equipment purchasing, took it upon himself when he arrived at Graco to meet with manufacturing engineers to learn about the equipment and their needs on the shop floor and to communicate the value purchasing adds to the sourcing process. "We've seen a shift from engineers going off and doing their own thing to their coming to us and getting us involved," he says. Not only does this help improve productivity, it also helps to reduce costs through consolidation and spare-parts purchasing.
As a mid-sized company, "our suppliers are often surprised at how aggressively we negotiate," says Vic Anderson, who has responsibility for sourcing facilities services as well as IS goods and services. "That gets reflected on our company's bottom line. A lot of it is due to what purchasing does on both the production and MRO sides. Our MRO team finds great satisfaction in helping to make Graco a successful company."
Owens Corning, Toledo, OhioTHE TEAM: Deb Strahm, plant sourcing leader, and Connie Moore, plant storeroom supervisor.
WHY IT'S A WINNER: The sourcing organization took the lead on a maintenance materials management project that's significantly improved productivity. It created policy and procedures implemented successfully at one plant and now are scheduled to be replicated at other company locations.
"The big story here is teamwork and partnership between global sourcing and the corporate maintenance functions," says Gene Zychowicz, global MRO and SAP sourcing leader at Owens Corning. In his role, Zychowicz manages a core group of two dozen MRO suppliers with whom the company has national contracts.
In 2006, Owens Corning took a new approach to its maintenance process. The first phase of its approach moved the process from reactive to predictive and preventive. The second phase which involves the plant storeroom consists of a parts receipt, kitting, staging and delivery system for the repairables and operating supplies needed to support maintenance of production equipment.
"This gets parts delivered to maintenance jobs, which saves the mechanic's time and reduces inventory and investment in working capital," says Gary Vainio, controller at the company's plant in Kansas City, Mo. "A more reliable asset base lowers our cost, services our customers better and provides a safer work environment for employees reducing upset conditions."
The basis for the project is sound materials management.
Deb Strahm and Connie Moore play a key role in this second phase at the company's plant in Kansas City, the first site to implement the new processes. Their mission: the right materials at the right place, at the right time, at the lowest possible cost.
The two women worked closely with maintenance to create a corporate policy and procedure manual that details that second phase of parts receipt, staging, kitting and delivery. No longer do plant mechanics just show up at the storeroom to hunt for a part. The change has resulted in improving productivity by approximately 12.5%, says Zychowicz.
"We chose Kansas City to build the model because plant leaders were supportive and an existing team of maintenance planners and sourcing was driving an agenda that fit well with best in class stores management," he says. "The Kansas City plant is serious about servicing its customers, maintaining its equipment and keeping the plant MRO catalog clean and functional. Deb and Connie were tireless in driving and sustaining the change that provides a template to be used at other plants."
At the same time, the plant in Kansas City completely revamped its storeroom, making it cleaner and brighter, and better organized. Other Owens Corning plants and suppliers were invited to attend a ribbon-cutting ceremony in February.
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