Here's Why Your Small Business Needs an MRO Procurement Strategy
Grainger Editorial Staff
Think of all the little things that keep your business running. Machine components, fasteners, light bulbs, floor cleaner.
This catch-all category of supplies—call it maintenance, repair and operations, or MRO for short—consumes a good chunk of your budget. In fact, an article in Supply Chain Management Review estimated that MRO inventory accounts for as much as 40 percent of a company’s annual procurement budget. Replacement parts alone can account for up to 15 percent of operating expenses, especially in asset-intensive industries like power generation.
And yet, at many companies—especially small or midsize companies—MRO procurement is left to chance, or to the whims of individual managers. When the utility closet shelves are bare, someone pulls up a vendor’s website and places an order without shopping around. When a plant manager needs parts to fix a machine that’s down, he’ll make a desperate call to the manufacturer and have those parts overnighted to the plant. Seemingly innocuous, these one-off purchases and last-minute buys can add up over time.
How can you take control of this spending? Bigger companies have the manpower to put together teams of specialists to devise procurement strategy and plans for MRO materials management, but midsize companies often overlook this area to focus on other things. After all, shop towels and the like don’t seem “mission critical” to your core business. But considering how large MRO expenses are in aggregate, it only makes sense to be purposeful with your spending.
By establishing a solid MRO procurement strategy that goes beyond just avoiding stockouts, and that includes a proactive approach to product selection, negotiations, and supplier management, you can help your company improve its operating margins, reduce maintenance costs and lower the level of unscheduled downtime.
Combined, these benefits all help to your company’s bottom line and help it run smarter, better, and faster in today’s competitive business environment.
If you're thinking about MRO purchasing best practices, here are some great places to start:
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