Maintenance faces boom
The pressure is always on to save money on MRO expenses. Did you know that unplanned buying accounts for 40-45% of a typical organization's overall purchases? Or that maintenance and repair purchases ...
February 1, 2000 | By MRO Magazine
The pressure is always on to save money on MRO expenses. Did you know that unplanned buying accounts for 40-45% of a typical organization’s overall purchases? Or that maintenance and repair purchases alone account for more than 80% of all non-production purchases in capital-asset-intensive manufacturing?
These figures, compiled by Aberdeen Group Inc., a Boston research firm, ratify the importance of using an organized strategy for managing and controlling MRO purchases. Even though many companies have contract supply arrangements with industrial distributors, spot buys are often made from various sources. This off-contract, “maverick” buying accounts for 30% of all MRO expenditures at most organizations, reports Aberdeen. Such spending reduces the ability to effectively monitor expenditures, and severely limits opportunities to access pre-negotiated prices or volume discounts, or to establish leverage for future negotiations with suppliers.
The future for both planned and spot MRO purchases, predicts Aberdeen, is in automated Internet procurement solutions. Two key reasons are lower cost and faster fulfillment. On average, it costs $107 to process an MRO purchase order using traditional, paper-based methods. The average cycle time for an MRO purchase–from order request to fulfillment–is 7.3 days. Internet procurement, meanwhile, provides a 5-10% reduction in the price of materials and services, a reduction of $30 per order requisition ($77 vs. $107), a purchase and fulfillment cycle of just two days (vs. 7.3), and additional reductions in inventory costs ranging from 25% to 50%. These benefits are hard to ignore, yet our own research has shown that maintenance professionals in Canada have been slow to jump on the Internet–at work or home. One reason is lack of time, and another is that it’s often difficult in the work environment to find access to a computer linked to the outside world of the Internet.
But with increasing supplier interest in providing goods and services via Internet ordering, and with the cost and shipment benefits available, it’s time those working in maintenance took a more serious interest in learning to use the Internet.
Word has it that when maintenance people go home, many shut off all thoughts of work. Too many problems. Too many furrowed brows. Hard thinking. Tough tinkering. Challenging problem solving. After a day (or night) of dealing with things that weren’t working properly, you just want to escape thoughts of problems that can cost your company tens of thousands of dollars every time some piece of equipment goes awry.
Yet more and more, there’s evidence that the future maintenance work day won’t end when the shift whistle blows. There’s too much demand for better practices, too much new technology, too little staff, not enough training, and never enough money. Well, you may not be able to solve that last problem. But you can work on the others by investing a little more time.
“More time, you say? No thanks!” I can hear it now. Yet the Internet provides a way to improve your knowledge and expertise in a time-efficient manner. Today’s Internet technology gives you the resources to look things up from home, from your local library, or from almost anywhere there’s a computer and a phone line.
Not only should you be thinking about the future of MRO procurement using the Internet, you should be aware of the ways you can improve your knowledge through it. There are more and more maintenance information resources available on the Internet each month, and not just from magazines like ours (www.mromagazine.com). Suppliers, consultants and associations are among those that are making their knowledge and resources available at the click of a mouse.
These are the reasons you should get on-line now, one way or another.
Bill Roebuck, Editor
NOTE TO READERS: This issue introduces our new Mobile Maintenance and FutureTech series, which cover remote repair issues and explain the latest technology and state-of-the-art equipment from a maintenance perspective. Our story about wearable computers on page 18 launches the FutureTech section, while the profile of Hibernia maintenance operations (page 14) gives a great start to our remote and mobile themes.
Bill Roebuck, Editor
Your comments and ideas are always welcome. You can reach me or by phone at (416) 442-2089. Because many of you work shifts or are often out on the job, let me know the best time of day to get back to you, along with your name and number, if you leave a voice-mail message. You also can send me a fax at (416) 442-2077, or an e-mail message at firstname.lastname@example.org. E-mail is an effective way to communicate outside the constraints of differing working hours and reduces the frustration of telephone tag. The mailing address for regular letters is 1450 Don Mills Rd., Don Mills, ON M3B 2X7.