In challenging economic times, companies look for new ways to control costs and improve efficiency. To address these issues, manufacturers are taking a hard, strategic look at maintenance, repair and operations (MRO) supply. Commonly known as "indirect materials," MRO supply includes a vast array of items that support internal operations, ranging from safety gloves and office supplies to spare parts for mission-critical industrial equipment and tooling.
In a new white paper, Driving Efficiencies in the Indirect Supply Chain, Exel explains how manufacturers can un-bundle outsourced services to implement lean processes that provide better visibility and promote continuous improvement in every aspect of the MRO supply chain.
Companies traditionally have focused cost-cutting efforts on direct materials and capital spending rather than MRO supplies, which have been viewed as low-cost items with little potential for savings. However, there is growing recognition that MRO represents a substantial expense for U.S. manufacturers - about $125bn annually, according to a 2008 study by Frank Lynn & Associates. For a typical manufacturer, MRO expenses represent up to 16 percent of the cost of goods - but 62 percent of total requisitions. MRO supply is also a complex process, with thousands of stock-keeping units, fluctuating demand and hundreds of individual suppliers, often managed at a local or site level rather than corporate procurement. Given the large volume of transactions, unpredictable demand and decentralized management, the MRO supply chain has long been ripe or efficiency and cost savings improvements.
This white paper is designed to help decision-makers in a wide range of industries understand how expertise-driven MRO outsource models reduce cost and complexity - while putting the control and ability to drive further efficiencies back in the hands of the customer.
