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    Future-Proofing The MRO Supply Chain

    Procurement professionals are under enormous pressure like never before. Supply chains have been disrupted and suppliers have lost partners. So how can you protect your MRO supply chain against future shocks?

    The COVID-19 pandemic has proven to be a supply chain nightmare that no one saw coming. Closed borders and skyrocketing transportation costs during the pandemic have forced procurement professionals to rethink many of the assumptions that have previously been the driving force of the supply chain.

    Take “Just-in-time” deliveries for example. The pandemic has mercilessly exposed this method's dependence on supplier reliability. At the same time, the economic effect of the crisis led to the accumulation of buffer stocks - a luxury that few can afford.

    So how can we protect ourselves against the next supply chain crisis?

    Firstly, you must not succumb to the temptation to diversify your MRO (Maintenance, Repair and Operations) materials supplier base. The key approach is to use our core group of suppliers whom we trust and from whom we can count on delivery certainty. Supplier rationalization was the most common procurement efficiency strategy mentioned in the indirect procurement report we worked on with the Chartered Institute of Procurement & Supply (CIPS) during the pandemic.

    “There is clear pressure to rationalize suppliers. It's a good approach and it should be pursued, although I honestly think we should be thinking about supply chain resilience rather than rationalization at the moment, says Dr John Glen, CIPS economist and visiting professor at Cranfield School of Management.

    “As in a long-term project, over the next 6-18 months we should manage resilience and risk in the supply chain and leave rationalization for later.”

    Measure Your Intentions

    When MRO supply chains are under pressure, it is important to act quickly to continue production. It is also important to consider the consequences of emergency actions, says David Loseby, director of procurement at Rolls-Royce.

    “When something like a pandemic happens, when you take action you have to be sure that it won't cause far-reaching damage. What can I do to stay transparent to the organization for a while? – he asks.

    Put simply, has spending increased or decreased? There is always a risk of making a mistake, he warns.

    Loseby says you can't just switch to another supplier, you need to develop a flexible supply chain that can respond to changing circumstances. “The reality is that we cannot hold millions of pounds worth of buffer stock,” he says.Glen and Loseby agree that performance and resilience don't have to be at odds. Using eProcurement and Vendor Managed Inventory (VMI) solutions from a trusted and stable procurement partner can help ensure future supply chain benefits.

    It is a mistake to think that supply chain resilience depends solely on what enters the company. You can't effectively plan supplies in your procurement process if you don't have visibility into what's being consumed.“Companies with multiple plants tend to have little inventory visibility,” says Alex Davies, director of customer order solutions at RS.

    “It's all about data quality,” he says. “It's about what systems you use and how you engage with suppliers. If you have a fragmented supply base and multiple employees are involved in sourcing MRO, the quality of the data you access will most likely be poor.“If you take a more mature approach and team up with a provider like RS, you'll find that you can have access to much more valuable data and solutions to help you maintain adequate inventory levels.”

    Sustainable Procurement

    While cost reduction remains a top priority, the best strategies companies use for MRO inventory are sustainable and ethical procurement and continuity planning.

    “To achieve these goals, we need to work with trusted partners working towards common goals. It is important that procurement includes a sustainability program and an action plan that includes compliance with the policies, processes and corporate governance that will bring this program to life,” says Kate Davies, director of Global Commercial Services.

    “Ethical sourcing of raw materials is increasingly important for company management boards, shareholders and customers alike,” he says. “It is important to recognize sourcing as a key driver of change, challenging the status quo and following ethical sourcing principles in business sourcing processes.

    ”Very few procurement departments can benefit from additional staff dedicated to managing sustainability in the supply chain. Therefore, it is worth saving time by using solutions such as VMI and eProcurement, says Alex Davies.

    All this leads to a simple conclusion: supply chain resilience depends on the quality, reliability and knowledge of suppliers. That's why it's so important to work with the right MRO supplier to ensure the resilience of your supply chain.