A US based IT company achieved significant cost efficiency in its business travel category through strategic sourcing initiative combined with...
MRO Spend Optimization
An Indian subsidiary of a global industrial manufacturing firm drastically reduced its MRO spend through an integrated solution.
Overview
The company had a relatively large MRO spend to run its operations and was looking for an integrated solution to optimize MRO spend and thereby create positive bottom-line impact.Challenges
- Fragmented supply base.
- Large number of SKUs spread over many sub-categories that included OEM spares, consumables, electro-mechanicals, safety items and office supplies.
- Decentralized MRO spend management process.
- Weak or missing business processes and limited integration across the supply chain.
Solutions
With the advent of e-commerce, especially in B2B area, an integrated MRO management solution is being embraced by leading MRO service providers and the market is getting competitive.Various work streams included –
- Spend Behavior Analysis
High-level spend analysis to identify the key areas of improvement. - Supply Market Assesment
Through a methodical supply market assessment process, competent service providers for an integrated model were identified. - Develop Sourcing Strategy
Focused sourcing strategy through segmentation at sub-category level by applying Kraljic matrix for the right treatment for each kind.
Results
Our structured and rigorous MRO spend analytics process helped enable greater spend visibility, data driven decision making, opportunity to reduce costs structurally and manage optimal inventory levels.
Key outcome of this exercise included –
- Near 10% reduction in unit costs as well as optimized inventory levels.
- A transparent pricing model that allowed visibility into best available market price for the items.
- Reduction in total number of suppliers as well as the total procurement costs.
- High availability of the items reducing supply chain risks.
Achieve dramatic cost savings, improve service levels and reduce supply risk by adopting integrated MRO management model
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