The Future of MRO Category Management
by Zach Kayne, Insight Sourcing Group’s Maintenance, Repair, & Operations subject matter expert
In terms of a procurement category, Maintenance, Repair, and Operations (MRO) is notoriously difficult to effectively manage and accurately track spend, as well as any related savings initiatives. Many organizations are comprised of multiple operating units or locations that purchase a large volume of SKUs in a decentralized manner, based on specific needs.
For a company that decides to explore our cost-saving group purchasing program, Insight Sourcing Group performs a thorough analysis of current spend, creates a unique core item list, and works with our clients to implement across all addressable MRO products with robust project management. But what next? What comes after implementation? How can companies best capitalize on the savings identified, particularly given the fragmentation across regional or national facilities?
Since the inception of our MRO program, we have been committed to providing best in class monthly and quarterly reporting based on client-specific needs. We receive key usage data from the program partner, audits for pricing accuracies, formats to client specifications, and provides insights on purchasing habits. Our firm has continued to innovate in this space, however, and is looking towards the future of enhanced category management: user-led MRO spend and compliance tracking.
Leveraging our proprietary SpendHQ Category Management module, we are taking steps to simplify this complex process and provide our clients with an integrated experience built on our human and technological capital. Insight Sourcing Group is pleased to announce that the module is now in public “beta.”
Here are a few features within the tool and how they can help your company reduce costs and secure targeted savings.
MRO Category Overview
A quick snapshot of a client’s spend, this view allows users to quickly and accurately understand numerous details about how their MRO spend is segmented: location, pricing tier, item category, core compliance, pricing accuracy, and a number of other spend breakouts can be viewed here. This overview allows even non-MRO buyers or purchasing managers the ability to understand at a high-level how spend is being allocated.
One of the top ways clients can see further savings off of baseline pricing is to drive their spend towards core items – a metric that ISG tracks and provides. ISG’s clients not only use this insight to manage their month-to-month purchasing habits, but also to take control of annual core list management to drive deeper savings to more highly used items.
Most clients have difficulty determining if the items they’re purchasing are aligned with the contracted pricing that has been negotiated and open themselves up for potential lost savings.
ISG’s Pricing Accuracy module takes the “expected price” based off the contract pricing and aligns it with the actual price paid as reported by the supplier and denotes any differences. This tool allows for easy and quick auditing to ensure that our clients are receiving the pricing they expect on every item.