Companies often consider MRO supply chain management a type of
tactical spend. When a warehouse is out of window cleaner, it goes out
to buy a new bottle. When a conveyor belt brakes, the business buys a
new ball bearing. Once a piece of equipment has reached the end of its
useful life, it’s time to buy a new one. Tactical spending, also
called tactical sourcing, focuses on the short-term requirements of a
particular part of an organization, rather than the long-term needs of
the organization as a whole.
The trouble with a tactical approach is that it often leads to waste.
For example, some organizations find themselves with a good portion of
their inventory either obsolete or more than what they need. When MRO
procurement is treated as a tactical spend, companies often find
themselves stuck using the same supplier or vendor, never having the
opportunity to explore other relationships or opportunities.
In fact, often when a part breaks or a piece of equipment needs
replaced, buyers are tempted to go with the first supplier they find
or the supplier that offers the best price. Taking that approach can
mean that a company spends too much on a product or purchases a
lower-quality product, which can increase the total cost of ownership.
Working with a procurement consultant to develop a preferred supplier
base has two major benefits in this case:
- Companies end up with a “go-to” source they know they can trust
when there is an issue.
- Businesses can take advantage of economies of scale. When different
departments or facilities at the same place use different suppliers,
they do not get the best price on products or the best services. But
if companies combine their efforts across departments, they can take
advantage of supplier discounts.
Although MRO procurement is often looked at as a type of tactical
sourcing, developing a more strategic approach to it might pay off in
the long run. Strategic sourcing assesses the current needs of an
entire organization, focusing on the total cost of ownership and
looking to make decisions that pose the least amount of risk to the
One way to develop a strategic approach to MRO procurement and supply
chain management is to work with a consulting firm. A strategic
approach to managing your MRO supply chain and procurement practices
saves you money in the long run.
By enlisting the services of Dryden Group, you will be able to remedy
a constant challenge of your operation and implement an organized,
tightly categorized system. Our expertise and recommendations also let
you centralize your procurement strategies and practices and align
them with broader, company-wide objectives. Top management will come
to recognize MRO as a value center instead of an indirect-spend