Published: 27 February, 2007
With purchasers and store managers singing from different hymn sheets, more often than not they are out of tune. Distribution companies try to bring harmony. PWE recently visited Brammer - a leading MRO products distributor - and discussed these issues with its UK managing director Ian Ritchie.
Picture the scene: a buyer needs to purchase three parts required by an engineer, but has an opportunity to purchase 10 at a reduced cost per item. An offer too good to refuse, he goes ahead, putting 10 in the stores and wins brownie points for securing such a good price. The engineer's happy too, because he got his parts.
But the remaining seven go unused for months, eventually becoming obsolete, and all of a sudden the purchaser"s deal ends up having cost his company money.
Based on a genuine example, the above story supports the view of some buyers offered by Brammer managing director Ian Ritchie: "There are many happy and promiscuous shoppers in UK industry who will regularly go to maybe five suppliers for the same item – particularly independents – in search of a best price.
“And if they are after a one-off item, those suppliers will probably under cut each other to get his business.”
Straightaway, with up to five suppliers to manage, the happy shopper buyer has created for himself something of an administrative and logistical minefield, one that requires careful negotiation, given the highly transactional nature of the MRO business.
At the same time, while he is not making life easy for his stores manager, the stores manager is quite happy receiving more parts to store and manage, for he, according to Ritchie, will often possess squirrel-like tendencies, collecting and hoarding many more parts than are actually needed at any one time.
Both of them – buyer and stores manager – would benefit from a little disciplining from the likes of Brammer. As the UK’s leading industrial maintenance, repair and overhaul (MRO) products distributor, it can help bring control for both of them.
The first thing it will seek to do is reduce the number of non-value adding suppliers, which, of course, cuts the time and cost involved in administering multiple suppliers of the same products and services. One staggering example of this involves a Brammer customer in the food production sector, which used to have 3000 parts suppliers. It slashed that figure to a more manageable 230, but wants to streamline further, and with Brammer’s help is right now working to get its suppliers down to just…four.
Once supplier numbers have been reduced, administrative clutter can be cut, too, and invoicing can be consolidated into a single document where customers are purchasing products for multiple sites and from different branches.
So the previously happy shopper buyer maybe having his purse strings tightened; but with savings and improved efficiency for his employer, he is adding real value to both the bottom line and the continuity of service and product supply.
Then there is a hands-on approach that will go some way to improving the lot of the stores manager, who is already seeing fewer parts entering his domain. Brammer offers 'Insite’ services, where it will set up a facility at a customer premises to manage parts inventories, standardise and rationalise MRO products, and provide technical support to the maintenance teams.
Once that inflow of parts stock – and its attendant admin – has been brought under control, it must be used efficiently, and though the stores manager – still with some squirrel in him – would no doubt like to keep hold of some non-essential parts, there is little point. Instead, Brammer offers to identify essential MRO components, which customers should hold in stock, but will then stock non-essentials itself and supply them via next day delivery.
Ian Ritchie said: “We help both buyers and store managers, who are often being pulled in different directions; the buyers by accountants seeking to maximise working capital, the store managers by engineers on the factory floor who crave parts availability to sustain crucial maintenance schedules.
“The influence on the buyers means they are often driven by cost alone, while the store manager wants and needs to hold enough of the best, fit-for-purpose parts to make available to the engineers.
“As a third party, we distributors can see both perspectives and work to help both buyers and stores managers, while at the same time stopping them pulling in different directions.”
And he believes there is a delicate balance to be struck between the two if maintenance is not to be compromised.
“An overreaction at the purchasing end of the equation could have drastic and much costlier implications: imagine parts being stripped from the stores only to be required soon after to carry out a repair to a key piece of kit. Without them there is no repair, which could mean production downtime, and that is potentially much more expensive than the cost of the parts in the first place.”
So, streamlined supply chain, reduced time and money spent on admin, lower capital cost and fewer parts to manage in stock, while having essential parts available immediately they are required, would appear to be the way to go.
Ian Ritchie believes buyers can still earn plaudits, but by working with MRO distributors to achieve the above big-picture aims, rather than seeking praise for lots of smaller ‘good deals’.
And the store managers? Ritchie comments: “They have a tough task balancing cost and need, and are the ones caught in the middle. Taking in and managing parts, making sure they’re the right ones and are available when engineers require them, is an important and demanding job.”