If there’s anything that we learned in the last two years, it’s that most businesses were woefully underprepared for supply chain disruptions. With the fragility of the global supply chain constantly exposed, supply chain leaders realize old strategies are no longer an option. The same mentality should should be applied to MRO and indirect materials management.
As 2022 draws to an end and 2023 waits around the corner, it’s time to explore what enterprise executives can expect in the coming year, and how their operations and procurement teams can stay ahead of these new challenges. Let’s look at a few trends that market leaders need to pay close attention to and what steps they can take to prepare themselves.
What your organization can expect this year
A threat of “stagflation”
In 2022, the rate of inflation rose to record levels that haven’t been seen since the early 1980s. In large part, these rates are the result of pandemic disruptions and economic challenges that resulted from a post-shutdown world.
The situation was exacerbated by the Russia-Ukraine war, which led to a series of raw material limitations, trade restrictions, and economic sanctions that added strain to an already fragile supply chain. Raw materials, like oil & gas, helium, wheat, and sunflower oil were primarily affected by this. This led to sourcing and production delays, having a domino effect on suppliers, vendors, and procurement managers who felt the pains of delays and increased costs.
Inflation continues to linger and there seems to be growing sentiment that it could stretch well into the upcoming fiscal calendar. The increased price hikes for raw materials coupled with the rising costs of freight and distribution means procurement leaders should tighten relationships with vendors and keep their procurement relationships strong to minimize costs and maximize profit margins.
The Federal Reserve responds to inflation by increasing interest rates intending to slow down economic growth until inflation levels reach normalcy. However, rising interest rates are bad for business because it tips a nation into recession GDP falls for several consecutive quarters.
MRO leaders need to prepare by creating an operational that strategically addresses inventory levels to reduce costs without adding additional risk. Strategic spending can keep costs low while preserving the life of high-cost machinery, a serious expenditure in times of high-interest rates and increased costs.
This is especially true when you need to expedite replacement parts in the event of production downtime. One of the greatest risks for companies is interruptions to operations in the form of unplanned downtime. Preparing for these risks with airtight procurement and maintenance procedures cuts costs by reducing downtime and eliminating the risk of rogue spending.
Maintaining digital records makes it easy to identify redundancies and spending inefficiencies. It gives procurement managers the ability to identify inconsistencies in purchasing across sites so that organization-wide policies can be easily implemented and maintained.
Increasing compliance needs
Across the globe, sustainability measures are being drafted and implemented. The Environment, Social, and Governance (ESG) criteria serve as a guideline for environmentally friendly, socially acceptable, and ethically righteous business practices that can help supply chain leaders make socially and environmentally conscientious decisions.
With ongoing studies revealing the Earth continues to warm at an alarming rate, businesses are asked to assess their operations at all levels, including their MRO strategies, to reduce their greenhouse gas emissions. This means businesses may need to make drastic changes to their current supply chain infrastructure.
For instance, businesses that deal with foreign exports and imports may be expected to use carbon-compliant ships which undergo rigorous inspection and certification processes. Furthermore, there is also an increased need for reporting and data collection to share information related to ESG compliance, such as reporting annual carbon emissions.
Integrating new data collection methods can be a massive undertaking for small operations that are reliant on legacy systems. Embracing digital transformation can make the transition smoother and will make it easier to comply with new ESG measures.
Making your supply chain resilient in the coming year
When your data is siloed, fragmented, and scattered across moving parts of an operation, it can be hard to assess what it means. This can lead to serious inefficiencies and lost opportunities.
A materials management software gathers end-to-end MRO data before consolidating it into an intuitive platform that allows you to quickly take meaningful action. Through a single solution, operations and procurement managers can gain insight into their operational spend and supply levels to make informed decisions that are based on historical data and existing inventory levels, rather than outdated practices.
This makes it easy to stay optimized and compliant in the face of upcoming change. This makes it easy to generate meaningful reports that can be shared internally and externally.
In an uncertain manufacturing landscape that’s continuously evolving, it’s necessary to make split-second decisions to navigate through a highly competitive, dynamic market. Traditional systems and mere manpower are simply not cut out for this because they lack the processing power to sort through vast amounts of data and are error-prone.
Cloud-based SaaS solutions are powered by artificial intelligence (AI) and machine learning (ML). These tools allow MRO leaders to harness the power of predictive analysis which gathers, analyzes, and stores large amounts of data to predict future needs. These smart solutions even serve up actionable recommendations that can be used within operations!
This includes anything from influencing strategic maintenance schedules, to areas where waste can be eliminated, to making procurement recommendations that avoid shipping delays.
Staying ahead of the curve often means being responsive rather than reactive, a purpose-built materials management solution can help your operation prepare for what lies ahead.
A purpose-built MRO tool is what your teamneeds for 2023
Although the last two years have been nothing short of chaotic, there are lessons we can take forward as we head into the coming year.
Leveraging the right MRO solution can streamline your supply chain processes and help you build the resilience you need to get through new challenges. Explore new solutions today and discover how an intelligent materials management platform can better prepare your company for the supply chain landscape of the future.