A strong procurement strategy is an integral part of a resilient MRO strategy. If your business isn’t equipped with the right people and tools to implement strategies to optimize the purchasing, sourcing, and distribution processes, things can quickly get out of control.
This is where empowered category managers come into play. In this article, we’ll break down how an empowered category manager can streamline their role and responsibilities to elevate their process efficiency and drive business improvement.
What is a category manager?
While category management is often efficiently managed for direct materials, when attempting to apply this strategy to MRO, spare parts, and indirect materials, the process often falls short. To see a wealth of benefits, creating an empowered category manager for MRO and indirect material who implements a strategic approach to organize procurement resources strategically can maximize productivity and minimize organizational spending.
With a deep understanding of market trends, operational needs, and supplier capabilities, category managers for MRO are tasked with keeping costs under control.
By working closely with vendors, they can negotiate pricing and contract terms to help eliminate excess spend. They’re also responsible for monitoring supplier performance so that businesses know whether or not to continue working with their vendors. Additionally, they must ensure compliance with organizational policies and procedures related to purchasing practices. Unfortunately, traditional data management methods for MRO, spare parts, and indirect materials often make these goals incredibly difficult to achieve.
How to create an efficient category management plan for MRO
Define categories and subcategories
Identify related operational needs and group them into separate categories. Having well-defined categories and their corresponding networks allows organizations to gain a deeper understanding of the parts and materials they are purchasing and their associated costs.
This information can be used to make informed decisions about sourcing, negotiate better pricing and terms with suppliers, and identify areas where they can reduce spending through inventory optimization and sharing excess materials between facilities.
Conduct a spend analysis
Without a solid understanding of where a company is spending its money, it’s hard to come up with solutions that aim to reduce costs. This makes it especially important that businesses track MRO spending and conduct spending analysis.
By analyzing spending data, organizations can identify areas where they can negotiate better prices or reduce unnecessary spending. With a clear understanding of spending patterns, organizations can make informed decisions about how to allocate their resources and prioritize their efforts for forecasted spending as well.
However, a spend analysis won’t tell you the total value of MRO inventory you already have on hand. With many companies being plagued by duplicate parts, decentralized models, and disparate systems of record, a spend analysis will only take you so far. Organizations looking to make immediate and ongoing improvements need a solution that shows existing inventory value in order to make informed spending decisions.
Conduct market research and analysis
Market research helps organizations understand current market conditions and the challenges they may present. Having insight into pricing trends, supplier capabilities, average lead times, and materials lifecycles can point procurement teams to their most viable strategy.
Armed with the right market research, procurement leaders can leverage different aspects of the procurement cycle to their advantage. For instance, it makes it more simple to find suppliers that align with their compliance requirements.
This makes it possible for procurement teams to negotiate the best prices, terms, and conditions with suppliers, leading to cost savings and higher margins.
Optimize procurement and inventory management
No strategy is perfect—there’s always room for improvement. Businesses need to evaluate the performance of their existing MRO inventory management methods to fine-tune MRO processes and ensure they are staying ahead of market trends and changes.
Use Key Performance Indicators (KPIs) to benchmark the performance and identify areas with growth potential. This offers concrete insights for implementing new strategies, though procurement teams and category managers should always be cognizant of how changes can affect other parts of a larger process.
How to make MRO category management simpler, and more efficient
Comprehensive category and inventory analysis
Traditional data collection methods simply don’t cut it in today’s increasingly complex supply chain. Manual data analysis for MRO category management is not only prone to a high degree of human error, but it also lacks the standardization needed to prevent data silos.
To mitigate this, teams are investing in materials management software that enhances procurement and operations strategies with enterprise-wide visibility to MRO inventory and spending data. It drastically reduces the time and resources required to collect and analyze data manually so you can make informed decisions from the first day. These intelligent systems can reveal hidden procurement insights and provide comprehensive reports that make it possible to efficiently manage supplier relationships.
Simplified supplier relationships
Limited supply chain visibility makes it difficult to ensure transparency and accountability. This affects not only operational efficiency but can impact supplier relationships, spending, and inventory management as well.
A purpose-built materials management solution that consolidates information into a single platform supports the development of a robust MRO strategy. This information can be easily accessible by all relevant departments, fostering collaboration and reducing errors.
Furthermore, the platform can track key supplier metrics, such as delivery times, order accuracy, and quality, allowing organizations to quickly identify and respond to supplier performance issues.
Optimization that lasts
To stay ahead of the game, organizations must be able to increase volumes of data and transactions without sacrificing efficiency or accuracy. However, manual systems not only impede progress when it comes to achieving excellence, but they’re also slow to adapt to a continuously evolving supply chain.
A solution that’s backed by artificial intelligence (AI) and machine learning (ML) can help organizations build on top of optimization that already exists. By using predictive analysis, these powerful algorithms can analyze historical data and simulate accurate models that predict future trends.
For instance, past occurrences of production downtime can be analyzed to formulate optimal maintenance schedules and spare part procurement cycles. Smart, actionable, recommendations arm market leaders with the tools they need to make informed business decisions.
Bolster your MRO management strategy with innovative tools
Empowering your procurement and operations leaders with MRO optimization tools is vital to your organization’s long-term success. To stay ahead, your company should invest in a solution that streamlines the entire MRO management process so that you always have the right materials where you need them while only carrying the right-sized amount of inventory.
Using an all-in-one solution that improves supply visibility, facilitates effective collaboration with suppliers, and provides actionable insights and recommendations gives both operations and procurement department outcomes they need. Learn more about MRO and material intelligence today..