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RS reveals sustainable procurement and asset performance are top business challenges for MRO procurement

RS Report

The top three business challenges for MRO procurement professionals are sustainable and ethical procurement (32 per cent), improving asset performance (32 per cent) and coping with reduced operational budgets (30 per cent), according to a new report from RS.

The leading high service level global supplier of industrial components and tools has joined forces with the Chartered Institute of Procurement & Supply (CIPS) to deliver its 2024 Indirect Procurement Report titled ‘Maintaining Focus’.

Surveying global procurement professionals from the manufacturing, education, government/public sector, facilities management, transportation, aerospace & defence, and energy sectors, the seventh annual report saw a record number of responses from UK and Ireland respondents, plus a shift to a younger demographic.

The findings show pressure to reduce inventory costs (28 per cent) and the increased cost of indirect materials such as MRO (27 per cent) are also significant concerns, while 29 per cent of respondents cited their biggest issue over the next 12 months as attracting and retaining talent.

Other key concerns over the course of the next year include inflation and higher costs (37 per cent), plus global political uncertainty (20 per cent). 

Elsewhere, ESG is rising up the agenda for procurement professionals, with just over half (52 per cent) saying ESG is important to the delivery of their company strategy and nearly three-quarters of respondents (71 per cent) stating they consider ESG criteria as either “important” or “very important” when it comes to selecting suppliers, products and services.

Interestingly, 82 per cent of respondents said they would be happy to pay a premium for more sustainable products, which Helen Alder, head of knowledge & learning development at CIPS said is “an indicator of a greater willingness to think about things differently and take a longer-term view.”

She added, “The pressure to deliver cost savings is still great, and with inflation and other challenges such as security of supply and geopolitical tensions, that’s causing a slight dichotomy.

“The whole ethical sustainable piece is the long-term plan but there’s been a bit of shorter upheaval.”

When it comes to other challenges for those working in procurement, just under a quarter (23 per cent) say a lack of investment in technology to control purchasing is a challenge, while almost one in five (18 per cent) point to a lack of spend visibility.

Downtime also remains an ongoing issue for organisations, with main drivers over the next 12 months expected to be lead time required to get hold of repair and maintenance parts (19 per cent), supply chain problems (16 per cent) and shrinking maintenance teams (16 per cent).

Meanwhile, the most common supplier strategy is automating transactional tasks through eProcurement which is favoured by 27 per cent of respondents, while 24 per cent are looking to increase supplier responsibilities, such as expecting them to get involved in stock management, predictive maintenance or to expand their product range.

On the topic of technology, the research paints a mixed picture around the adoption and use of technology within the procurement function.

Only 38 per cent of businesses currently use eProcurement systems when dealing with indirect MRO suppliers, while older technology is still popular with 33 per cent raising invoices with suppliers, while 29 per cent request contractors to source items themselves.

Michael Lewis, professor of operations & supply at the University of Bath School of Management said, “There is still low-hanging fruit here. It amazes me that eProcurement levels are so low. There was a time when it was only for the large players, but that’s just not true anymore. If there are firms out there that are not driving hard on eProcurement, then they’re effectively missing out on free money.

He continued, “Such organisations will almost certainly not be in a position to gain insights into other areas. If you haven’t got control over something as core to your business as where money gets spent, then how are you going to measure your modern slavery compliance or understand your carbon footprint over three or four years?”.

Commenting on the survey, Emma Botfield, managing director for the UK and Ireland at RS, said: “If there is one thing that can be said about the past few years, it’s that they have certainly been interesting. Those working in procurement have had to confront a wide range of challenges, including significant price rises and severe disruption to supply chains. At the same time, they’ve had to get to grips with the biggest issue of them all: climate change and how organisations can play their part in reducing carbon emissions across their whole supply chains.

She added, “Our seventh annual survey of the indirect procurement landscape, undertaken in partnership with CIPS, shines a light on the current state of the sector for those responsible for supplies supporting maintenance, repair & operations. This year’s survey drew a record number of responses – evidence perhaps of just how engaged and active procurement professionals are in key business issues – and it was pleasing this time around to see a significant number taking part for the first time”.

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