.png)
Table of Contents
Demand is ever-changing; prices keep rising; there’s a constant pressure to do more with less. In this shifting landscape, how do you maximize your MRO procurement efficiency? What can you do to achieve your desired savings?
The fact is that you can only be as efficient as your data allows. MRO master data is at the heart of all procurement process decisions, whether you realize it or not. Your data has the power to give you information on how frequently items are used, what you have in stock, how much you paid for certain items, who you’ve bought items from, and more. Of course, the data can only help you if it’s entered and maintained in a way that allows it to be usable.
If you’re hitting a wall with your data or struggling with procurement inefficiencies in general, now is the time to learn how to transform your processes and see real savings.
Struggles with Procurement
When we talk about MRO procurement, we’re talking about the process of purchasing and keeping in supply items for “maintenance, repair, and operations.”. These items can be anything that make your organization run, from belts for machinery to office and cleaning supplies. It’s your procurement team’s job to make sure the right items are purchased in the right quantity and for the best price. If that sounds like a big task, that’s because it can be!
Your procurement efficiency relies heavily on the quality of your MRO master data. If you can’t rely on your data to be accurate and reliable, you’re likely faced with some common issues:
Overspending on items
Incorrect purchase amounts
Multiple vendors used at different prices
Inaccurate purchase orders causing delays and excess costs
Inability to leverage spend
Lack of streamlined payment
Does this sound like your organization? The good news is that you’re not alone and there are steps you can take to make procurement simpler and more efficient while reducing overall costs.
What’s the Solution?
To make procurement easier on your organization, you need to start with high quality data. Most likely, your current MRO master data is lacking. Typically, organizations have issues with duplicates and missing information and generally can’t rely on the data for making informed procurement decisions. Before you can rely on your data, you need to make a dedicated effort to improve it through the process of a data cleansing and governance project.
Data cleansing is the act of standardizing data to make sure it’s accurate, consistent, and not missing any information. Essentially, your goal is to be able to easily look up items and know you have all the information—no unreadable fields or hidden duplicates.
When we talk about data cleansing, we’re typically referring to a data cleansing project that takes place to get all existing data up to necessary standards.
Data governance is the ongoing maintenance of data to make sure all additions continue to meet the standards of your master after the initial cleanse. A data cleansing and governance initiative can completely revolutionize your MRO master data, turning it into a reliable tool that can help you make money-saving decisions.
Procurement Benefits
Cleansing your data sounds well and good, but what benefits are you actually going to see relevant to procurement? How is it that you can save money and justify the cost of a new initiative?
There are several areas you’ll see marked improvements, from more accurate spend analysis to the ability to group spend to fewer spot buys. Below are some of the most beneficial outcomes you’ll see from using high-quality data.
Take advantage of spend analytics. Accurate data gives you the information you need to clearly understand where your budget has been going. For example, consider a specific part, like a belt. You may have a contract with a distributor but find through your purchasing data that you’ve bought the part from that distributor at multiple different prices instead of the contracted price. You may also see it was purchased from other distributors, perhaps for better prices. This knowledge can be used to inform your future purchases—maybe you need to fix prices with your distributor or take steps to make sure they are billing you correctly. Or maybe with this information available, you can make the choice to save money by using a different distributor.
Better spend leverage. With a reliable MRO master to reference, you can take advantage of spend analytics to understand exactly what it is you buy and the prices of the items you’ve been purchasing. That knowledge then allows you to leverage spend on future purchases to get better deals. In our example above, we imagined you were buying a belt from multiple different distributors at different prices. Now that you analyzed that information, you can go back to the distributors with a clear idea of what you need (no more additional purchases later) and the cheapest prices you’ve received to negotiate a better deal.
Product consolidation. Spend visibility and analytics means you can make smart choices like consolidating your spend with one distributor or manufacturer. Consolidating your spend can provide you with more leverage to get a better deal.
Avoid purchase order inaccuracies. Accurate purchase order descriptions are incredibly important when it comes to procurement. If your distributor receives a purchase order from you that isn’t clear, they’re going to guess at what it is you requested. If they guess wrong and ship an incorrect part, that mistake is costly. Not only do you have to pay shipping to send it back, but it also costs you in time not being able to complete maintenance using the part you actually need. Depending on the situation—for example, if you have broken machinery—this could end up costing your organization hundreds of thousands of dollars. Using accurate, reliable MRO master data, you can be sure that your purchase order population is correct and will result in the right order being sent.
Streamline procure to pay. Automated payments help make the procurement process easier by taking a manual step off your plate and ensuring payments happen on time (thereby avoiding possibilities of late fees). However, if your purchase order doesn’t match the invoice, the automatic payment won’t happen, and you have to deal with the headache of getting the payment sorted out. Quality MRO master data helps ensure that your purchase orders are consistently and accurately submitted to avoid any downstream issues.
How to Get Quality MRO Master Data
Now that you understand how transformative high-quality data can be to your organization, you’re probably wondering what a data cleansing and governance initiative entails.
Data cleansing is a multi-step process that starts with a data evaluation from the provider (such as IMA’s free evaluation!) to identify the state of your MRO master data and come up with a custom action plan. After you have figured out the details of the project, you’ll go through the following process:
Standard Operating Procedure (SOP) Creation. A defined SOP gives clear guidance so all your data will be cleansed the same way.
Data Collection. If your data is in an electronic format already, you’ll just need to follow any instructions to send it for processing. If you have inventory that is unaccounted for, you’ll want to set up an on-site data collection initiative to have it all captured.
Data Cleanse. Next, your raw data is run through software, noun-modifier pairings are assigned, data is standardized using the SOP and enhanced with populated fields and updated attributes, and classification codes are assigned. Throughout the process, duplicates and review items are identified so they can be handled as needed with additional steps like on-site item identification.
Quality Control. When everything has gone through the data cleansing process, a quality control review is completed to verify the standards of all cleansed data.
Review. After the data has passed quality control, the customer can verify that it meets expectations.
Formatting and Return. With the data approved and complete, it can be formatted to match your system’s needs and returned in its final, cleansed form to be uploaded into your data management system, such as an ERP.
With a clearly defined process and commitment to the timeline, a data cleansing initiative can run smoothly and quickly. From there, a data governance plan should be put in place to account for all data entered after the initial cleanse.
How IMA Can Help
IMA is an experienced data cleansing and governance provider with a proven track record and powerful tools to help you reach your data goals. We offer our expertise at every step to help guide your organization to the path that fits your needs. Our services are the most flexible in the industry, with options for customizations and multiple levels of governance services. No matter what you’re looking for, IMA can help you on your journey.
To get an idea of what a data project can do for you, check out our free ROI calculator or submit your data for a no-cost, no-obligation data evaluation.
The Benefit of Group Purchasing
Even with the best data, procurement can still be a daunting task on your own. How do you know you’re really getting the best deal? That’s where the concept of “group purchasing” comes in. Instead of navigating the procurement process alone, you can align yourself with other, similar purchasers for better leverage when making orders.
Procure Analytics is the leading group purchasing organization (GPO) for MRO items. With a combined spend of over $2.5 billion, Procure Analytics drives impactful price savings for their members through group purchasing organization contracts and the power of large numbers. Procure Analytics’ GPO programs are free to join and produce real results for their members. For more information, check out their website here or contact Procure Analytics here.
Contact Us
For questions or more information, you can visit our contact us page or email us at info@imaltd.com.
Comments