October 26 - 27, 2020
The CPO's Corner
To what extent should I be focused on automating the MRO process?
It’s tempting to jump on the automation bandwagon, isn’t it? All across procurement, we’re focused on improving the speed and reducing the complexity of the purchase-to-pay cycle. We started some years ago by creating and maintaining catalogs internally for many frequently purchased items, then we simplified even further by creating links to supplier sites, shifting the burden of updates and maintenance to the suppliers.
Now there are even options like AmazonBusiness, which touts quick delivery, integration with legacy purchasing systems, and millions of items available at the click of a mouse. Pretty tempting. And possibly the right decision for many of the MRO items your company purchases.
But before plunging too far into automation, procurement professionals need to consider the interaction and complexity of the items bring purchased. Although a fast, low cost process may sound great, automation comes with a price. And that price is often expertise.
What happens when you’re not sure exactly which item to buy? When you’re charged with purchasing an MRO item outside your range of expertise? When you’ve looked at the specs and there are multiple options, each with pros and cons.
That’s when you need to have a relationship with someone at your MRO suppliers who can offer guidance. A trusted advisor or two who come to learn your company’s needs, strengths and weaknesses. The more interplay there is between items – or the less we personally understand about the technical aspects of what we are buying - the more reliance we should have on them. And that’s a hard thing to get when you’re talking to a help desk.
So the suggestion is to consider that there is likely a bimodal characteristic to your spend, with some items lending themselves easily to automation and others where the needs for technical expertise is too high. Repetitive spend where minimal variation is required? Automate. Technical expertise and support is required? Focus there on building the relationship. Its unlikely that your solution is “One size fits all”.
Joanna Martinez is a global procurement / supply chain leader and the founder of Supply Chain Advisors LLC. She is a frequent lecturer and blogger on procurement topics and also provides coaching, strategy development, training, and cost reduction opportunity assessment. Her clients range from Fortune 100 companies to technology startups.
As either regional or global CPO, Joanna has led transformation initiatives for companies in many different sectors: among them Johnson & Johnson (consumer products), Diageo (beverage), AllianceBernstein LP (financial services) and Cushman & Wakefield (real estate services, property management). She has also held client-facing roles, effectively giving her the opportunity to “sit on both sides of the table”.