How Technology, Data, and AI are Changing MRO Procurement

Leaders engaged in Maintenance, Repair, and Operations (MRO) procurement understand the increasing importance of technology and innovation in their function. Digital transformation has already significantly altered the foundation of traditional procurement processes, so procurement teams must adapt to new tools and solutions to keep business running smoothly.

Naturally, staying on the cutting edge of technology in procurement can be challenging, especially when teams have grown accustomed to legacy systems. According to an article in Procurement Magazine, "A new generation of digital natives with an expectation of consumerised business technology, actionable insights, and decision-ready data. When combined with the old guard’s growing frustrations for influence and smarter ways of working, we are seeing the emergence of a new paradigm of change-makers."

Here, we'll explore the powerful influence of technology, data analytics, and artificial intelligence (AI) on the future of MRO procurement.

The Evolving Landscape of MRO Procurement

The procurement sector has entered a new era marked by technological advancements that promise greater efficiency and smarter decision-making. The MRO segment, in particular, has seen significant shifts from manual, reactive approaches to proactive, technology-driven strategies, especially in the wake of the COVID-19 pandemic.

According to one analysis, e-procurement, taking the form of digital signing, electronic invoicing, and more, has become critical.

"One of the main questions we ask our suppliers is can you support e-procurement? Electronic invoicing should be standard," says a category manager in the manufacturing sector.

Now, procurement leaders are implementing more advanced digital solutions like AI to streamline operations further. This technology holds immense promise for insights generation and task automation, but it is dependent upon an underlying base of technology that includes integrated technology as well as clean, usable data.

Technology's Impact on Streamlining MRO Procurement Processes

Modern technology, from sophisticated procurement software to IoT (Internet of Things) integration, is reshaping MRO procurement. Cloud-based platforms enable real-time collaboration across departments and facilitate the automation of routine tasks, freeing human agents to focus on more critical, strategic work.

However, technology integration remains a significant challenge, especially in organizations that depend on legacy systems. As noted in a previous article by ProcureCon, "To create a truly dynamic and advanced procurement function, it's critical to connect with the most innovative and disruptive technology trends. More so than the technology itself, procurement is looking for ways to practically deploy them to support existing business processes."

Currently, some of the most critical technologies for MRO procurement are:

• Advanced text analytics: for cleaning data sets and identifying duplicate items to reduce costs.
• Cloud technology: for real-time inventory visibility, spending transparency, and collaboration.
• Inventory analytics and forecasting tools: for anticipating needs based on historical and real-time inventory data.
• Optical character recognition (OCR) tools: for digitizing paper-based vendor contracts.
• IoT sensors: for monitoring equipment performance.
• E-procurement and business spend management (BSM) systems: for user compatibility, guided buying, analytics, contract management, and more.

Ideally, many of these tools will be integrated with the organization's suppliers. This integration allows for seamless operations, minimizing delays and resulting in cost efficiencies for the organizations.

Leveraging Data Analytics for Predictive Maintenance and Cost-Efficiency

Data analytics is one technology that has the potential to transform MRO procurement by minimizing risk. With the right integrated tools, it can transform reactive maintenance into predictive maintenance.

By analyzing historical data, patterns in equipment wear and tear can be identified, predicting failures before they occur. This foresight enables procurement leaders to schedule maintenance activities during non-peak periods, reducing downtime and associated costs.

Furthermore, data analytics provides clear insights into procurement spend, helping identify cost-saving opportunities by monitoring trends and negotiating better terms with suppliers.

Strong Data Governance is Now Critical

As data underpins almost every new technology that MRO procurement uses, data governance is crucial to maintaining operations.

Organizations must ensure that their data is clean, timely, and accurate. This may involve implementing controls to improve data quality continually, such as automation tools for cleansing or integration with other systems.

Strong data governance will inevitably support the organization’s ambitions for AI in procurement, and AI can even play a role in establishing that governance.

"Having a single source of truth also plays a part in collaborative data governance,” says Paul J. Noble in Forbes. "AI machine learning helps to establish and define clear ownership and responsibility for data. AI can also facilitate sharing KPIs and dashboards with all stakeholders to see progress towards shared goals.”

The real value of technology comes from the insights generated by analyzing data. Therefore, organizations should invest in building a strong data analytics team dedicated to generating actionable insights from its various datasets.

The Role of AI in Optimizing MRO Inventory Management

AI is at the forefront of innovation in inventory management, and its success is dependent upon the organization's underlying technologies and data capabilities.

With AI algorithms, MRO procurement can now forecast demand with higher accuracy, thus optimizing stock levels and reducing carrying costs. AI-powered tools can even detect anomalies in ordering or usage patterns, flagging potential issues before they become problematic.

Additionally, AI facilitates intelligent categorization and organization of parts, making it easier to manage. For MRO procurement, which often deals with tens of thousands of spare parts, tools, and consumables, such optimization plays a pivotal role in operational success.

Embrace Innovation for the Future of MRO Procurement

The future of MRO procurement hinges on the ability of its leaders to embrace technological advancements. By leveraging these innovations, procurement departments will not only be able to achieve their primary goals of minimizing costs and ensuring the smooth operation of their organizations but also play an increasingly strategic role in the long-term success of their companies.

To learn more about how your procurement function can leverage technology, data, and AI for success, don't miss ProcureCon MRO 2024. It's happening from October 28th to 29th at the Marriott City Center in Charlotte, North Carolina.

Download the agenda and register for the event today.