Why Digital Transformation is So Urgent in MRO Procurement
MRO procurement is an essential part of business operations, but it can often be set aside during digital transformation efforts in favor of procurement functions deemed more critical. According to an article by engineering.com, 53% of manufacturers surveyed in a recent Gartner study haven't even been tested by a digital challenge yet, undermining their readiness for transformation.
As a result, digital transformation has become urgent in MRO procurement, as MRO leaders are missing opportunities to achieve cost savings, engage in predictive maintenance, and reduce tail spend.
Here, we'll explore why the digital transformation of MRO procurement has become so critical and what procurement departments can do to prioritize it.
Digitization Can Help Reduce Costs and Eliminate Maverick Spend
The concept of digital transformation has revolutionized the way procurement teams operate, particularly in terms of reducing tail and maverick spend.
In the past, it was challenging for procurement MRO leaders to keep track of all their expenses and discern between necessary and unnecessary costs. However, with digitization, businesses can now optimize their MRO procurement processes and only spend where it matters. This transformation has not only made organizations more cost-effective, but it has also streamlined their operations, eliminating the need for manual intervention and reducing the chances of errors.
In MRO procurement, digitization enables procurement teams to get an end-to-end view of their most critical purchases, as well as their agreements with key suppliers. Removing manual and paper-based processes enables companies to analyze their MRO purchases to identify trends, which can then be used in negotiations with suppliers.
Similarly, it enables procurement leaders to identify spending that can be eliminated, saving the company on operational costs.
Data Analytics and Automation Can Support Predictive and Preventive Maintenance
Data analytics and automation are now essential for maintenance and operational continuity. By using powerful algorithms to analyze massive amounts of data, operations teams can predict when assets like machinery and fleet vehicles will break down. This data can then be provided to MRO procurement leaders so they can pre-order parts and maintenance services before an asset breaks down and interrupts operations.
Preventive maintenance, on the other hand, involves regular upkeep to prevent issues from arising in the first place. Both types of maintenance are crucial for maximizing efficiency and minimizing downtime, and data analytics and automation are making them easier than ever to implement.
Stakeholders Need to Prioritize the Digital Transformation of MRO Procurement
To remain competitive, stakeholders must prioritize the digital transformation of MRO procurement. MRO procurement leaders can encourage investments in digital transformation by leveraging data and analytics to identify where digitization can introduce overall savings for the company. This data can be conveyed to stakeholders through visualizations and easy-to-understand content.
MRO procurement leaders should also keep close track of their suppliers and look for cost and labor optimizations that make the most sense for their businesses. If there are opportunities to guarantee asset uptime, reduce risk, and form more strategic partnerships with suppliers through digital transformation, these could have a significant impact on the business.
The adoption of digital MRO procurement can also provide real-time insights into inventory levels, lead times, and supplier performance. Ultimately, a digital transformation in MRO procurement will enable stakeholders to better serve their customers, improve their bottom line, and stay ahead of the competition.
It's Time to Transform MRO Procurement
These are just a few examples of why digital transformation is so critical. Although most companies have made strides in their transformation efforts, MRO procurement may be falling behind, and it must take priority if companies hope to keep their operations resilient.
If you'd like to learn more about the digital transformation of MRO procurement, don’t miss ProcueCon MRO 2023. The event is scheduled for October 23rd through 24th at the Grand Hyatt Atlanta Buckhead.
Download the agenda and register for the event today.