MRO consolidators: What are they and why would a bakery or snack producer need one?
When it comes to managing maintenance, repair and overhaul (MRO) products, many bakery and snack manufacturers go down the traditional route of inhouse stores management. This includes ordering MRO supplies directly from manufacturers or through a distributor to then be collected from a local branch or delivered to site.
However, management of the onsite store often results in issues, including diverting resources from the main business.
To avoid this, some food companies’ hand over inventory management to a third party. For larger companies, a further option is available in the form of an MRO consolidator who can provide services and dedicated personnel on-site.
What is an MRO consolidator?
An MRO consolidator is a third party that aims to consolidate and streamline MRO processes within your bakery and snack business. Embedding itself into the heart of your company, a good MRO consolidator integrates into your business and becomes an extension of your team.
It delivers all the benefits of an MRO distributor’s branch on your site, including high levels of customer service, year-on-year cost saving delivery through vendor optimisation and a reduction in the purchasing and transaction costs associated with indirect supplies; all with a single point of contact for orders and customer service enquiries.
For example, as a part of our Vendor Managed Services, Brammer Buck & Hickman offers a fully customisable MRO solution named Insite. We currently have 99 Insite locations within the UK, which delivered £3.6m savings in the past 12 months.
Bringing benefits to your business
There are four main types of work that an MRO consolidator will carry out, divided into core activities, performance measurement, supplier management and other services.
Core activities includes product identification, order handling and expediting, as well as parts standardisation, technical support and supplier management. MRO specialists help you by proactively identifying cost-saving opportunities across these areas.
Performance measurement involves monitoring progress against agreed KPIs and objectives, including Service Level Agreements (SLAs) and the measurement of cost savings against achieved targets. This gives you total transparency over performance.
Supplier management focuses on dealing with technical specialists, supplier engineers and regional teams as well as supply chain partners.
There are many other services that an MRO consolidator can potentially perform depending on client requirements, including stores design and restructuring, providing and managing MRO e-commerce sites and online catalogues from which to order, employee training, condition monitoring and designing and implementing improvement projects.
Pros and cons
There are many advantages of implementing an MRO consolidator onto your site; the biggest being the saving of time and money, which draws most people into the idea of employing a service of this kind.
With the right firm, you can expect to see high-level cost savings as well as a reduction in downtime and processing. Alongside this, clients are also most likely to experience an increase in productivity as the company’s processes are now streamlined.
Another important factor is the dedicated resources you’ll receive on your site, typically a dedicated individual or team. This will allow you to establish a relationship with not just a company but a person who can get to know your organisation indepth and ensure the service is completely tailored to your needs. Most consolidators sell on the basis of unit cost savings and supplier reduction, but without engineering expertise this is short sighted and that’s all you’ll get. If the supplier understands your processes, you’re more likely to see value creation through continuous improvement.
While the advantages mostly outweigh the disadvantages, there’s still are a few factors you need to consider when looking to implement a service of this kind.
The main one is the length of the contract: you can expect to be tied into a contract for a minimum of three years. There’s also the potential to damage relationships with existing suppliers who may be cut out of the supply chain by the MRO consolidator. Lastly, there’s the cost of this service.
If you think a service of this type could be potentially beneficial to your site, then follow these five steps.
- Discussion: All good MRO consolidators should begin the process by firstly discussing the needs of your company. Early discussions should involve which areas you might need help in, particular cost savings to be achieved, or simply if you need a team or just a single person to work with you. These early discussions are your chance to map out timeframes and budgets, and to confirm if this approach is the right one for you.
- Proposal and contract signing: After discussing your needs, the MRO consolidator will submit a proposal. Read this carefully and be sure to go back to the MRO consolidator with any questions. Straighten out the fine lines and ensure the MRO consolidator will deliver all that you’re setting out to achieve. The next step is, of course, accepting the proposal and signing the contract.
- Set-up: Although you’ll play a significant role during this process, the majority of stages will be the job of your MRO consolidator, such as sourcing the right MRO specialist for your needs – either from within their organisation or externally, and ensure they have the tools necessary to do their job – through to training on your network and company policies. All other elements of the service will also be put into place.
- Arrival of MRO consolidator onsite: This begins with the various company onboarding and training sessions. This part of the implementation can take anywhere from a couple of days to a couple of weeks, depending on the size of the site and needs of your company.
- Continuous improvement and reporting: Having an MRO consolidator onsite is often a big investment, so you want to make sure you’re seeing results. This is done through continuous reporting as well as tracking all departments your MRO consolidator covers. A good MRO consolidator will have a reporting service in place, which includes monthly revenue meetings designed to keep your KPIs in mind. It also gives you a base to talk over other issues you might have and give you a better access point to your wider industry.
Remember, if you’re thinking of implementing an MRO service provider at your site, it’s vital to do your research.
The service has got to work for you, otherwise the kind of cost savings you’re expecting might not happen. Ensure regular communication is maintained as well as that all-important upkeep of a good relationship.