Articles & Announcements

by Thomas Terfehr, Executive Vice President, GenesisSolutions

The pressures on suppliers to help their customers improve business performance are enormous in this global economy. Business complexity, cost pressures and ever-increasing quality standards are at the root of these pressures.  The ‘extended enterprise’ supply chain model, with a focus on rapid product design, lean manufacturing, and JIT inventories, has proven its effectiveness as a competitive weapon.  This is having a major impact on how direct materials (those materials and components that ultimately become part of the product which is sold), are purchased and their suppliers managed.  Inventories have been slashed, time required for product design has been reduced, quality has improved, and suppliers and customers find themselves in new and unprecedented roles.

Business pressures and supply chain management are causing firms to also evaluate the world of indirect materials and particularly MRO (maintenance, repair and operating supplies).  The path to improved performance in this arena is not, however, so straightforward as with direct materials.At the core, the MRO supply chain exists to support plant operations.  The supply system is complex with many, often thousands or tens of thousands, of parts, pieces, suppliers and inventory stockpiles.  The amount of annual “spend” for a typical company is significant (15%, or more of total spend).  Finally, there are many decision-makers with different agendas who are often not in close communication with each other.  The net result of this complexity and lack of coordination is higher cost and service gaps. Achieving lower total cost of ownership for MRO items requires that the following three supply chain dimensions be addressed.

Read more about Integrated MRO Supply Management.