Maintenance is a key consideration for any manufacturing operator and procurement of supplies supporting maintenance, repair and operations (MRO) is a large part of this. But MRO procurement has long been a challenging landscape to navigate, with a variety of pressures facing professionals in this space.
These pressures were highlighted in RS’ 2025 Indirect Procurement Report Tackling the cost of business. Reduced operational budgets was one of the biggest business issues, exacerbated by inflation and higher costs. The respondents citing this issue stood at 62 per cent, compared with only 31 per cent in 2024, proving it is a growing concern across manufacturing in a variety of industries.
It is clear to see, with MRO spend being significant, getting a grip on this spend is crucial if procurement professionals are to address the effects of budget constraints. There are a number of factors cited in the report that have added to this pressure.
These include a strategy to repair rather than replace machinery, which means negating or postponing the expense of investing in new machinery, but makes maintaining older equipment a bigger financial burden. This means a more proactive maintenance approach is being taken to avoid bigger issues leading to larger repair costs.
The cost of an expansive supplier base
According to the Tackling the cost of business report, the average number of suppliers organisations use has risen by 18 per cent on figures from 2024’s report, meaning a rise from 75 to 92 suppliers used. There has also been a notable increase in the percentage of businesses using more than 250 suppliers, from six to 15 per cent.
This tactic helps organisations mitigate risk and operate a more resilient supply chain, but can make it more difficult to harness the efficiencies gained from a consolidated supplier base. Organisations are moving towards better management of their supplier base, according to RS’ report, with half of the survey respondents citing between 50 to 100 per cent of their MRO spend is with a tier one supplier. Three quarters of these tier one contracts are said to be actively managed.
While key performance indicators (KPIs) can be used to help with managing supplier performance on elements like price, delivery and quality, there is a cost involved in managing multiple suppliers. And even more worrying is that the report highlighted a real lack of awareness of what this cost might be. A significant 59 per cent of respondents didn’t know what the cost of processing an order is. This means that factors like price can’t be truly measured like-for-like, if cost of process isn’t known and factored into the transaction.
A supplier with a cheaper component price may offer less value if their ordering process isn’t streamlined and has many steps, or if they have onerous purchase order processes. The entire cost should include these factors, from sourcing to approvals and payments, in order to be compared across multiple suppliers.
According to RS, there’s a ratio of two to one in terms of process versus product costs. So understanding this can help buyers make the most efficient choice, which may not always be the one with the lowest headline price.
Of the 59 per cent of businesses claiming to be aware of the whole cost, the average business cost for processing was £89. This figure was lowest for larger organisations who may have more resources to implement the right KPIs to achieve the highest efficiencies.
Managing risk of counterfeit products
One of the concerns highlighted in the Tackling the cost of business report was around risk of counterfeit goods, which is an ever-present risk for procurement professionals and one that is higher when dealing with a larger supplier base.
Almost a quarter of survey respondents saw the counterfeit goods risk as an issue, which is a lower percentage than the previous year’s report which cited 42 per cent, but is a persistent risk nonetheless. Improvements in the production of counterfeit goods have made them harder to spot, largely because of advanced technology like 3D printing and additive manufacturing.
This is where using an authorised distributor only can be a way of securing peace of mind that parts are genuine. Additionally, using one that can demonstrate a close relationship with manufacturers and offer the right associated guarantees, should be prioritised in the quest to reduce counterfeit goods risk.
Collaborative working for more effective procurement
When considering procurement for parts for ageing assets in order to keep them operational, collaborative working is crucial. Procurement teams will have knowledge pertaining to their role, but the engineers are the ones with the equipment know how. When the two work closely for the purchase of parts and equipment, the best chance of avoiding downtime or equipment failure is achieved.
But RS’ report highlighted a need for improved relationships between these two functions: only one third of respondents cited a collaborative relationship between procurement and key stakeholders, while 27 per cent say it needs improving. The use of shared KPIs can help set goals and track progress are aligned, so all parties are agreed on the action plan and desired outcomes.
This is also important for ESG goals, working collaboratively to ensure the components being bought will have as long a lifecycle as possible. With the climate change and wider sustainability agenda, it’s important to prioritise the circular economy.
The Tacking the cost of business report was the result of the eighth annual survey conducted by RS in partnership with The Chartered Institute of Procurement & Supply (CIPS). Procurement professionals are surveyed from a wide variety of sectors like discrete and process manufacturing, public and private sector organisations, energy, facilities and intralogistics. This year it featured an increased number of respondents on the previous year, with a record number of 426 from the UK and Ireland.
The 2025 Indirect Procurement report can be found here.
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