Organisations in the industrial space are facing a myriad of pressures as a result of difficult macro conditions and industry-specific issues. Technology adoption, availability of skilled workers and keeping plant operations moving efficiently are all key to success for industry players, but they are also the most significant challenges right now, along with meeting sustainability goals.
Procurement professionals, according to RS, are in a good position to help tackle these issues. In its latest Indirect Procurement Report ‘Maintaining Focus’ – an annual publication the organisation produces following research in association with The Chartered Institute of Procurement & Supply (CIPS) – RS highlights a record number of survey respondents and a larger number of younger participants in the 2024 report.
This higher number of responses, which also included more from small and medium-sized businesses than in previous surveys, indicates a higher awareness of industry and business issues and looks promising for the future of procurement, which underpins the foundation of efficiency. But the path isn’t straight and the journey will be long. The RS Maintaining Focus report highlights the key challenges and offers some food for thought on positive progression steps.
Firms must employ an array of tactics to attract and retain talent
The procurement of Maintenance, Repair and Operations (MRO) products is an important area for any business in the manufacturing space, and as RS’s report outlined, was cited by more than half (57 per cent) of survey respondents as important or very important. In order to keep this key area operating optimally, attracting and retaining talent is crucial. Yet this was highlighted as one of the biggest challenges, cited by 37 per cent of respondents, and therefore should be top of the agenda to tackle.
Attracting talent can be tackled in a variety of ways, but ultimately, creating an attractive proposition is vital. In a digitally evolving world, demonstrating a commitment to digital transformation can be a huge factor in attracting talent. Working within a forward-thinking organisation, which facilitates growth of skills and development, is a real desire of many people looking to forge or progress a career in this space.
The available technologies that offer automation of time-consuming and inefficient tasks can be a real pull for talent. People would always rather use their skills in a meaningful way, while very few would choose to include mundane and repetitive jobs in their role. The Maintaining Focus report showed implementation of automation is evident in procurement: 25 per cent of survey respondents said they were using eProcurement to automate transactional tasks and a slightly lower percentage were turning to suppliers to help with elements of stock management and predictive maintenance. Using the right suppliers that can support an organisation in reducing inefficiencies can also give peace of mind to current and potential employees.
And with the Environmental, Social and Corporate Governance (ESG) agenda fully-fledged, being able to show a commitment to this important area is also a real talent magnet.
Ethical and sustainable procurement is undoubtedly a rising priority
The Maintaining Focus report was testament to the rising importance of ESG, which is no surprise given the environmental impact of many organisations in the manufacturing and industrial sector. As well as considering the impact of elements like energy usage and waste materials, ESG is a major consideration in the procurement of products and services. And the suppliers of them: nearly three-quarters of respondents (71 per cent) consider ESG criteria as either important or very important.
Sustainable and ethical procurement is seen as vital, but also a real business pressure for those procuring indirect materials. Procurement professionals are turning their attentions to monitoring the sustainability practices of the suppliers they work with: 29 per cent of survey respondents said sustainability practices were a key issue and a focus for them over the coming year.
Procurement professionals have a key role to play in minimising downtime
Downtime is the enemy of any plant and the procurement function has a key role in helping minimise it. Professionals are also faced with challenges like lead time for MRO parts, as well as supply chain issues and dwindling maintenance teams.
Procurement professionals can employ some simple tactics to help in the mission of reducing downtime: with better collaboration with engineering and maintenance teams, a clearer understanding of the key assets can be gleaned and procurement can become a real facilitator in the downtime avoidance quest. Relationship building, networking and communication are all soft skills that should be built and maintained.
Building better supplier strategies is also key. Assessing the number of distributors or suppliers used will help in establishing the true cost of MRO purchases. Reducing supplier numbers not only helps create process efficiencies by negating the task of dealing with multiple invoices and purchase orders, but also helps an organisation tap into consumption insight that can reduce downtime.
With better consumption data – which can be collated by working in closer partnership with distributors and suppliers – MRO purchases can be planned in accordance with actual usage.. This will minimise cash flow being tied up in unnecessary inventory and ensuring the right supplies are available when needed for smooth and streamlined maintenance planning.
The Maintaining Focus report highlighted an average of 75 MRO suppliers cited by respondents. This is a high number and can adversely affect efficiency gains, as well as making it harder for procurement teams to monitor stringency of protocols and ethics of supply chain – important factors in maintaining ESG objectives and reducing risk of counterfeit products.
This year’s survey, conducted by RS and The Chartered Institute of Procurement & Supply (CIPS), resulted in 323 responses from UK and Ireland participants – a record number. Participants included procurement professionals at all levels, from sectors including manufacturing, public sector, energy, logistics and retail, transport and defence and technology.
The range of challenges procurement professionals highlighted in this survey were not surprising in the current climate, but it is heartening to see a real momentum on the important ESG agenda, which is translated in the actions organisations are taking. Professionals are also focusing more on the ESG credentials of suppliers. And suppliers are increasingly displaying transparency in their supply chains. All positive steps in the right direction.
Click here to view the full 2024 Indirect Procurement report.
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