Viewpoint

More documents

Recommendations

Info

3 | Supply Chain Management <strong>Viewpoint</strong> Figure 1. Sourcing of MRO services Traditional centralized strategic sourcing Site-by-site regional Figure 2. Site-by-site methodology Phase 1 Phase 2 Spend mapping/scope Site-by-site diagnostic Analyze Analyze MRO spend MRO Spend 3 Select pilot sites 4 weeks Get support from the sites As is To be Site(s) optimization plan Data classification iterative improvement process 8 weeks Workshops Validation Validation Phase 3 Site-by-site execution Specific opportunities in identified areas Specific opportunities in identified areas Specific opportunities in identified areas 12-20 weeks
performance. To maximize the benefits posed by the procurement of MRO services, any company attuned to high performance should take note of the sourcing site-by-site methodology discussed in this point of view. Pragmatic principles Our methodology relies on two guiding principles. The first is to form clusters of an organization's sites that are in close geographic proximity to maximize the opportunities for combining expenditure without compromising operational considerations. Secondly, an organization should take a holistic approach toward processes and categories: Executives should exploit existing synergies to create new opportunities without constraining MRO managers with unrealistic or unworkable centrally imposed sourcing rules, while looking at ways to generate efficiencies through process improvements, supplier rationalization or other optimization approaches. This holistic approach contrasts sharply with the more traditional, centralized approach that companies usually follow in the sourcing of their MRO services. Consider the left map in Figure 1: The traditional approach at an industrial company with sites across Europe would attempt to identify a solution that could be deployed from a central point, such as Belgium or Holland. This logic may work well with physical distribution and warehousing, but it falls flat when applied to MRO services. As the right map highlights, a more intuitive and effective approach is to first identify clusters of adjacent sites and then seek a common supplier capable of serving each cluster. It is a perfectly reasonable expectation to find a cost-efficient and competent supplier that can serve a cluster of plants, which are a few hours in driving distance within a single country. On the other hand, it is significantly less likely to find a similar supplier that can cover plants in a dozen or so countries spread over a continent. How Indian companies Opportunities are improving for sourcing their from performance Central and through Eastern procurement European Sourcing site suppliers mastery by site | 4 The second principle of taking a holistic approach to the category is equally pragmatic. A surprising wealth of opportunity can be identified when this approach is combined with the early involvement of local purchasing teams and the guidance of a few straightforward objectives. These objectives could include aiming to reduce suppliers where possible; combining the purchase of goods and services when and where relevant (a combined purchase of a fitted filter, for example, rather than separate purchases of a filter and its installation); parameterizing as much as possible by better definition of services; or striving to combine categories of spend across sites where possible. The upshot? Despite not attempting to source categories centrally, it is still possible to dramatically increase the amount of pooled spend by combining at a site level. Powerfully, this approach delivers practical savings instead of just theoretically possible ones: Site-by-site pooling does not simply create opportunities to increase leverage in realizing savings; rather, it makes those savings more achievable by creating category "bundles" of services on which suppliers are more likely to bid. Few suppliers may be interested in a contract that requires them to serve plants scattered over thousands of miles. But if an organization can condense the contract to plants within a single country or region, then supplier interest—and hence competition—will be greater. So how, precisely, is this transformation achieved? As shown in Figure 2, our methodology divides the process into three distinct stages: 1) an initial spend mapping and scope definition that lays the groundwork; 2) a site-by-site diagnostic analysis in which the detailed potential is evaluated; and 3) a site-by-site execution and implementation process that delivers the benefits. Based on our research and deep client experience, Accenture has developed an innovative methodology to specifically target the untapped opportunities inherent in the procurement of MRO services. 4
Page 1 and 2: Supply Chain Management Viewpoint S
Page 6 and 7: 5 | Supply Chain Management Viewpoi
Page 8 and 9: 7 | Supply Chain Management Viewpoi
Page 10 and 11: High performance in action
Page 12: Copyright © 2007 Accenture All rig

Viewpoint

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?