Category management – MRO: the steps you should take

Many categories are experiencing a sharp increase in costs, and it can be challenging to…...

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Many categories are experiencing a sharp increase in costs, and it can be challenging to manage costs under such circumstances. However, if organisations adopt strategy spend management in maintenance, repair and operations (MRO) categories, they will be able to ensure that they save costs.

Here are some ways that procurement professionals can manage MRO categories.

Negotiate pricing for all SKUs

You will be sourcing a large number of SKUs in each MRO category and also adding new SKUs each year. This can make it challenging to manage prices across the SKU, especially if you are a large manufacturing company.

Identify the main SKUs that you purchase on a continuous basis and account for about 70% of the category spend. Once you have done this, it will become easier to negotiate the prices with approved suppliers. Ensure that you ask for competitive and discounted prices and volume incentives for a specific time period. To lock the prices, sign an agreement with the supplier.

For new SKU spend, negotiate with suppliers to give you a discount so that you can still save money on the spot and ensure that you keep the pricing transparent.

Select a mix of MRO supply models

You will need to shortlist suppliers for seamless MRO category management. While there are different MRO supply models, most organisations opt for a mix of models rather than sticking to one type. For each sub-category, you have the choice of collaborating with a primary supplier, specialist supplier, or a mix of both.

If you have technical or core requirements, a specialist supplier could be just what you are looking for, as you can be certain about the quality of the products and the efficiency of the supplier. However, for non-technical MRO categories, you can work with general suppliers.

Once you have shortlisted the suppliers you want to partner with, ensure that you work with these preferred suppliers to efficiently manage MRO categories and enjoy cost savings and timely deliveries across all SKUs.

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