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A new report which shines a light on the state of play for MRO procurement professionals across a wide range of key economy sectors has been released today by RS, a global provider of product and service solutions for industrial customers.
Produced in association with The Chartered Institute of Procurement & Supply (CIPS), the report ‘2024 Indirect Procurement Report ‘Maintaining Focus’‘ provides information on the current state of the sector for those responsible for supplies supporting maintenance, repair and operations (MRO). It is the seventh annual survey of its kind and those surveyed were global participants from the procurement profession from sectors including manufacturing, public sector, energy, logistics & retail, transport and defence and technology. Job roles ranged from operational to senior and director level.
This year’s survey drew a record number of responses from UK and Ireland respondents, at 323, and from a larger number of younger individuals than would normally contribute. There was also a significant number of first-time participants and a higher-than-usual percentage of smaller and medium-sized companies took part.
Some of the main themes emerging from this year’s survey included the impact of ongoing challenges like attracting talent, difficult macro conditions, environmental, social and governance (ESG) and technology. The top three challenges were cited as the need to ensure sustainable and ethical procurement (32 per cent), improve asset performance (32 per cent) and cope with reduced operational budgets (30 per cent). Pressure to reduce inventory costs (28 per cent) and the increased cost of indirect materials such as MRO (27 per cent) are also significant.
Other 2024 Indirect Procurement Report highlights include:
- 57 per cent of respondents stated the procurement of MRO products for their business was either important or very important.
- One of the biggest challenges for procurement over the next 12 months was cited as attracting and retaining talent, reported by 29 per cent of respondents.
- Getting individuals who can understand best practice procurement is a day-to-day operational challenge highlighted by a third of respondents
- Of other key challenges over the next 12 months, over a third (37 per cent) of procurement professionals reference inflation and higher costs, and 20 per cent highlight global political uncertainty.
- Downtime is a key issue and procurement is recognised as having a key role in helping to minimise. Challenges over the coming year were listed as lead time for required MRO parts, according to 19 per cent of respondents, with supply chain issues and shrinking maintenance teams being highlighted by 16 per cent.
- ESG is high on the agenda: just over half (52 per cent) of procurement professionals believe it is important to the delivery of their company strategy. And nearly three-quarters of respondents (71 per cent) say they consider ESG criteria as either ‘important’ or ‘very important’ when it comes to selecting suppliers, products and services.
- Almost a third (32 per cent) of procurement professionals identify sustainable and ethical procurement as an impactful business pressure, affecting how they procure indirect materials, while 27 per cent cite place monitoring suppliers’ sustainability practices as a key issue for procurement over the next 12 months.
- Waste recycling is the most common measure in the carbon footprint reduction strategy, demonstrated by two-thirds (67 per cent) of respondents. Cutting energy consumption was cited by more than half.
- Automation is making its way into procurement as more than a quarter of respondents say they are automating transactional tasks through eProcurement, while just under a quarter are using suppliers for some elements of stock management and predictive maintenance.
- Organisations could be missing out on efficiency gains by not embracing eProcurement software: only 38 per cent of respondents work within businesses that are using them.
Emma Botfield, Managing Director for the UK&I at RS, said: “With a record number of UK&I responses, with more representation from younger age groups and small and medium-sized businesses, we’re heartened by this evidence that procurement professionals are more engaged and active than ever in key business issues. This offers reassurance that the future of procurement is in safe hands.
“We were not surprised about the range of challenges facing procurement professionals in the current climate. However, it was great to see that even in times of financial pressures, the ESG agenda is still firmly rooted and a high priority for many firms. Procurement teams recognise their hugely important role in this and we are certainly poised to ensure their intentions are translated into effective actions.”
Encouragingly, 82 per cent of respondents to the survey stated they would be happy to pay a premium for more sustainable products.
Helen Alder, Head of Knowledge and Learning Development at CIPS, said: “This is an indicator of a greater willingness to think about things differently and take a longer-term view. However, the pressure to deliver cost savings is still great, and with inflation and other challenges such as security of supply and geopolitical tensions, that’s causing a slight dichotomy. The drive to become more ethical and sustainable should be part of a long-term plan, but there’s been a bit of short-term upheaval.”
Botfield concluded: “Those in procurement must do their bit to keep everything running smoothly and in the indirect space, this means tackling ageing assets while contending with risks presented from issues like counterfeit products. Building strong relationships with the rest of the business will be vital, both in liaising with engineering teams to identify what needs updating, when, and making the case for investment.
“It is also clear that effective supplier management is essential if procurement is to meet its dual aims of securing supply and reducing risk. For some organisations, this will require a close look at the number of suppliers and improving communication with key providers. None of these are easy issues, and having a trusted partner to help in the navigation of them can be invaluable.”
