MRO Procurement Outsourcing: The Benefits And Key Considerations

MRO Procurement Outsourcing

There is no denying that managers have the lion’s share of responsibility when it comes to business. They oversee staff and functions, finance, and policies. A host of different skills are needed for both entrepreneurs and managers. As businesses grow, so do the challenges, and even success needs to be harnessed correctly. 

One thing that many growing companies do is outsource some of their functions. By delegating things like IT support, accounting, or Human Resources they are enabled to focus on things like product development, and marketing. Something that is being talked about more and more is MRO Procurement Outsourcing, which can bring a host of different benefits to companies when handled well. It may be that you are intrigued by this subject yourself and if so, you’ll find this article to be a helpful and informative guide. 

The Purpose Of MRO Procurement Outsourcing 

The maintenance, repair, and overhaul (MRO) of supplies are essential to keep a company running, yet it can be a nightmare to manage. Companies find it more than a full-time job performing functional checks and getting things repaired, serviced, or replaced. Whether it’s for a business, government institution, or a residential complex both the building infrastructure and its related utilities will all need to remain permanently compliant, safe, and operational. 

If you think about a manufacturing plant, for instance, it’s easy to see how faulty equipment could be both dangerous and inefficient. Added to that there’s the loss of revenue that would be incurred by system downtime in order to fix things. For these reasons and more, many businesses outsource the responsibility to external specialist companies. 

The Role Of Third Party Companies

When professional assistance is sought from outside, invaluable advice, support, and strategies can be gained.  Many MRO procurement experts have an online presence and they frequently provide helpful free information designed for all sectors and industries. A company’s MRO can be transformed into a competitive advantage using the third party’s customized support, resources, and services. 

These external parties often perform complex analyses of a company’s data so they can help save money, as well as identifying and resolving issues. 

The Benefits Of MRO Procurement Outsourcing

It’s possible that a company can reduce its inventory with outside help. Production and maintenance improvements can be identified that reduce costs. It may be that fewer staff members will now be needed, or less training on equipment maintenance. Staff are more likely to feel happy, safe, and supported if the building and its utilities are being safely overseen as well.

Whilst an employee may have a limited knowledge of equipment suppliers, an outsourcing company may have access to a database containing many more. This means they can discover the cheapest or best providers for your company. There may even be some space for price negotiation, in which case they can use their skills to get you the best deals. 

Draw Up Clear Goals

Before you interact with the outsourcing company it’s important to conduct your own research and to make your own conclusions. Try to identify the areas that are most important to you. When you have your initial consultations with the third party, explain both your requirements and your concerns. They can then create customized ways of tracking these objectives. 

If cutting costs is a priority, make sure that quality and safety won’t be compromised by any future changes. By bringing a clear business plan to the table, it will be easier for you to create an accurate agreement and pricing structure. 

procurement outsourcing

Put Clear Boundaries In Place

Once you have chosen the company you wish to deal with, you will be giving them access to a wide range of data. Make sure they only see what is relevant to their task. 

There may be areas you are highly protective over and do not wish to delegate. You may feel you know more about a specific area than they do, and be keen to avoid unnecessary risks. There may be sufficient resources and technical knowledge within your company to cover certain aspects yourself. Needless to say, this would reduce your outsourcing fees. 

In contrast, some businesses can only afford to delegate limited areas due to a lack of budget. It is therefore paramount that you make your boundaries clear from the outset to avoid confusion.

Recognize The Challenges

For the day-to-day running of your business, you may be dependent on a host of different equipment that comes from almost as many different suppliers. 

This can make it hard to track the data and to review the efficiency of the outsourcing company. Any improvements they claim to achieve may be almost intangible to assess. 

Health And Safety

Because of the huge diversity involved, it can be hard to achieve consistency when it comes to things like health and safety. Each tool, machine, or product may have differing levels of compliance and maintenance needs. 

Both suppliers, contractors, and subcontractors can also muddy the waters because it can be hard to find out exactly how compliant they have been in terms of health and safety requirements. 

Transition And Lack Of Control

While you are progressively handing over the reins to the outsourcing company, there will be an inevitable handover time. Old equipment contracts may need to run their course and all the while you’ll wish to minimize work disruption and maintain productivity. 

Once the external company has taken the responsibilities off you, there may be a feeling of vulnerability because it will now be their business decisions that could affect your profits. It will also be their reports you will be trying to analyze rather than your own. You’ll also need to agree upfront on exactly how many updates you receive, and in what detail. 

It will be essential that adequate governance is kept in place to keep things under control. You’ll also need your engineering and operations colleagues to buy into the whole process of outsourcing. If this business partnership prospers, however, the external company will become a compatible arm of your operations and a co-contributor to your continued growth.