By George E. Krauter
Companies that offer onsite MRO management programs (third-party MRO or 3PMRO) are able to prove substantial savings for their client’s total cost of ownership (TCO).
These savings are in the form of financial and non-financial benefits which accrue in varying levels to various plant disciplines.
For example, price reductions are beneficial to procurement, stock on hand when needed affecting less downtime is important to maintenance, lower inventory and less cost of paperwork resonates with finance, and the reliability of plant assets is meaningful to engineering, as well as maintenance.
Here’s the rub. When the 3PMRO company becomes aware of a prospect in need of MRO TCO recovery (whether they know it or not, it will try to get to the highest level of management because management must be able to see the potential benefits that will accrue before approval to change is forthcoming. Too many times when a company is approached, the seller is asked what product category they are soliciting; when the seller mentions MRO, they are sent to the MRO buyer.
There are interesting exceptions to what I am going to say next; however in most cases, the MRO buyer will see 3PMRO as a process that will eliminate the buyer’s job. In the real MRO world, the MRO buyer is elevated to a higher level of supervision via managing this new process (3PMRO) that has provided new channels of profitability. The buyer’s employment level is enhanced.
So, here we are. Since there is no other option, the 3PMRO presentation is made to the MRO buyer. Verbalized or not, the buyer has in mind, “What’s in it for me?”
This makes sense, because, although, every employee should be thinking of company improvements, every associate will think, “How will I benefit? Will this improve my chances of advancement?” Three situations occur:
One, there is recognition of total benefit opportunities; proactive reactions occur: The MRO buyer sees the benefit to the company and to him or her personally. The proposal is taken to the proper management level for assessment and approval to proceed.
Two, there is recognition of total benefit opportunities; negative reactions occur: The MRO buyer smothers the 3PMRO concept and acts to keep it out of the company’s reach. This is really foolish from an objective prospective, because, if the traditional buyer’s function can be saved via a better procedure, it is eventually doomed anyhow.
Three, there is no recognition of potential benefits for anyone: The buyer listens to the proposal, files it away, and returns to the daily MRO process. “It’s not my job to change anything.” “This is above my pay grade.” “If I stick my neck out and it does not work, I will look bad; I better not do anything and be safe.” Follow-up actions from the 3PMRO are met with, “There seems to be no interest.”
Obviously, number one benefits all. Numbers two and three are equally bad for the 3PMRO, the buyer and the company. What is the answer?
A presentation that answers the unsaid question, “What’s in it for me?” can get movement to the decision makers.
My Purchasing Center recorded a series of interviews with Blogger George Krauter:
Banging Head Against Wall? Overcoming Resistance to Change
How to Calculate the Cost of a Purchase Order
The Market Basket to Select an MRO Supplier: A Flawed Process?
George Krauter, former founder and president of Industrial Systems Assoc. [I.S.A.] has retired as vice president of Synovos.
Currently, he has initiated, "George Krauter Consulting [GKC]" for effective reliability and cost recovery for consumers of MRO materials. George is a recognized authority on the management of the MRO supply chain and support for maintenance reliability programs. His book, "OUTSOURCING MRO...FINDING A BETTER WAY" is available from Amazon and from Reliability Web.com.
He is published in Uptime, Modern Distribution Management, and Supply and Demand Chain Executive. George has conducted seminars across North America, in Europe, and in the U.A.R. as well as a guest speaker at Temple U., Howard U., Duke, and MIT.
George is a graduate of Temple University; he lives with his wife, Joyce, in Bucks County, PA. All grand kids live within eating distance. He can be reached anytime: firstname.lastname@example.org.
George E. Krauter
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