Darr Greenhalgh, senior manager of customer solutions at MSC Industrial Supply Co.
Overhauling your indirect supply chain can provide significant savings, increase order visibility, reduce downtime and boost labor productivity.
However, implementing a new maintenance, repair and operations (MRO) solution can seem daunting and risky. I know, because I’ve been brought into manufacturers after botched indirect supply chain overhauls and seen the aftermath firsthand: stockouts, service disruptions, lost efficiencies and more.
A partnership with an integrated, broadline supplier is the critical first step, but all supply chain transformations carry some risk. The most successful manufacturers tap the expertise and resources of their supplier partner while maintaining control of the overall process.
The following roadmap will help any manufacturer ensure a successful and profitable indirect supply chain implementation.
Step 1: Ensure you have the right supplier
The good news: Assuming you’ve selected an experienced, strategic supplier to partner with, that partner will take the lead in designing the new system and overseeing implementation. After all, the supplier doesn’t make money until the new system is up and running.
Here’s what you should expect from your supplier before implementing the new MRO solution:
- A high-level design of the new indirect supply chain, including defined processes, equipment, resources, functional areas affected, business systems and solutions.
- A readiness review of your operation. Usually an implementation champion is identified at this point.
- A co-developed statement of work that defines the business and operational elements of the implementation.
- An implementation plan or “project guide.” This should include defined project phases, the cross-functional resources and actions your company will commit to, identification of critical actions and milestones, update and status meetings, training sessions and a schedule.
Step 2: Implement for success
Once implementation is underway, the primary focus should be on establishing and maintaining appropriate inventory levels, identifying everything your indirect supply chain handles, and deploying appropriate equipment, such as cribs and vending machines, to manage these items.
As the implementation proceeds, issues should be identified and solutions developed. The new MRO system may touch several other departments, so cross-functional communication is vital. Any new risks that arise during implementation must be identified and mitigated. In some cases, parts of the new MRO solution may need redesigning.
Once you’ve completed implementation, you and your supplier partner will transition to normal operations. This transition should include:
- Identifying resources to maintain and service the new MRO supply chain.
- A formal transition plan agreed upon by you and your supplier.
- Documentation of the results of the supply chain overhaul, any changes you made to the initial plan along the way, and any remaining tasks to be completed.
- A survey of your key internal stakeholders to assess how well implementation went.
- An agreement between you and your supplier for ongoing reviews (perhaps quarterly) to assess the status of the system, measure cost savings, and identify opportunities for further improvement.
Some new MRO implementations fail
Now that we’ve covered the key steps in implementing a successful MRO solution, keep in mind a few things. Some implementations fail because they have one (or more) of these three major problems:
- No assigned manufacturer site champion. Simply put, someone on your side of the implementation must be ready to ensure that key resources are available and key activities are completed during the implementation.
- Manufacturer not ready for implementation. Assuming that your status quo operating procedures will be adequate for the new MRO solutions is a mistake—they almost never are. A good supplier partner will help you identify and prevent potential problems.
- Data problems. Finally, the No. 1 cause of failed MRO solutions is data. Incomplete, inaccurate or non-existent data and inadequate systems can doom attempts to overhaul your indirect supply chain. A legacy system that holds supplier part numbers but not the corresponding manufacturing part number, for example, can cause chaos if not fixed before implementation. Your data readiness should be evaluated during the design of the new solution; any data entry or re-coding should be completed before implementing a new system.
As long as you stick to your implementation plan and avoid these three major problems, you’ll improve your likelihood of success considerably.
Getting a win from your indirect supply chain
Overhauling your indirect supply chain is complex. It’s tempting to leave some elements out and create a “streamlined” process, but I’d recommend against it.
Manufacturers that rely too much on their supplier and don’t manage the internal processes may create a recipe for disaster. The implementation must be a partnership—a transparent, collaborative process between integrated supplier and manufacturer.
Understandably, suppliers and manufacturers may want to accelerate the process. Neither gains anything from the process until implementation is complete. But hurrying or taking shortcuts can result in costly re-dos down the road.
The most successful manufacturers focus on getting their indirect supply chain solutions right the first time, even when it means taking a little longer to complete the implementation.
