The 2020 Mid-Year Economic Update_long

Commentary: Approach Your Customer Relationships Strategically for a Higher ROI

As the lead article in this issue explores, customers are looking harder at their MRO practices to extract costs and manage smarter. They are now looking for return on investment in an area that was if not invisible just not typically part of a major quality or continuous improvement program. MRO was a necessary cost center; get the best price.


Contrast that with the growing concept of strategic MRO, which in fact has been in development for years. They may not have labeled it as such, but customers applied the same management principles to their indirect materials procurement and management as they did to their direct material practices.


Companies that elevated the status of MRO to a strategic position developed goals for their MRO programs to directly support and help achieve the overall corporate strategy. That type of vision changes the nature of the supplier relationships significantly. Suddenly distributors find themselves challenged to create a five-year plan to help customers achieve their goals rather than asked to repeatedly dance the same old reduce-your-price-five-cents jig. The bar is certainly higher for distributors to participate at a strategic level with a customer, but the ROI is a customer relationship that is deeper, more stable and ultimately more profitable.


As the article on automated VMI outlines, customers are getting more strategic about supplier relationships and tools to gain efficiencies. How many of your customer relationships can be classified as strategic? How many customers are innovative and potentially open to be more strategic with your assistance? Finally, how many of your suppliers are asking these same questions about your company? And are you comfortable with what their answers and resulting actions might be?

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