Case Studies: Saving Hard Dollars in MROP
Competitive Advantage in MROP

Purchase order costs include the entire procurement cycle: requisitioning, sourcing, placing the order, expediting, receiving, transporting, stocking, paying and so on. There are numerous soft-dollar savings that distributors can help their customers achieve, including bar coding, storeroom management, vending machines and electronic customized catalogs.

Potential cash flow and other improvements may very well exceed hard dollar savings potential. Here is one example outlined in The 20% Solution:
 
Consolidated Invoicing -The vast bulk of work performed in most accounting functions is directly related to MRO procurement. In many cases the amount of approvals, checking, coding, data entry, uploading, check preparation and mailing and other tasks is staggering. It is also labor-intensive and error-prone. The true cost of nonproductive activities is incalculable but substantial.
 
Example: A packaging company required approvals for purchasing not only from accounting, but department heads and plant managers. One plant manager complained he had to take MRO invoices home to review and approve because he had higher priorities during the business day. Moreover, the same procedure is required for a $5 broom as it is for a $50,000 truckload of ink.
 
The company had installed an expensive and sophisticated ERP data processing system. But the MRO procurement application was ignored in the planning and implementation stages.
 
An integrated supplier designed a completely new paperwork process, utilizing the exiting ERP system, and eliminating all paperwork in the MRO procurement cycle with the exception of one document: a signed packing list/bill of lading for system verification and audit.
 
The 20% Solution is available for free download to MDM readers at www.the20percentsolution.com.