Group Purchasing Case Study
MRO – Group Sites
During 2009 AUK Purchasing undertook a tender to select an appropriate partner to supply across the whole of the UK group of businesses Maintenance Repairs & Operations (MRO) products. This includes personal protection equipment (PPE), hand tools, workwear, oils and lubricants, and other factory consumables.
The strategy was to replace a fragmented solution of utilising numerous MRO suppliers for individual sites requirements and replace them with one competitive preferred supplier in order to reduce costs and provide efficiency benefits whilst at the same time retaining source flexibility.
Five specialist suppliers were invited to join in a competitive tender exercise encompassing an extensive selection process. This included detailed site surveys by all five participants who all subsequently submitted tenders.
Following a thorough tender response evaluation two potential suppliers were short-listed and subsequently presented their detailed proposals to wider cross functional selection teams across all businesses. As a result of our final internal assessment, Cromwell Industrial Tools Limited were selected as the preferred supplier as they offered the most complete and cost-effective service solution.
In line with our implementation and development plan incorporating agreed objectives it is intended that this project will realise the following benefits:
- Direct cost savings
- Significant supplier rationalisation
- Improved efficiency and reduced transactional cost e.g. in goods receiving and invoicing
- Development of common processes and products across the Group
As a consequence of the work undertaken with Cromwell significant cost savings on MRO products have resulted and further changes in procedures and staff training are planned to realise further benefits in the medium to longer term of:
- Product rationalisation
- Improved inventory management via consignment stock and VMI
- More streamlined and efficient ordering by the introduction of E-procurement methods