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    MRO Procurement

    MRO Procurement (Maintenance, Repair and Operations )

    First, what is MRO procurement

    MRO is an abbreviation for English Maintenance, Repair and Operations, which refers to maintenance, repair and operation. MRO procurement refers to a business operation in which an enterprise obtains industrial products or services from the supply market under certain conditions as a corporate resource to ensure the normal production and operation activities of the enterprise.

    Second, the advantages and disadvantages of MRO procurement

    (1) Advantages

    1. Since all procurement processes use e-commerce, it effectively saves procurement time.

    2. MRO is a kind of related products related to maintenance, maintenance and operation. Because it is some consumables, it is often damaged during use, which leads to some unplanned purchases. At this time, MRO's simple process and relative match A wide range of products can help companies "not be shocked."

    (two), shortcomings

    At present, most of the MRO manufacturers in China are agents. The inventory of products is few or no. The MRO manufacturers with their own inventory account for a small number, resulting in some production enterprises that cannot be used for re-use of damaged equipment due to shortage of goods.

    Third, the characteristics of MRO procurement

    MRO procurement has the same goal as consumers go to the supermarket to purchase. Consumers going to the supermarket to buy daily necessities will face many brands, and most of them are to buy some bits and pieces, low value, but also essential in life. In general, consumers are reluctant to travel throughout the city in order to buy different things. Although it may be possible to buy goods that are cheaper than supermarkets, time costs, tolls, and other costs incurred during the purchase process add up. It is much higher than the cost of buying something in the supermarket. This can be used to interpret some of the main features of MRO procurement: the supply market is relatively scattered, the number of suppliers is large, the purchase price and total price are small, the procurement variety is numerous and scattered, and the purchased items are indispensable materials in production. The hidden costs such as process costs, inventory costs, material prices, etc., and abnormal downtime costs due to untimely and inaccurate supply of MRO purchases account for a major proportion of the total cost of procurement.

    Fourth, foreign companies MRO procurement management

    (I), the emergence of MRO procurement management theory

    The problem of MRO material procurement in foreign developed countries has also been neglected for a long time. The manager will focus on the core business such as BOM procurement, which makes the MRO inventory far higher than the normal operation of the enterprise. In the 21st century, except for a few special industries, most of the markets have entered the era of meager profit. Even some companies with monopoly status feel the pressure of falling profits. Due to the excessive management of BOM procurement in the early stage, there is not much profit space to be explored in this area, which makes the multi-national enterprises with sensitive sense of focus focus on the long-neglected MRO procurement. According to some surveys, the ratio of MRO procurement cost to the total procurement cost of the enterprise is 26%, and even 63%, and the actual value of the purchased materials accounts for only about 39% of the total MRO procurement cost. For example, a company with a procurement cost of 60% of total cost and a profit margin of 5% can increase the profit margin to 11% by reducing the procurement cost by 8%. At the same time, improvements to MRO purchases will reduce abnormal production. The field of MRO procurement, which has always been considered small and inconspicuous, has become a focus of cost savings for enterprises.

    (II) Introduction of MRO procurement management mode

    In the enterprise procurement system, MRO procurement exists in a form similar to open-air market shopping for a long period of time. There are a large number of suppliers, and some large multinational companies even have thousands of suppliers, facing the brand. Millions of things, management costs and procurement risks can be imagined. After recognizing the importance of MR0 procurement, enterprises and scholars have put forward more countermeasures for the problems of MRO procurement, and adopted a series of measures to improve them. According to MRO procurement and its supply characteristics, procurement organizations use advanced supplier management methods to seek supply from external resource markets. The resulting MRO procurement and supply management methods mainly include:

    1. Integrated supply

    A supplier is responsible for supplying all materials for a particular product online. This supplier can subdivide the product category and can also merge many related product details.

    2, supply mall

    Refers to the physical or geographic location of the supplier. Vendors are concentrated in a specific physical location, which can form market functions and competitive effects.

    3. Distributor cooperation

    It refers to distributors who distribute various industrial products, have independent legal person qualifications, and different origins of products, and cooperate to carry out sales, supply and logistics management for customers.

    4, order point procurement

    According to the change of demand and the length of order lead time, accurately calculate the order point, order quantity and Ting goods cycle, the highest inventory level, establish a continuous start ordering operation mechanism and inventory control mechanism, so as to meet the demand and minimize the total inventory cost. 

    5. Just-in-time (JIT) procurement

    Just-in-time procurement is a procurement method based on full satisfaction of demand. The goal of this procurement is to deliver the correct quantity and correct variety to the location of the user's needs when the user needs it. The buyer does not keep the inventory.

    6, supply chain procurement

    Supply chain procurement is a procurement mechanism under the supply chain model. This kind of procurement is a strategic procurement organization of the cross-industry organization community established by the demand side, procurement and supply organization, and supplier to jointly realize the procurement and supply functions. The characteristics of such procurement and supply: First, the supplier should take the initiative, and second, the demand side should explain the demand pattern of the supplier to the supplier and communicate the inventory information in time.

    7, e-commerce procurement

    E-commerce procurement is a procurement model under the Internet environment. It is characterized by online trade negotiations, ordering and issuing orders for goods and settlement. Therefore, the Internet brings mainly business flow, information flow and capital flow. The convenience is a revolution in logistics.

    V. Current situation and countermeasures of domestic enterprise MRO procurement

    (I) The status quo of domestic enterprise MRO procurement

    China's MRO annual purchase amount has exceeded 50 billion US dollars, and is moving toward the scale of 100 billion US dollars. China's huge MRO market is being valued by the same MRO companies. The leading MRO supplier in North America, USA, has settled in Shanghai, and in order to cover its business in the economically developed regions of East China, it was in Jiangsu in August 2007. Wuxi New District has established regional branches. The two-domain electromechanical is also one of the professional suppliers to open up the MRO market in China earlier. It is expected to adopt e-commerce to carry out integrated supply services. Compared with the mature MRO procurement management of the same company and the strong momentum of foreign large MRO enterprises entering China, the domestic MRO market is still not mature. MRO supply chain management is only in its infancy, and even equates it with general BOM procurement.

    For the domestic MRO procurement and management status, first of all, it belongs to the original aspect of the market: the MRO supply market is relatively scattered and has not yet formed a professional scale. At the same time, it is an indisputable fact that MRO suppliers are small in scale, operating varieties are few, business management is not standardized, liquidity is lacking, networks and channels are not developed, and value-added services cannot be provided. On the other hand, user companies also have many problems in the procurement and management of MRO:

    First, the company will focus its attention on the procurement of BOM, and MRO procurement management has not been fully and effectively valued and managed. Due to the special business and environment in China, many companies concentrate most of their efforts on sales, followed by production, and place purchases in a subordinate position. They do not realize that the management of integrated procurement is as important as sales and production. The "localization" of MRO procurement management is a long-term and worthwhile task.

    Second, corporate MRO procurement behavior is often dispersed in different functional departments, procurement functions are scattered, and communication between departments is not smooth, resulting in increased workload and potential risk of procurement errors. The degree of centralized management is poor, resulting in uncertainty in MRO procurement. Although the purchasing department of many enterprises is called the purchasing department, the actual purchasing authority is very small. The purchasing plan is often formulated by the manager who does not understand the actual production situation, and usually only the oral plan, the warehouse management only imports and exports, whether or not it is achieved. The lowest dangerous inventory; personnel, administrative, financial and other departments will propose their own procurement needs, and skip the procurement staff to directly purchase, increase the amount of procurement operations, resulting in chaotic management of enterprise MRO procurement.

    Third, in MRO procurement management, enterprise managers pay too much attention to the role of people, ignoring the application of electronic systems, or there is no corresponding electronic management system. Although many domestic companies have begun to adopt ERP systems in recent years, the actual application is not satisfactory, and many are just face projects. Buying an ERP system, together with the consulting fee of the system supplier, requires at least 3 million yuan to 5 million yuan, but it does not produce any practical benefits, which cannot be said to be a great waste.

    Fourth, pay too much attention to the MRO purchase price, ignoring the quality of MRO and the choice of quality suppliers. Many enterprise managers pay close attention to the quality of BOM and ignore the quality of MRO. At the same time, the traditional concept holds that the more suppliers of the same kind, the better, so that enterprises can grasp the price initiative and choose the lowest price. It is not known that the quality of MRO is directly related to the normal operation of the company's production. For example, most manufacturers have many kinds of accessories, small purchase batches, low consumption and irregularity. Most of the spare parts can only be purchased from many retailers in the market, resulting in spare parts quality. Can not guarantee, seriously affect the normal production of the enterprise. Although the price is important, it is not the only factor that needs to be considered in the procurement process. The low price is extremely harmful, and the win-win is the right choice. In fact, a good MRO supplier can significantly reduce the production risk of the company.

    Fifth, there is a lack of strategic management of suppliers. According to the survey, spare parts procurement costs about 80% of the manufacturing procurement department, but the purchase amount only accounts for about 10% of the company's purchase amount. The energy of the procurement staff is mainly spent on the specific operation of the procurement business. Some enterprises even do not know how many suppliers they have, let alone the strategic management of the suppliers.

    Any enterprise that is in a rising period cannot ignore these problems. If it is not properly resolved, as the scale of the enterprise continues to expand, the additional costs and production risks caused by these problems will continue to increase, and the cost of operating the enterprise will also be increased. Will be increasingly high.

    (II) Countermeasures for MRO procurement by domestic enterprises

    First, set up an independent MRO material procurement management department or group, which should include those who are familiar with the common technology of the enterprise, and concentrate the procurement work scattered in different departments in the department or group, giving them appropriate authority. Analyze and optimize the MRO procurement operation process, pool production, warehouse and procurement, formulate specific internal procurement approval procedures for different customers, and clarify responsibilities. Pay attention to the compilation of historical data and demand forecasting, formulate strict procurement plans, timely understand the inventory situation and improve inventory management, and inform the procurement service providers in a timely manner on the basis of comprehensive consideration of the above aspects.

    Second, reduce the number of MRO suppliers, focus on procurement, and optimize suppliers. When conditions are ripe, gradually reduce the number of suppliers to one or two, and can form a perennial supply partnership to achieve better service. According to the characteristics of MRO material demand and the importance of the production of the enterprise, the materials are classified, and the procurement service providers collate and improve the material data, and the procurement service provider informs the enterprise to update the information in a timely manner, maintains the consistency with the supplier data, and improves the procurement. Accuracy.

    Finally, the electronic management system suitable for the enterprise itself is used to realize the electronic management of MRO material procurement. If objective conditions permit, you can consider connecting it with the supplier's ERP system, realize EDI data exchange, simplify the procurement process and realize the adoption of integrated supply, procurement just-in-time, distributor cooperation and strategic level procurement through electronic management. Supply organization management. The establishment and optimization of MRO procurement management is a long-term task, and it is necessary to give appropriate transformation time and not to do it overnight. This also optimizes and cooperates with MRO procurement management for domestic enterprises, and provides a market space for growth and development for domestic MRO channel integration suppliers.

    Note: Some of the information comes from Baidu Encyclopedia, Wikipedia and so on.

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