Do you have visibility into your MRO spend? You may have even less visibility into it than you imagined. Working in MRO and Facilities Management Solutions, in our experience, we’ve seen a substantial amount of hidden MRO spend trapped within our clients’ facility services budgets; Our clients’ facilities’ spend that would typically be categorized as MRO. MRO and FM are inherently linked.
Facilities service providers often include supplies, parts, and materials into their service charges. This can include everything from jan/san products to light bulbs, to HVAC filters and many other items that may be better sourced – more reliable quality, and at a much lower price, through your MRO provider. And while it may seem convenient to have your facilities service providers procure these items for you (after all, they probably get volume discount pricing, right?), these providers often charge a significant markup off of list pricing, particularly when the costs are rolled into the overall price point.
For something as simple as a case of 25 T-5 Fluorescent light bulbs, you can see a net price swing of 47%, if you pay your service provider a markup off a list, vs. providing the bulbs as part of your existing MRO contract:
MRO Spend Left on the Table
This is real money, particularly when you extrapolate it across your portfolio of locations, and expand it to dozens of other every day, predictable consumable products. You see, the same calculation plays out with everything from floor wax, to toilet paper, to HVAC filters; the list goes on. The example above is also one in which the service provider discloses their markup. Many times, these costs can be obfuscated, creating exposure to even higher costs.
This calculation is also before the added benefit that your MRO provider can deliver through strategic sourcing, inventory management, and other quality control measures. It also gives you greater control over deciding on product quality, and ensuring you’re getting what you’re paying for.
SDI’s Approach to Uncovering Hidden MRO Costs
When we look at our clients’ spend data to find opportunities for savings, there are several areas where the data resides.
- Loaded into their Computerized Maintenance Management System (CMMS) through work history
- General ledger and disbursements made to service providers
- Deep dive into invoice detail
Looking through this information, we can parse out what you’re spending on parts, materials, supplies and consumables. Combined with our MRO data analytics engine, ZEUS, and our 50+ years of MRO supply chain expertise, we’re able to make clear the blurred lines between MRO and Facilities Management. With the information ZEUS reveals, we can benchmark against our leveraged strategic procurement practices, identify low-hanging fruit and deliver additional, pain free savings by bringing that spend back in house for our clients.
Contact SDI today to see how we can help you uncover hidden costs and take back control of your MRO spend.