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MRO Data Analytics: How to Leverage both Data and Market Trends

MRO Data Analytics:
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Posted by on Thu, 08/23/2018

The Institute for Supply Management (ISM) Monthly issues the Manufacturing Index (58.1%) and Non-Manufacturing Index (55.7%) as noted for July 2018.  I’d like to point out while the metrics are easy to follow and are all positive currently, perhaps more important are the comments from the sectors.  Are these comments within the report the proverbial “canary in the coal mine “, providing a more insightful look to the trends which economic activity may not signal yet?  I have provided a few examples below:   

  • “Global demand is still strong. Working on contingency plans for the Chinese tariffs. We will probably onshore most of that material. Labor availability is becoming an issue.” (Computer & Electronic Products)
  • “As a result of new tariffs on materials to/from China, we are taking measures to move impacted materials ahead of effective dates, which in some cases is resulting in holding higher inventories.” (Chemical Products)
  • “Steel cost increases are causing a lot of negotiations. The increases are real and will affect costs beginning in the third quarter of 2018.” (Electrical Equipment, Appliances & Components)
  • “Reviewing the business case for importing manufactured parts from China, as new tariffs will lead to increased costs that we will pass along to our domestic customers.” (Transportation Equipment)

While data analytics are very important they support strategies to address the market conditions that each firm needs to navigate through its headwinds.  Only good data will get you there. 

While we hear the blaring sounds of business media pundits, commodity prices and tariffs have set the tone recently.  But for some reason, in an example like fuel and steel prices, the increases seem to hit the street before the ink is dry on the legislation. The demand on procurement organizations is to read the market faster and faster. Category management, ever-changing client demands, and unexpected supplier production issues, which can be related to direct material or labor shortages, all have potential business impacts. The news of the future leads to rationalizing and rushing to “commit now at this price before the real impact!”

How to Avoid MRO Data Analysis Paralysis

No single source of data will yield all the correct answers.  It’s those unique, but multiple summaries and reports that you rely upon to provoke insight and provide thought leadership to your business.  In the MRO space segmenting data, identification of alternate sources and manufactures to keep your organization nimble, and responsive and competitive data will all yield positive results. 
The ability to:

  • Identify productivity issues
  • Reign in tail spend
  • Derive meaningful and actionable insights from data

will determine whether companies evolve, adapt, and survive or whether they close up shop. SDI has a highly flexible and scalable data analytics platform, ZEUS, which provides insightful analysis of your indirect spend which can lead to category segment optimization and strategy options to protect your business from market disruptions.  Learn more about how analytics transforms data into decisions, or contact us today to schedule a demo.

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