Your customers seek innovative, cost-effective integrated supply solutions. But a commitment to integrated supply requires substantial resources dedicated to sourcing, logistics, identification, multi-shift staffing, KPI reporting and more. How do you get into this space with such high barriers to entry?

Consider a hybrid integrated supply model that can mitigate your risk and resource investment and leave non-core material management and sourcing to a software solution. You manage the supply room and grow relationships, while providing the goods and services that your customer has come to expect. Only now you’re on the inside looking out instead of the outside looking in.

Work with your customers to define non-core MRO items and their authorized suppliers. Once configured with automated replenishment levels, let the system manage non-core inventory while you focus on your products and services.

Overcome barriers to integrated supply through:

• Inventory Management: As a hybrid/integrated supplier, you need your finger on the pulse of each customer’s MRO inventory level, while supporting multiple locations and inventory strategies, including vending and VMI. The software should simplify inventory management through automated replenishment and reporting while providing a homogeneous view of inventory, regardless of where it is and how it is dispensed. Eliminate the need for off-shift supply room management by enabling end-user access to read-only real-time inventory and locked down data entry devices for an efficient self-serve model.
• Point-of-Use Procurement: Raise your value proposition with a mechanism to create requisitions on any device from anywhere for items in stock or for purchase. Items in stock may be staged for pickup or delivered via runner to point-of-use. Eliminating travel or wait time represents a serious value-add differentiator for a hybrid integrated supplier.
• Logistics Support: Every step of the MRO supply chain should be optimally linked to speed acquisition and delivery. Systems that offer natively integrated transactions for assets, maintenance, inventory and procurement are easy to deploy and maintain. The ability to initiate spot-buys from an operational or maintenance point-of-use simplifies the process for all.
• Sourcing: Establishing sourcing relationships can be a major effort when within an integrated supply program. The right software will make both core and non-core punchout and digital catalogs visible to all eligible users. Integrate with your customer purchasing process with one-click conversion to an RFQ or a PO. Industry standard punchout and electronic order transmission lets the system do its work with replenishment, while allowing designated users to initiate their own spot-buys.
• Accountability and Transparency: While outsourcing MRO supply management frees your customer from day-to-day MRO management, they still demand reporting and spend visibility. Be prepared to deliver end-to-end visibility and data to support their analytic requirements, including potential ERP integration.
• Cost Control: While meeting your customer needs, you need to manage your business model costs through flexible but predictable licensing models that account for customers with multiple locations, and variable number of users. Look for software that supports multiple sites, security that guarantees customer data privacy, and allows unlimited users without incremental fees.

Preparing Your Sales Team

As you reinvent your value proposition, your team has to be ready to deliver on this differentiated proposition. Selling a value-add service is very different from selling MRO supplies. Although complementary, your sales team should be prepared to put on a consulting hat, including inquiring about customer plant floor and supply chain pain points, and addressing them with a digital solution.

Overcome barriers to integrated supply by starting with a hybrid model that meets customer needs and unlocks the strategic value in your end-user customer’s MRO spend. Moving forward, fully integrated hybrid models are readily repeatable for each deployment.

Jane Liu, MBA, is a leader in enterprise architecture, process re-engineering, change management and strategy development. She is a senior manager at Tofino Software.