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Genius Speaks #2: What is YOUR Most Cost-Effective MRO Procurement Method?



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MRO Genius is a subsidiary of Fast-Rite International, Inc. Specializing in the OEM market, Fast-Rite International is a dynamic corporation continually diversifying to meet our customers’ industrial component needs. An ISO 9001:2015 certified company, Fast-Rite supplies millions of parts to the world’s most demanding manufacturers every year.

We are committed to providing the highest quality fasteners, stamping, castings and assemblies. Our product lines also include plastic injected molded components, abrasives, anchors, tools and tool accessories, to name a few.

Fast-Rite has multiple distribution centers throughout the USA, including our newest DC in the Chattanooga Metro area, full service locations in the Chicago, IL Metro and St. Louis, IL Metro areas, as well as full-service sales, warehouse and production facilities in Mexico and Asia. With an eye to further global and domestic expansion, we make sure we have facilities near our customers to serve them better.

Fast-Rite’s international manufacturing roots run deep. With over 25 years of manufacturing experience, the Fast-Rite team has exceptional industry-related expertise that will positively contribute toward the growth of both your business and bottom line.

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Genius Speaks #2: What is YOUR Most Cost-Effective MRO Procurement Method?

Let’s face it. There are several key metrics to purchase MRO. The most important usually are identified as:

  • Acquisition Cost
  • Carry Cost
  • Receiving cost
  • Material Handling

Now there’s a huge cost we haven’t listed here, the cost of running out of a key supply item, which means an emergency purchase by the buyer, or worse, sending someone down to the local hardware store to pick up supplies at the retail price.

While you’re waiting, it could cost the company down time. It could stop production. It could mess up delivery schedules. And if management thinks it’s your fault, it could cost you something very dear to you - your job.

The Old School

In the old days, it was all PO’s. Someone would put in a PO requisition, deal with various salesmen, cut PO’s, go through the entire receiving and put-away process, and get the bill.

Accounting would log the bill in and set it for payment, then cut a check.

You might need $50 of WD-40. But how much did it really cost to place that PO? Everyone has a different figure, but a typical $55 - $150 PO cost is easy to see when you add it up. They may have “saved a nickel” by shopping it, and spent a dollar more to buy it.

But then the web came along. You could go to your vendor web site, search for your items, use a company credit card, and the goods would show up at the door to be received and put away.

That’s a big benefit to MRO Genius. You order it and you’re done. We confirm the order, fulfill the order, ship it, send you tracking info, and it’s there. And you can see your orders, track your shipments, reorder easily. And we’ll be rolling out so many new items and benefits, you won’t be able to count them.

But what if you need more? You have a high volume industrial operation, and you really need to get a great price, you need more time on your hands, you need a better process.

 You need more!

 You need not only a low acquisition cost,

  • You need the lowest carry cost possible.
  • You need the lowest receiving cost possible.
  • You need the simplest supply program to the POU possible.
  • You need the supplies where you need it when you need it.
  • You need the simplest payment methods possible.
  • You need customized reporting that allows you to track

 And because these critical supplies amount to less than C-Class, typically 3 - 8% of your total spend, you need your supply program to be so easy that it runs without you having to put your time and effort into it.

 How can you make sure you have the supplies you need at the time you need them at the right locations in the plant with the simplest dispersal system?

 What’s the best program?

 It is Web sites? Customer Portals? Vending Machines? Digital Bins? Vendor Managed Inventory Programs? An in-plant store with a Site Manager?

 Or is it a customized program that can take any or all these elements – and more?

 At MRO Genius, we’ve learned from 25 years of being a reliable industrial supply, that each of our customers require different solutions. That’s why we develop a customized Genius™ Supply Program to fit the specific set of customer-needs every one of our customers have for their company, or for an individual department, production line or cell.

 It could be vending for high cost cutting tools, VMI for gloves and abrasives, replenishment direct to the point of use, dispensers for ear plugs, or an on-site / in-plant store with a dedicated Site Manager.

 For most major manufacturers, it’s a combination of all the above.

 And it’s a matter of preference too. today’s Millennials often prefer to shop via web, but they still want humans they can Live-Chat with or email or click a link to conference with. What’s the best solution? The one that combines how you work with the products you need, the service level you need and the pricing that gives you the lowest cost of overall ownership.

 Genius Supply Programs begin with in-depth review and analysis of the needs at the POU, of the cells, of the department. Our Analysts pull as much information as you can provide, add our analysis, develop inventory plans, and bounce these items against your goals and objectives, identify special and critical supply items and develop timelines for them, inventory your current brands and SKU’s also identify quality cost-effective alternatives.

 In the meantime, our VMI / Productivity team will design a solution to maximize the POU storage and organization.

 This solution is designed around your goals, objectives and preferences. It’s designed to minimize your transactions and maximize performance.

 What about data?

 It’s one thing to deliver, but we find that for our customers, it’s even more critical we prove it.

You need to know what's going on in your plant. So, we customize reporting to fit your specific needs.

KPI's are created to fit your needs, and performance is benchmarked.

There are multiple metrics that can be reported, among them:

  • MRO Spend

What's the overall spend per Week / Month / Year?

How does this compare to budget?

What is the total percentage versus the overall procurement budget?

  • Item Usage

Not just usage, but planned versus unplanned usage

We compare historical data and planned usage versus actual usage and identify trends.

  • Track by POU / Profit center / Even Individual

In cases where vending tracks actual user data we can analyze variations. For example, Bill, Tom and Joe average 6,7,5 Tape Measures a month. Bob uses 11. We provide the usage data to determine

  • Inventory Turns

While each plant is different, typical MRO program turns for an average plant with 20 workers could be 12x annual, and the larger the plant, the more turns are possible.

  • Discrete order ratio.

Rush orders can really disrupt production and procurement efficiency.

We review usage and inventory levels (min, max, etc.) to minimize rush orders and expedited freight charges.

  • Stock Outs

Enough said. You can't run if you don't have what you need to run.

 What’s the bottom line?

 Every customer is different. They have different work centers, different product. Different expectations. Different data needs. What you need is what you need, the way you want it, when you want it, delivered how YOU want it. Without fail. That’s what we do. That's what makes the Braintrust at MRO Genius a smart buy.

 Looking to improve your MRO experience? Email, call us at 630.942.6270 or click on the LiveChat Icon and communicate with a real live Giant Brain! As we’ve said before, Einstein would approve!