Editor’s Note: The following is one in a series of case studies on the IM Supply website. To see more case studies on the subject of MRO procurement, visit the blog section of imsupplygroup.com.
A leading global producer of inorganic chemicals had mastered its manufacturing processes during 200 years of operations.
However, company executives realized they didn’t have a firm grasp on their MRO spending, as each plant conducted its own purchases with P-Cards.
Since their facilities network included many remote plants, the company had trouble finding a national MRO supplier to provide a total solution.
“They had little to no information on their spending because they were using P-Cards for their purchasing,” said Jared Johnson, national account sales manager at IM Supply. “The P-Cards don’t capture the transactional data they needed so they didn’t really know what they were spending.”
With such an incomplete picture of its spending, the company was missing out on manufacturers’ special pricing opportunities and spending more than necessary on MRO supplies.
Its facilities network was a further complication for the chemical company. “The company has 25 sites, and some have 50 or more people, but some have as few as three or four people and many of the plants were in remote areas,” Johnson said. “It was difficult for them to get a national supplier with a program where they could get the same level of service for the large sites in bigger metro areas, as well as the outlying sites in more remote locations.”
These isolated plants operate 24/7,so having a local MRO supplier was critical to keep the manufacturing lines running smoothly.
“Most national providers wanted to service these plants from big cities, but with our network of 800 locations, we have distributors just down the road from these really remote sites and we can service them locally,” Johnson said. “They run 24/7 and we provide each plant with a local rep for emergency and after-hours delivery. This proximity and the ability to have a local guy the plants would know was a big win for them.”
Besides having distributors local to the customer’s plants, IM Supply’s sophisticated e-commerce functionality and robust system integration delivered a detailed picture of MRO spending. With this data, IM Supply negotiated special pricing on a national level for the customer’s plants, reducing MRO spend by 4% in the first year, and growing to 7% savings by the third year.
“We provided purchasing analytics, which they had never had before. We took that information to our manufacturer partners and got better pricing for our customer and that directly benefits their cost structure,” Johnson said.
To deliver the detailed business analytics for the customer, IM Supply leveraged its sophisticated e-commerce functionality and robust system integration, which include Electronic Data Interchange (EDI), direct-order entry, punch-out capability and compatibility with third-party system providers (e.g. SAP, Oracle).
IM Supply’s real-time reporting, which allowed the company to quickly assess spending across its manufacturing facility network, generated valuable benefits for the chemical company and 7% savings by the third year.
Additionally, IM Supply offers all of its customers an advanced purchasing portal that serves as the front end for receivables and the back end for payables. With this system, customers no longer have to purchase multiple items through multiple channels.
With its large distributor network and advanced reporting capabilities, IM Supply successfully lowered the bottom line for the customer, despite the challenges associated with servicing remote locations.