b'C The solution The existing process was CuuttttiinnggtthheeMMRROOccoossttss The first step was to process map the companysunnecessarily complicated: current procure-to-pay process. This was led by o RSs dedicated team of eCommerce specialistsAn engineer would choose a basket of goods, offaaccoonnffeeccttiioonnaarryyggiiaanntt and the customers key stakeholders then, using araise a paper requisition and send it to their process cost calculator (produced in collaborationsuperior for authorisation with Chartered Institute of Procurement & Supply),Once this authorisation was granted it was possible to calculate the time taken for eachthe requisition was sent to procurement. RS has helped a leading confectionery manufacturer achieveprocess step in order to produce the total cost to theProcurement would then check the price online significant cost savings in the indirect procurement process company for every order they place.before raising a purchase orderBy doing this, it was identified that each PO raised,The purchase order would need to be signed off through its Purchasing Managersystem. took 88 minutes from end to end, costing $126 perby the head of procurement before the PO was order. For RS alone, they were placing over 200emailed to RS for fulfilment End inefficient, costly As such, there is significant value in reducing processorders annually, with a similar number of orders procurement processescosts, rather than focusing purely on the purchasebeing placed with multiple suppliers.Once the goods were delivered, a three-way price of individual items. match was needed between the emailProcurement teams and engineers face a number ofRS found that the simplest way to remove many ofrequest, the PO on their system and the challenges when it comes to the maintenance, repairthe issues (and additional cost) in the process wasindividual invoicesThe challenge and operation of their organisations assets andto introduce PurchasingManagerto the customer. facilities. The supply chain for indirect materials isAn example of how RS has been able to help aPurchasingManager is a web-based, order complex due to the number of stakeholders involved,customer take better control of its process costsmanagement system used alongside the RS website.The outcome a fragmented supply base and the sheer number ofis our work with a well-known confectioneryBuyers can create account structures across The customer now has a simplified workflow with products split across multiple categories. In addition,manufacturer, a market leader within its categorytheir organisation, assign spend controls, cost empowered end users, which has significantly there is constant pressure from senior managementwith a turnover in excess of $170 million. centres and approval limits to help manage all reduced processing costs, enabling all functions to reduce costs.RS Online purchasing.involved in the indirect purchasing process to focusRS has worked with this company for a numberon value added activities in their respective roles. As one of the largest suppliers of industrial supplies,of years, supplying a wide variety of products. The system allows the end user, usually an engineer,The customer has moved from an average cost RS is in a unique position to understand the complexThis includes electrical and automation products, to go onto the RS website, choose the product theyneeds of its customers and to help these businessesPPE equipment, tools and test equipment, whichneed, order it and see when the delivery will beper order of $126 before PurchasingManagerwas improve their processes and make efficiencies.are used by maintenance engineers to help keepmade. Behind the scenes a confirmation request isintroduced, to $78 now. The number of orders also operations running.sent to a senior colleague who can quickly approveincreased to 1,089 annually as they consolidated The crucial statistic for organisations to understandthe cost and the order is processed.more orders with RS, reducing their supplier base. is that with indirect procurement, process costsAs a large organisation, the confectionaryBased on the new cost per order, this equated to can be twice as much as the amount spent on themanufacturer had a long-term plan to streamlinePurchasingManager addressed the authorisationa $51,836 saving annually compared to their old products themselves. So if your organisation spendstheir purchasing process, which included reviewingprocess and became the only authorisationprocess. $170,000 on purchasing products over the courseall indirect spend. The procurement departmentrequired to approve an order from RS. Once an 2:1 was challenged to reduce admin and bureaucracyorder is approved, it is sent directly to RS withoutThe entire purchasing process has been greatly of a year, you will spend a further $340,000 onspeeded up, more employees are ordering from processing or soft costs. around the purchasing process so that it wouldprocurement being involved. The confectionerytrusted suppliers (rather than using local or online be quicker and require less input from multiplecustomer was able to use a single monthly blanketpurchases), which improves contract compliance, stakeholders across the business.order rather than individual POs, meaning that theand parts are being successfully delivered when only PO processing now takes place at the end ofengineers want them, which means there isTypically, the customer was spending significant the month. far less downtime. time locating suppliers who had the products they needed and then comparing quotes; raising POs The result is that the customer has gone from an with a finance team; and arranging for delivery inefficient, costly process with too much duplication to be achieved in a time that didnt impact theof tasks and a lack of clarity to becoming highly day- day business.efficient with real transparency throughout the They also felt there was a great deal ofpurchase-to-pay process. duplication and manual entry of information during purchasing. In short, the process was Indirect (MRO) Indirect (MRO) delaying procurement of low-value products,$51,836 (3.7 weeks) process costs product costs while taking valuable time away from employees core responsibilities. Savings per yearTime per year45'