RS Components releases 2021 Indirect Procurement Report: ‘From Disruption to Recovery’

RS Components, a trading brand of Electrocomponents, a global omni-channel product and service solutions provider for industrial customers and suppliers, has launched the 2021 Indirect Procurement Report ‘From Disruption to Recovery’ – the resulting report of responses from the fifth annual survey produced in association with the Chartered Institute of Procurement & Supply (CIPS). It explores how the category of supplies for Maintenance, Repair and Operations (MRO) is managed. The survey was the biggest yet, with more than 1,300 global respondents from the procurement profession.

These respondents are from sectors including manufacturing, public sector, energy, logistics & retail, transport & defence and technology, covering job roles from operational through to senior and director level.

While reduced operational budgets and the need to reduce inventory costs remained in the number one and two spots as the top business pressures, for the first time, sustainable and ethical procurement emerged as a business pressure among the top three. Some of the main themes emerging from this year’s survey included COVID-19, sustainability and digital technology enabled growth.

The 2021 Indirect Procurement Report highlights include:

  • After being largely postponed in 2020 due to the pandemic, efforts to tackle climate change were prioritised again by many organisations, with more than half (56 per cent) of those surveyed having a sustainable and ethical procurement strategy in place and a similar number (48 per cent) having a carbon reduction strategy, adopting measures such as electric vehicle use, energy management and better logistics to reduce transport.
  • While the pressures of the COVID-19 recovery included disrupted supply chains due to firms going out of business, furloughed staff and decreased MRO spend, it’s by no means a negative picture as more than a third (36 per cent) said collaboration with suppliers is increasing and opportunities for agility have been created.
  • Supplier rationalisation in the UK has seen a decrease year on year, but over the last year, this will likely have been driven by supply chain issues, companies failing, reduced headcounts/furlough – so while supplier rationalisation is the right strategy, it may not be the best time to employ it.
  • The impact of COVID-19 remains and the role of digitisation and new technology, as well as remote working, are anticipated to continue for the next 6-12 months. Digital solutions are improving efficiencies: a third (34 per cent) of UK organisations are using eProcurement to automate transactional tasks, with more than half (53 per cent) of the stakeholders using eProcurement channels for purchasing and 25 per cent are actively training end users on these systems to increase MRO procurement efficiencies.
  • Despite the disruption caused by the pandemic, the percentage of respondents having a strategy in place for business continuity planning (BCP) for critical parts has risen by just four percentage points from 2020 to 50 per cent.
  • Encouragingly, industrial cloud computing and cyber security services have seen big increases year on year in the UK: 21 per cent vs 14 per cent in 2020 for industrial cloud computing and 49 per cent vs 42 per cent in 2020 for cyber security services.
  • 58 per cent of UK respondents claim their business is issuing an average of 13 MRO tenders a year.
  • Average annual indirect spend is up about 10 per cent year on year, although pressure to deliver annualised cost savings has eased, with 45 per cent identifying it as a challenge, down from 51% last year.
  • Delivery on time remains the number one KPI for suppliers, while cost savings generated ranks fifth.
  • After several years of incremental increases, the claimed use of using online marketplaces for tenders and ordering has decreased slightly across all markets.
  • The ‘war on talent’ going on in the profession continues to be a day-to-day challenge, with almost a third of respondents (32 per cent) citing the difficulties in finding people that understand best practice procurement. This is despite a higher-than-average UK pay increase of 5 per cent (national average 4.2 per cent) for procurement professionals, according to the CIP/Hays salary survey.

Emma Botfield, managing director UK & Ireland at RS Components, said: “This comprehensive and insightful report has highlighted that while the MRO procurement profession is still feeling the impact of COVID-19, a post-pandemic procurement world is starting to emerge. With a bigger than ever survey sample, we’ve been able to really get to the heart of the issues affecting MRO procurement and how firms are dealing with it. We’re pleased to be able to share this valuable insight and help drive best practice across the whole industry.”

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