Kurtz’s Korner:  The Untapped Opportunity of MRO      

 

Much like housing starts offer an indication of overall economic health, the Ariba Network provides insights into business commerce patterns and developments as ever-higher levels of spend are transacted.  Given this new degree of transparency, I am often asked by customers, analysts, and thought leaders where meaningful trends are emerging and their impact on the business.

 

As you might expect, there continues to be no shortage of interesting findings…some of which I will share in future posts.  Today however, I would like to focus on the untapped opportunity of MRO spend. In April 2011, Flint Hills Resources (“FHR”) identified this opportunity and created a goal to move past basic electronic commerce and create a competitive advantage by optimizing their purchasing processes and leveraging new tools - with a particular focus on MRO categories.  Today, FHR is currently transacting with over 220 of their suppliers processing approximately 36,000 purchase orders and 204,000 invoices annually over the Ariba Network.  The result has been improved collaboration with their MRO suppliers and more efficient and effective purchasing processes.

 

Unfortunately, FHR is an exception.  The reality is that very few organizations have the same process rigor in place for MRO as they do for other indirect spend categories.  According to Supply & Demand Chain Executive, the paper burden of this inefficiency is nearly 20% of total MRO spend - making this a category worth a second look.

 

At Ariba, this opportunity got us thinking.  As is our mission, how could we help our buyers enable more MRO suppliers and supplier catalogs faster and easier?  We believe we found the answer to this important question with our new partner – Thomas Industrial Network, an online division of Thomas Publishing Company that provides procurement professionals, engineers, and plant and facilities management with access to the detailed information needed to make purchasing decisions.  The partnership provides our buying organizations with free access to Ariba.ThomasNet.com  which allows you to search Thomas’ network of over 650,000 suppliers, most of which may be enabled to do business on the Ariba Network.  For example, suppliers like New Pig and MSC Industrial Supply have both been associated with Thomas for a number of years, and transact with more than  30 buyers each on the Ariba Network today.

 

If you are in procurement, my team can help you assess the potential opportunity to be found by increasing the amount of industrial MRO within your company’s spend management program. Alternatively, if you are a Thomas Industrial Network supplier, we can help you become even more eCommerce savvy to optimize how you market and sell over the Ariba Network.

 

Contact your Customer Engagement Executive or Account Executive, who will be pleased to perform a spend profile analysis to determine which of your suppliers are enabled on Thomas Industrial Network. Alternatively, to find out which of your suppliers are active on Thomas on your own, check out the self-service tool available at ariba.thomasnet.com.

 

Finally, if you are interested in learning more about how Ariba and Thomas Industrial Network are working together, please watch this video of Claudio Pinto, Senior Director Business Development at Thomas, as he shared his thoughts at the 2012 Ariba LIVE Conference.  You can also see a Flint Hills Resources Ariba LIVE presentation here.

 

If you have thoughts on MRO or other spend categories of note for a future posting, please use the comments section below or contact me directly.

 

Jason Kurtz

Vice President and General Manager, Ariba Network and Financial Solutions

jkurtz@ariba.com