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MRO Partnerships: A Case Study
Author(s) -
Bechtel Christian,
Patterson James L.
Publication year - 1997
Publication title -
international journal of purchasing and materials management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.75
H-Index - 92
eISSN - 1745-493X
pISSN - 1055-6001
DOI - 10.1111/j.1745-493x.1997.tb00027.x
Subject(s) - purchasing , procurement , business , operations management , cost reduction , product (mathematics) , purchasing management , marketing , engineering , geometry , mathematics
IN BRIEF Despite the increased attention procurement managers are giving MRO purchasing, success in managing MRO items has been limited. Increased awareness of MRO purchasing can be traced, in part, to the increased use of blanket contracts and procurement cards. However, blanket contracts and procurement cards address only one cost area of MRO purchasing, ordering, and processing costs. While firms save money through increased processing and ordering efficiencies, larger product application cost‐saving opportunities in MRO purchasing lie in improving stocking, receiving, distribution, and searching activities. This article discusses how Bethlehem Steel's Burns Harbor plant developed and implemented a new MRO purchasing strategy which achieved dramatic cost reductions in all MRO cost areas. By creating MRO partnerships, Bethlehem Steel decreased all of its key MRO cost drivers, increased internal and external customer service, and used MRO supplier expertise to create ongoing reduction efforts.