Logistics Providers as MRO Integrators

For a few years now, the manufacturing sector has been feeling the pinch of the global recession and in these tough times, many manufacturing companies have started looking for avenues for cost reduction and increasing efficiency. While most attention has been on reducing direct materials cost and other capital spending, the indirect materials costs have been silently eating away the companiesï¾Ãƒâ€šÃ‚Æ’?? profits. It was a surprise to discover that the indirect materials cost has been a major contributor to rising expenses for manufacturers. It is being recognized that MRO materials is a growing substantial expense for US manufacturers- about $125 billion annually shows a study done by Frank Lynn & Associates in 2008. It has been observed that MRO supplies represent about 16 percent of cost of goods, which is about 62 percent of total requisitions for a typical manufacturer. Though integrated model has been popular among manufacturers, itï¾Ãƒâ€šÃ‚Æ’??s ï¾Ãƒâ€šÃ‚Æ’??bundledï¾Ãƒâ€šÃ‚Æ’?ï¾Ãƒâ€šÃ‚ services has been hiding the true picture of inefficiencies and waste which , in turn, paved the way for the lean handling of unbundled services. Unbundled services scored over the bundled services because it gave better visibility and a better chance for continuous improvement.