Brammer, the UK’s leading supplier of maintenance, repair and overhaul (MRO) products and services, has issued a White Paper extolling the benefits of adopting an approach based on the total cost of ownership when sourcing MRO spares, of massive benefit to Sales Professionals in the manufacturing arena.
Entitled ‘The Importance of Total Cost of Ownership in Maintenance Spare Procurement’, the White Paper challenges the simplistic approach, often taken in an attempt to reduce costs in the area of maintenance and engineering spares, of opting for the lowest price product to do the job. Such decisions tend to be taken by procurement departments without giving sufficient thought to the direct and indirect operating expenses that may result during a product’s lifecycle
It also considers the fact that initial cost can account for as little as 10 per cent of the total cost of ownership and how purchasing based on optimising costs offer the most economical solution.
Brammer Managing Director Ian Ritchie explains: “While a reduction in purchase price may offer an immediate short-term gain, this is far outweighed by the financial and operational benefits of purchasing based on total cost of ownership.
The White Paper demonstrates the advantages on offer to companies who adopt a well-considered total cost of ownership approach. One example cites how an MRO supplier can potentially save a company which generates sales of £100 million a year, with a net profit margin of 10 per cent (£10 million), £100,000 in variable costs. This is achieved through lower maintenance costs, energy savings and optimised performance, and equates to a 1 per cent increase in gross sales – or £1m – to achieve the same bottom line gain.