5 steps to analyze business needs

Maintenance, repair, and overhaul (MRO) spending makes up a significant portion of manufacturing facilities’ indirect costs. Expenses can result from hundreds or thousands of individual supply items, from fixtures and tooling components for critical manufacturing equipment to trash bags and first-aid kits.

It may be tempting to tell department heads to cut supply purchase costs by 5% to 10% across the board and assume they’ll distinguish a solution, but this approach will likely fail to work for long. Likewise, less expensive supplies may lead to increased costs, quality problems, or future issues.

As a solution, a business-needs analysis is a process that produces significant, sustained cost savings as well as improvements in productivity, quality, and safety.

To implement a plan that best fits your business, follow these five key strategies necessary for a high-impact business-needs analysis:

1. Secure executive buy-in

Sustainable cost savings and other improvements often require more than renegotiating supply contracts. These improvements will take time and effort, partially because they often involve finance, purchasing, maintenance, operations, and others. Start by securing buy-in from the senior executives responsible for the facility. Their commitment to the process at the beginning will make everything else easier.

2. Set clear goals

As you involve senior executives, ask them to establish what they see as the most important goals for the analysis. Cost savings are always a goal for companies; however, as you gather input from leaders, you will find other pain points to address, such as inefficiencies in routine processes or excess inventory. Setting goals also provides a way for you to measure the process’ value. Typically, a comprehensive analysis targets up to seven objectives.

3. Involve all functions

As you collect the information for your analysis, involve every department head. This doesn’t have to be time consuming; 20 or 30 minutes with each member of the leadership team will allow you to understand their core processes and how they make supply decisions. During these conversations, you’ll likely discover additional problems that might not be obvious from a review of purchasing data and may go unnoticed by high-level executives.

4. Map out processes

Go beyond knowing the quantity of metalworking fluids and coolants used and how much they cost. Develop an understanding of how and when they’re ordered, who makes the purchasing decision, and how the payments are processed. By completely mapping out these processes from beginning to end, you can identify information gaps and spot-savings opportunities.

5. Do it all at once

While it may be tempting to view this process as a side project, you’ll have a much clearer understanding of problems and potential solutions if you do the project in a compressed period – throughout a few days. When MSC performs these analyses for clients, we frequently do most of the work in a single day, on-site at a facility. Doing it this quickly helps keep it at the top of everyone’s agenda, including those who you need to provide information and the individuals who must approve the final changes to purchasing, inventory, and other processes.

A business-needs analysis can seem intimidating and time consuming, especially during other day-to-day operational demands. That’s why MSC offers a business needs analysis through the national accounts program. With a thorough analysis, companies can yield significant cost savings, process improvements, and efficiency increases for several years.

MSC Industrial Supply Co.
http://www.mscdirect.com

Darr Greenhalgh, senior manager of customer solutions at MSC Industrial Supply Co, can be reached at 704.987.5254 or greenhad@mscdirect.com.