Industrial consumables often represent a significant but unstructured spend for many companies; and with a large number of stakeholders involved; it can be difficult to manage effectively. Many companies don’t set budgets for this category; allowing spending to grow unchecked.
The Industrial consumables category includes items like abrasives; adhesives; lubricants; welding supplies; PPE; and cleaning chemicals…products used in production that are not part of the final product. While it’s a diverse category; it can also be an emotional one; with strong attachments to certain brands and suppliers; making change challenging.
However; there are substantial savings opportunities for companies willing to invest the time. Over the years; ERA has helped clients achieve savings ranging from 7% to 19%.
It is not easy and challenges remain; such as:
- Poor or incomplete data is always a challenge.
- Multiple suppliers offering the same products.
- Difficulty in gaining stakeholder buy-in for change.
- Lack of formal purchasing processes.
- Insufficient training for purchasing staff.
The industrial consumables market is fragmented; with many small players and only a few large suppliers. While this complexity makes it difficult; it’s not impossible to achieve long-term savings with the right approach.
Some tips for finding savings from your Industrial consumable are:
- Data is Key: Accurate data is the foundation of good decision-making. One client thought their data was in good shape; but after 4 – 6 weeks sorting it out; they never looked back. Make sure your data is structured for cost management to unlock its full potential.
- Engage Stakeholders Early: Getting the right people on board early is crucial. If you don’t engage key stakeholders at the start; problems can arise later. Clear communication and a thoughtful approach can help manage the challenges that come with different preferences and needs.
- Leverage Supplier Relationships: Suppliers can be more than just vendors - they can offer valuable insights and resources. Working closely with suppliers can help make sure you’re using the right products and gaining the most value. Exploit them to your benefit.
- Consolidate and Optimise Supplier Deals: Avoid purchasing from too many suppliers. Consolidating your purchases can provide greater bargaining power; simplify processes; and improve quality control. Aim to have most of your requirements under a few preferred suppliers…and yes there are always the exceptions.
- Benchmarking: Comparing costs internally and against industry peers can highlight areas for improvement. Benchmarking reveals discrepancies that can lead to more informed decisions and help identify opportunities for savings.
