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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.
