An end-to-end, source-to-pay MRO solution
April 14, 2022
By Eric Rea | Vice President and Managing Director Innova Supply Chain Solutions
By Eric Rea | Vice President and Managing Director Innova Supply Chain Solutions
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No one ever said MRO is easy. It takes a lot of energy to procure, manage, and process payment for tens of thousands of SKUs from thousands of suppliers. Today, many companies are looking to rise above this resource-draining distraction and focus more time, talent, and energy on core competencies.
Fastenal has answered the call with a newly-enhanced integrated supply program: Fastenal Integrated Supply Powered by Innova. We sat down with Eric Rea, vice president and managing director of Innova Supply Chain Solutions, LLC, to learn how the program helps businesses do more of what they do best. How do you define "integrated supply?" On the most basic level, integrated supply is when a company hires a third party to manage supply chain activities in a comprehensive way. This includes sharing data to illuminate activities and to measure the program’s impact. I think there’s also an expectation for strategic alignment, cultural fit, and a certain level of completeness in terms of the scope of service and materials. Why did Fastenal make the decision to bring this solution to market? There has been a growing refrain from strategic customers: They want to “get out of the MRO business.” They want to step away from the transactional processing of indirect materials, and to redirect that energy toward activities that bring them into new markets, improve the value of their end product, and ultimately widen the moat to their competitors. Fastenal has been doing integrated supply for a long time, but over the past three years a significant investment was made to enhance and scale the program. Those efforts centered on developing and launching a wholly-owned subsidiary of Fastenal called Innova Supply Chain Solutions, LLC, and also developing a proprietary P2P software application known as NovaPoint to support the unique needs of integrated supply clients. Okay, so there are two entities here - Fastenal Company & Innova Supply Chain Solutions, LLC. What are the respective roles and how do they work together to bring value to a company? Fastenal offers 50-plus years of supply chain management experience along with a suite of solutions to supply MRO products efficiently, from eCommerce and VMI to vending and Onsite crib management. What Innova brings to the table are the additional capabilities required for a comprehensive integrated supply program. We have an offsite procurement services team that does the strategic sourcing and tactical buying for all indirect material transactions. They work with our finance team, which receives the invoices, performs the three-way match, and pays the suppliers. We also provide NovaPoint, a customer-facing application that serves as the “single source of truth” for all indirect material transactions and inventory positions. When you combine the capabilities of Fastenal and Innova, it adds up to a supplier-agnostic, end-to-end, source-to-pay solution for all indirect material purchases, regardless of source. 
There are several integrated supply offerings out there. What differentiates this solution? Unlike a lot of providers in the integrator space, Innova isn’t a stocking distributor trying to sell more product. In fact, we don’t sell products at all. We provide software along with procurement and payables services, and we do it through an agency business model. This comes with a legal, fiduciary, and ethical responsibility to always do what’s best on behalf of our clients, which is the definition of “supplier-agnostic” in this space. Couple these features with what the market already values from Fastenal – great service, innovative solutions, supply chain expertise – and we have a very complete program for companies looking to alleviate the processing costs surrounding indirect spend. What are some of the benefits companies can expect? This solution allows businesses to step away from the distraction of MRO – all of the labor energy consumed by processing thousands of invoices, doing the three-way match to pay suppliers, physically managing the product in the facility, and so on. But more than that, it’s a way to make MRO an area of excellence in the business. That means piece price cost savings, contract compliance and reduced rogue spend, faster lead times and requisition-to-PO turnaround times, 6S Onsite cribs, standardized processes across locations, full transparency to inventory and procurement data, and actionable KPI reporting for all indirect material purchases regardless of supplier. You may also like:
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Want to learn more?
www.innovascs.com is a great starting place for information on our operating model and what we do. Even better, reach out to us at www.innovascs.com/contact.html so we can start a conversation about your business needs. We are happy to present our operating model and provide a demonstration of the NovaPoint application via a virtual meeting. Like what you're seeing here? Subscribe to the Blue Print for FREE and get the magazine sent right to your address. |
