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Contract Challenge

It all started in 2002 with an idea sparked by wanting to assist a growing Energy Services Company achieve their objective to reduce their vendor base from a record 40,000-plus AND generate associated cost savings in the process.  The idea, to set up a national contract for procuring commonly used Maintenance, Repair and Operational (MRO) assets from leading vendors, found traction with the company when proposed by the Account Manager for Industrial Controls. 

So much so, a bid was developed and competitively let to several other potential contract providers.  Industrial Controls was awarded the original contract for an initial two years.


Contract Solution

The MRO contract originally specified 500 commonly-purchased items from 13 major vendors.  All of the company’s everyday purchases for these products/vendors – Ashcroft, Honeywell, ASCO, GE, components, instrumentation, boiler and HVAC controls, analytics, to name a few – would be transacted via a consolidated versus a multitude of individual invoices.

Cost savings for consolidating purchases were NOT insignificant.  Consider, for example, that the company spent $160 generating one purchase order (PO) per vendor.  If one facility needed to purchase items from 10 different vendors, it would cost $1600 just to cut the POs.  Now multiply that by a hundred or so facilities every day.  It added up quickly.

The company was so pleased with the results after the first two years, it re-upped the Industrial Controls contract for a three year extension.  In 2008, the contract went out for competitive rebid; this time with 75 vendors and 3000 commonly purchased items specified.  Once again, the contract was awarded to Industrial Controls for an additional three years.


Contract Results

In addition to the cost savings associated with consolidating invoicing, the company enjoys overall MRO purchasing efficiencies, special pricing, technical support, engineering assistance and the ease of doing business with a single point of contact, the Industrial Controls account manager…AND their vendor base is down to 500 nationally.

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