WHAT IS THE 20% SOLUTION?

The 20% Solution is a concept for dramatically reducing the costs of MROP (maintenance-repair-operating-production) supplies procurement, often by 35% or more. Described in the book, The 20% Solution is a practical, down-to-earth guide for getting the MROP function under control and turning it from a chronic problem area to one of innovation, opportunity and sustainable competitive advantage.

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Who needs the 20 percent solution?

This book is written for anyone who has responsibility to procure indirect materials including those in manufacturing, construction, health care, government, military/defense, institutional, commercial, mining/extractive, charitable and other types of enterprise, whether for-profit or non-profit.

It is also intended for the manufacturers, distributors and other supplier/vendors who furnish MROP  materials—for training their sales and service personnel and to promote this profit-improvement concept to their current and prospective customers.

Finally, this book should prove useful to faculty and students in such curricula as industrial distribution, industrial technology, purchasing and materials management, supply chain logistics, industrial engineering and related fields.

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Why the 20% solution is needed

In the typical organization, the procurement of maintenance, repair , operating and production supplies (MROP) represents only about 20% of the total spending for materials, but consumes about 80% of the time, effort and expense involvedin the purchasing process. For many reasons, detailed in this book, very few organizations have properly analyzed and identified improvement potentials in MROP procurement beyond getting price quotes. The Author’s experience with hundreds of entities over 50 years has demonstrated that cost savings in excess of 35% of MROP spending are obtainable without significant investment or risk. Applied to the estimated annual spend of $450 billion to $500 billion in the U.S. for MROP products, this equates to an astounding potential cost savings of $150 billion or more across the American economy. The 20% Solution shows in easy-to-absorb detail how to analyze, identify and obtain these savings within your organization. This book is written for those individuals responsible for indirect materials procurement in for-profit and non-profit entities, their suppliers, students and faculty of business and industrial technology and others seeking dramatic cost reduction opportunities in an often overlooked function.

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What the Professionals say

“This book provides valuable insights into one of the last untapped profit opportunities in distribution.”

Al Bates, President, Profit Planning Group Inc.

“The practical ideas and deep industry knowledge can significantly impact your bottom line. For buyers; real-world strategies and creative cost-saving tips.  For distributors: ways to improve internal processes and profitability, as well as deepen key customer relationships. For both: how to create long-term win-win relationships based on continuous improvement.”

Thomas P. Gale, Publisher, Modern Distribution Management

“One of the few places where buyers can find a practical guide to help them partner with their suppliers to lower costs. The 20% Solution: A Practical Guide to Dramatic Cost Reduction in MROP Procurement, is a terrific resource for anyone who makes a living in the MROP world, either on the buy side or the sell side of the table. I highly recommend it as an easy-to-read and useful tool.”                   

Rich Vurva, Publisher/Editor, Progressive Distributor Magazine

 

“Joel Roth has given much thought about the relationships between purchasing and its uppliers and is looking to start a conversation on ways to take costs out of the MRO buying process with his book, The 20% Solution.  From my experience interviewing both  urchasing professionals and executives at supplier companies for Purchasing Magazine, his suggestions make sense.  The solution doesn’t have to be complex, nor does it have to cost a lot of money to work. Start small. And talking.

Susan Avery, MRO Editor, Purchasing Magazine

 

“Increasingly, the (supply-chain) managers in our focus groups said, it’s more important to examine the total cost of the deal.  Purchasing from suppliers with a lower price may not be the smartest move………if that supplier ends up bringing in higher additional costs, including waste in the production process, or high expenses for storage, transportation and packaging. Supply managers must also be able to understand—and take advantage of—the benefits they can derive from supplier relationships to achieve organizational goals.  For example, they must know when to turn to suppliers for help with developing new products and standardizing parts and processes to lower production costs.

We…can free up a great deal of creative energy from the suppliers in terms of contributing to solutions that can reduce costs….supply-chain managers must learn to be more transparent in their dealings with suppliers—a big change from the days of keeping critical information close to the vest to get leverage for price cuts.”

The Wall Street Journal,  March 10, 2008

 

• Joel Roth is on the money with The 20% Solution.
• In today’s business environment allocation of resources is critical.
• MROP procurement is not a core competency of manufacturing companies.
• Integrated supply programs provide opportunities for year over year cost savings with little investment or risk and can be a key to operational excellence.
• The book is not based on theory—every aspect of this guide is illustrated by real experiences of the author during his 50 + years in business.

 

Lee Heusinger, former Operations Manager, Jos. T. Ryerson Co.

 

 

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