The 20% Solution
A Practical Guide To Dramatic Cost Reduction In MROP Procurement
by
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Why is this book titled "The 20% Solution"? In 1906, an Italian economist named Vilfredo Pareto observed that 20 percent of the population in Italy owned 80 percent of the country’s property. This became known as Pareto’s Principle of Maldistribution or, more famously, the 20/80 Rule. This concept is extremely useful as an analytical tool because it enables one to concentrate efforts on a small number of items, yet achieve valid results for the entire universe being studied. We will use this concept frequently in the chapters that follow. You will find that the 20/80 Rule is ideally suited to analyzing and resolving the MRO problem (the 20 % or so of total spend).
Many would say that the 20/80 approach is simply applied common sense. It has been our experience that, when it comes to MRO procurement, common sense is not always so common.
We propose to do something that you never thought possible—take the drudgery, frustration and grunt work out of MRO and make it a profitable, controllable and positive undertaking.
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About the Book
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 involved in 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
About the Author
Joel L. Roth has spent over 50 years in a business career that is extremely diversified. He holds Bachelors Degrees in Engineering and Operations Research from Case Institute of Technology (now
His career began with Procter & Gamble in Manufacturing Engineering, and later in Sales. He worked in general management consulting for a number of years, serving a diverse array of clients in numerous functional areas including purchasing, logistics and materials management. He subsequently became a Principal of Ernst & Ernst (now Ernst & Young) in their Management Advisory Services Division.
Mr. Roth left E & E to join a client, Gulf & Western Industries, as a Senior V.P. with operating and planning responsibilities covering G & W’s 160 subsidiaries, divisions and affiliates world-wide.
Since 1972, he has owned and operated a number of privately held companies, including 10 industrial supply distributors in the
Mr. Roth has worked on procurement problems and issues in hundreds of organizations—ranging from motion pictures to pulp and paper, from military procurement to metalworking—over the course of his career. He is a former member of NAPM, a member of Affiliated Distributors and a member of the Industrial Supply Association.
In his spare time, the author serves as a consultant, speaker, trainer and seminar- workshop leader. He can be reached at, jroth@the20percentsolution.com or 770-319-0735.