MRO

Overview

MRO (Maintenance, Repair, and Operations) is a set of corrective and preventative activities performed to keep facilities and production equipment in perfect working conditions. MRO inventory consists of diverse supplies, tools, and materials for maintaining physical assets. It includes safety gears, tools, spare parts, consumables, lubricants, office and janitorial supplies. The continuity of production processes relies heavily on the proper maintenance of physical assets. Companies need to effectively manage MRO inventories, ensuring timely and adequate availability of supplies. 

There are different ways for managing MRO inventories to prevent equipment downtime, minimize overstocking and enhance productivity. Common inventory management methods are: 

  • Vendor-managed inventory (VMI)
  • On-site kiosks and vending machines
  • Enterprise resource management (ERP) inventory solutions

Aside from getting the correct supplies at the right time and place, optimizing MRO inventories enables companies to improve their profitability (better cost savings), enhance maintenance and production planning, improve operational safety and strengthen the sustainability of production processes. Companies often overlook the following tips when streamlining and optimizing their MRO inventories.

1. Centralizing Inventory Management Using Technological Solutions

Modern production facilities encompass multiple independent units, sometimes in different locations. Maintenance interventions vary from one piece of equipment to the other. Additionally, they require materials and tools sourced from different manufacturers or suppliers. As companies strive to improve the quality of maintenance work, they are constantly implementing technological solutions. There is increased adoption of sensors for predictive maintenance, Industrial Internet of Things (IIoT), and Computerized Maintenance Management Systems (CMMS) into maintenance operations. Managing the procurement, storage, and distribution of supplies is taken care of by Enterprise Resource Planning (ERP) solutions.

Although these solutions streamline MRO activities, they remain underutilized. Condition monitoring sensors and CMMS systems collect vast amounts of data on the health of production equipment. The solutions enable companies to centralize maintenance operations, collect, analyze and store relevant maintenance data. The systems retain detailed maintenance logs containing materials and tools used during routine or emergency maintenance of different production equipment.

Centralizing the management of ERP and CMMS systems can strengthen MRO inventory management further. Companies utilize CMMS data to identify frequently used spare parts and consumables. The information gathered is transferred to ERP systems and subjected to statistical modeling to generate accurate demand forecasts for better financial planning. 

2. Criticality Analysis and Inventory Segmentation

Production facilities contain blends of equipment from different manufacturers. Stocking of supplies and materials depends on the criticality of each asset to the production process. By comparison, some production assets break down often, while others require part replacements at intervals as recommended by manufacturers. While the cost of each spare part varies, the lead time will depend on market availability. Critical spare parts are uniquely manufactured and distributed by the original equipment manufacturers (OEM), while others have generic aftermarket alternatives. 

Based on maintenance data, organizations can identify materials and parts that are highly critical. They can scrutinize MRO inventory to establish the holding value of each MRO part and its movement frequency. The company then categorizes stock commodities as fast- or slow-moving consumables and develops policies for managing each segment.

Companies may end up overstocking materials just because there is a budget. However, they can perform facility-based criticality analysis and inventory segmentation. In return, they identify and phase out potentially obsolete stock items. Criticality analysis enables the company to make advance arrangements for purchasing high-value or scarcely available spare parts. Depending on the holding values of stock, companies can decide whether to directly manage MRO inventory or enlist the services of a 3rd party (vendors) to minimize storage costs and risks.

3. Spares Risk Assessment

Companies struggle to strike a balance between high cost, least use, and fast-moving, low-value consumables. In most cases, it is difficult for companies to estimate mean-time-between-demand and quantify the financial risks caused by stock-outs. Companies are likely to hold stocks of MRO inventories with little unexpected usage while understocking parts with a long lead time.

Risk modeling allows companies to explore the effects of holding certain stock items. It provides an opportunity for companies to analyze the efficiency of different stocking models to their operational requirements. Conclusive spares risk assessment enables companies to make better stocking decisions and minimize the financial burdens created by stock-outs. 

4. Setting Key Performance Indicators and Training MRO Staff

Measuring the success of any MRO inventory management strategy requires continuous monitoring of parameters like cost-savings, visibility of the supply chain, and the impact of stock items on production processes. Every employee should understand how the inventory management system works. They need to understand procedures for requesting materials, when to initiate stock replenishments and how to maintain material consumption records on technology platforms.

Developing KPIs and training employees is one of the steps for standardizing MRO inventory management. KPIs provide tools for controlling stock movement, tightening the supply chain, and generating usage reports in a standard format. Companies can audit inventories and automate usage reports. Through structured training, the company introduces, enforces and continually evaluates adherence to inventory management best practices.

Conclusion

Optimizing MRO inventories goes beyond availing maintenance supplies. Companies must maintain sufficient stock levels at affordable rates and continually review inventory management strategies to proactively identify opportunities for improvement. A shift towards technology-based inventory management solutions improves the company’s access to maintenance and supply chain data for better inventory management decisions. Overall, inventory optimization through innovation, best practices and technology significantly improves the profitability and workflows of a company.

Bryan Christiansen is the founder and CEO of Limble CMMS. Limble is a modern, easy-to-use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.