MRO Inventory and Procurement
Historically, MRO inventories are one of the most inefficiently managed units of an organization. While a neglected, disorganized storeroom may seem a trivial matter, it can pose a substantial burden on productivity and profitability.
On average, a technician spends up to ten hours per week searching for parts. Rushed or inaccurate requirements make service fulfillment more expensive and less effective.
MRO inventory best practices are defined as the most efficient and effective means for managing, storing, and handling MRO inventory materials. Best practices are the backbone of an efficient and effective MRO storeroom operation. MRO best practices include:
- Clean, standardized, and enriched MRO inventory data
- Separation of receiving and buying activities
- Inventory cycle counting
- Trained and skilled storeroom personnel
- Clean and well-organized storeroom
- Automated requisitioning
- Reorder point optimization
- Key performance indicators
Formulating a custom MRO Materials Model establishes the client’s best practice state for all storeroom materials management activities. The model contains information such as key performance indicators, policies and procedures, process flow charts, and storeroom roles and responsibilities.
Benefits of MRO Best Practices
The storeroom has the potential to increase productivity, improve asset performance, and reduce overall costs. Correctly optimized, a storeroom can provide:
- Increased maintenance productivity by 12 to 15%
- Reduced MRO material costs by 20 to 30%
- Reduced equipment downtime by 3 to 7%
One of the primary objectives of a Procurement organization is to ensure that materials and services are available at the right time, place, quantity, quality, and price. Accordingly, responsibility for buying materials or services is assigned to people skilled in negotiating, value analysis, procurement law, and ethics.
Just as for MRO Inventory, formulating a custom Procurement Model ensures that procurement responsibilities are clearly identified and that these activities are performed in a timely, efficient, and effective manner. The fundamental belief underlying this model is that by standardizing work, practices, and processes, procurement activities become more effective and efficient.
Implementing MRO and Procurement best practices is critical to optimizing MRO spending and inventory investment while supporting asset reliability needs. How these philosophies and measurement programs are implemented is equally important. The identification of best practices coupled with a simple but thorough implementation methodology shortens implementation time, accelerates organizational buy-in, and facilitates the realization of long-term and significant value across the organization.