MRO in the manufacturing sense refers to the maintenance, repair and operations of a plant’s machinery and equipment. Further, management of the MRO is playing a more significant role especially around supply chain. COVID-19 and its affect on supply chain has brought more attention to the sourcing and procurement of MRO. At Air Specialists Worldwide, we are playing a significant role in the supply chain management for our manufacturing and OEM customers.
Ineffective MRO processes carry significant risks such as unplanned machine downtime, out of stock parts that are critical to the machine, and higher costs due to expedite fee and freight costs, to name a few. The combination of ineffective MRO processes and the associated risks have a significant impact on the MRO supply chain. The MRO buyers who neglect their MRO spend can lead the plant operations into disorganized storerooms, over spending and waste of spare parts.
What is your MRO strategy? Do you even have a strategy? Maybe you haven’t had the time to stop implement MRO processes much less come up with a strategy! What can you do today to improve MRO?
Here are several ideas to improve your MRO management.
- Do you have a MRO budget? That budget would include spend for all production inventory (i.e. new machinery, upgrades to machinery, rework of the lines, etc., which typically are larger dollars). The MRO spend should represent a low percentage of this total, say 3-10%. Where does your MRO spend fall in this?
- Proactive vs. reactive buys of MRO parts can vary widely. An unorganized storeroom and reactive purchases can inflate the budget. When is the last time you counted your storeroom inventory and compared it to your usage? How many MRO parts are “unknowns” – you don’t when it was purchased, why it was purchased, or what machine it would go on?
- The finance guys don’t like when cash is tied up in MRO inventory. Yet, it is necessary to have these replacement parts on hand in the event of a machine breakdown. Knowing your critical parts as well as lead times for other parts is very useful.
- Who are your primary suppliers, say those that help you with 80% of your spend? How do they support your critical stock? Or maybe do they know which parts are critical? Are their lead times accurate? Are they willing to stock any of your parts?
- Perfect MRO planning is not possible so we all know that rush orders may be necessary from time to time. As you know, these rush orders increase spend which the finance department tells you increases costs and lowers margins. What is your strategy to keep rush orders to a minimum?
- Oh yeah, and what about stock outs which could have also been incorporated in a few of the above? Stock outs lead to production delays, rush orders, and consequently higher MRO spend. Do you track the number of time each week, each month that a stock out occurs and compare it to when you actually have a MRO part in stock in the storeroom? It seems that procurement and plant operations should regularly collaborate to manage the storeroom inventory.
In a perfect world, the goal is to accurately forecast MRO spend, manage disruptions and reduce the impacts to all areas of your organizations.
If you are looking for guidance around MRO, please contact an Air Specialists Worldwide representative today! https://www.airspec.com/contact/