How to Design a Mro Supply Chain Managment Solution
MRO Inventory and Purchasing Best Practices
Integral to all types of businesses, service deliveries, and manufacturing processes, are items which do not necessarily form a part of the final products or goods. Maintenance, repair, and operations (MRO) is the term used to collectively refer to these vital materials. Depending on the type of business or production operation, MRO could range from finances spent on office space cleaning to furniture, machinery lubricants, spare parts, building, and safety supplies.
A significant challenge many businesses face is the ability to properly manage these essential expenditures. In some instances, MRO purchasing can account for up to 40-60% of company budgets often due to purchase redundancies that could have been overlooked for firms running non-centralized MRO systems. To overcome these inefficiencies, this article will show why employing best practices in MRO inventory is the key to streamlining all production costs.
What Is MRO Inventory?
MRO inventory refers to an account of all materials supplies for use in any manufacturing or service delivery process. While the materials in the MRO supply chain are vital to the production cycle, they do not form any part of the finished products.
What Is MRO Inventory Management
MRO inventory management includes all activities that determine a company's spending on essential items indirectly involved in its manufacturing processes. Often, businesses do not pay sufficient attention to MRO sourcing and purchase which can have negative impacts on their overall production rates and cost-efficiency. An efficient MRO inventory management plan should contain the following:
- A complete list of the MRO items used in a typical production cycle
- Estimates of the sourcing and restocking time for each MRO component
- Records of the rate of use and depletion of MRO items
With the above MRO inventory best practices in mind, an experienced supply chain handler can effectively predict and replace MRO supplies as required while eliminating spending redundancies and freeing funds to support other important aspects of production.
MRP vs. MRO
Material requirements planning (MRP) refers to a computerized inventory system that helps businesses accurately predict the amounts of raw materials needed per unit time to maximize productivity while remaining cost-effective. By comparison, maintenance, repair, and operations (MRO) are the actual physical items manufacturers utilize to create their final products.
5 MRO Inventory Management Best Practices
There are various effective methods to solve the problems posed by poorly managed MRO inventories. Below are some MRO purchasing best practices that can keep spending within acceptable ranges while acquiring the materials you need.
1. Set MRO Management KPIs
The first step to sustainable MRO parts inventory management is setting minimum benchmarks against which your inventory can be measured. Setting up and monitoring key performance indicators will assist supply managers to predict trends in MRO usage and offer appropriate suggestions on how to keep the process running efficiently.
Vital KPIs to consider are:
- An estimate of spending on MRO items
- Supplier performance data
- The useful lifespan of present inventory
- Material utility surge versus replenishment rate
- Quantity of out of date MRO stock
- Total number of stock-outs
2. Educate Relevant Staff on MRO Sourcing and Supply Chain
Equally critical to the implementation of an effective MRO inventory plan is the training of the relevant members of staff who will implement MRO sourcing and supply. Providing opportunities for members of your procurement team to interact with MRO staff will create a synergistic work environment where everyone understands their role in achieving a common goal. More efficient material procurement can be achieved with interdepartmental training workshops and teamwork.
3. Locate MRO Inventory Centrally
In typical settings, plant managers and procurement staff working independently of one another might inadvertently raise the costs of material acquisition by separately ordering the same components. Cataloging and locating MRO supplies in a centralized area will significantly boost MRO efficiency by eliminating potential duplication of purchases.
4. Establish a Software Management System for Your MRO Procurement Strategy
Investing in MRO management software is a smart business decision with sound merits. Not only will access to storeroom management software streamline your supply chain, but it will also improve your ability to track, predict, and pre-empt MRO needs in real-time. Further, the use of MRO software will provide you with valuable data to help analyze supplier performance and adjust your storeroom vendors as required.
5. Consider Using Vendor-Managed Inventory Services
Vendor-managed inventory services are ideal for companies that prefer not to dedicate members of their staff to MRO supply management. Using a third-party firm to provide supply chain services in combination with a procurement software system, will optimize process efficiency, and free up staff to focus on their primary tasks within the organization they work for.
DXP Can Provide Sophisticated MRO Inventory Management Solutions
DXP is a globally-leading MRO distributor that offers refined business solutions to a broad client base. Our technologies are applicable in a diverse range of industries including aviation, agriculture, food, and beverage manufacturing.
We offer cutting-edge MRO inventory management solutions that are custom made to fit each unique business model. For companies seeking to gain a competitive edge in today's fast-paced business world, DXP is the right fit.
Contact us online today to learn more about the services we offer.
How to Design a Mro Supply Chain Managment Solution
Source: https://www.dxpe.com/mro-inventory-purchasing-best-practices/