What's Missing from Your MRO Supply Management Strategy?

Unchecked MRO management could easily compromise manufacturers or service providers utilizing preventive, predictive or proactive maintenance plans.

Whereas an active supply chain supports healthy production and high-quality goods, well-managed maintenance, repair and operations/overhaul (MRO) procurement powers enterprise asset maintenance strategies. Although these two channels often run parallel and may even share similar delivery infrastructure, many businesses underestimate or overlook MRO and fail to incorporate supply chain best practices into its management.

It's a shame – in the past, we've discussed the benefits smarter MRO management brings to critical spare parts programs, but MRO encompasses much more. Essentially, all tools, materials and labor pertaining to the upkeep of enterprise equipment fall under the MRO purview, which makes its functionality crucial to asset-reliant businesses regardless of what maintenance paradigm they work under. However, as we'll demonstrate, unchecked MRO management could easily compromise manufacturers or service providers utilizing preventive, predictive or proactive maintenance plans, especially those that sought out scheduled maintenance to escape the costly traps hiding in the reactive maintenance mindset.

Why does MRO management require greater on-site attention?

Those without direct experience handling aspects of MRO may see these processes as ancillary – perhaps even tertiary – to the greater production or service goals their businesses maintain. In fact, the two are complementary, enhancing each other so long as both remain stable. How else could a manufacturer uphold high standards for its products without enterprise machinery running at capacity?

"In a way, MRO procurement embodies the Pareto Principle."

To that end, business leaders ought to understand the full scope of MRO as a sizeable fraction of their respective budgets and itineraries. According to Instrumentation and Control, while MRO item procurement costs may constitute at most 25 percent of nonproduction invoiced costs, management of MRO supplies takes up a significant amount of oversight for the average procurement department – around 80 percent of the total procurement process workload.

In a way, MRO procurement embodies the Pareto Principle, otherwise known as the 80/20 Rule, which means positive optimization efforts could reasonably yield more substantial results than if applied elsewhere in the procurement process. However, cost efficacy isn't the only reason why asset-intensive businesses augment MRO operations. What about the benefits increased attention to MRO could have on general plant functionality?

After all, we know asset reliability impacts productivity or stability of service. We know enterprise asset management solutions mitigate the severity and frequency of downtime events to a negligible margin. We know EAM and scheduled maintenance allow businesses to control when, how and why they power down instead of waiting until a failure takes them offline for an indeterminate amount of time. Surely, these abstract values add up to concrete savings.

Let's go a bit broader: In a global context, where else might businesses reap benefits in MRO optimization initiatives, specifically as they pertain to the process itself as opposed to the supplies comprising the process?

"Half of all businesses refocus their attention on MRO for compliance."

Keeping up with compliance

MRO upgrades maintain service stability for customers, improve safety for equipment operators and technicians and avoid expensive violations from regulatory bodies. According to a survey conducted by the Aberdeen Group, half of all businesses refocus their attention on MRO, at least in part, to keep in step with current compliance standards and ready themselves for those just down the road. Highly regulated, reliability-centered industries like energy, for example, ought to take advantage of all methods and resources that preserve, protect and prolong the lifecycle of generators, as well as a plethora of distributed, interconnected remote assets to appease the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation.

Streamlining a distributed MRO supply chain

By reducing and consolidating the number of suppliers providing raw materials to process industries or prefabricated components to manufacturers for assembly, these businesses simplify production procurement from an administrative standpoint. The same could be said for MRO, perhaps more so if one considers the specialized equipment and spare parts required for advanced maintenance. While it may not be as easy to reform MRO sourcing on a supplier-by-supplier basis as it would be with standard supply procurement, businesses may find benefit in dividing budgets between the two more evenly.

Reducing risk in connected age

As assets grow more technologically complex and businesses integrate inexpensive sensors, telemetry and other innovations from the Industrial Internet of Things into the mix, MRO materials costs might not change all too much. That said, the diversity of items on an MRO Bill of Materials absolutely will. MRO process optimization can effectively preempt the complications inherent in taking on additional assets and all their maintenance needs.

What should an MRO management system do to achieve greater asset reliability?

The introduction of a couple of different EAM solutions will help drive out waste from MRO operations on site and abroad, making it easier for repair professionals to track the supplies relevant to them and sharpen the overall maintenance mechanism business leaders look toward to ensure asset reliability.

Try utilizing a comprehensive and prioritized master asset list deployed over a computerized maintenance management system (CMMS), such as IBM Maximo. In tandem, these resources both standardize research and reporting for all maintenance activities, as well as ensure every byte of granular data relevant to each asset or failure code won't go unnoticed by maintenance professionals. Should an issue arise, repair technicians have a wealth of historical information to pull from, including the model number and stock of critical spares pertinent to a specific work order or project. CMMS, therefore, enhances the speed with which maintenance staff respond to asset failures or deficiencies, not to mention supports high-quality repairs performed once and only once.

Upon adopting EAM solutions for industry-leading MRO management, business may even greatly reduce or completely eliminate the need for on-site critical spare parts inventory at all, switching instead to a "just-in-time," as-needed procurement model.

For all it does and all it impacts, MRO management deserves greater appreciation from business leaders who want to get serious about all aspects of asset reliability. Once organized onto a user-friendly and actionable platform like a CMMS, MRO operations will finally fall in step with EAM strategies, reduce procurement costs and bolster any scheduled maintenance plan even further.