Maintenance, repair and overhaul, or MRO, is the process of carrying out reparative, scheduled or preventative maintenance on a firm’s equipment. Because MRO items do not form part of a company’s end product, MRO is a regularly under-resourced area for most organisations. However, the tide is turning, as leading firms have started to recognise the importance of formalising improved in-house MRO practices.
This increased awareness is in part due to growing pressure on materials and production managers, to reduce the cost of unplanned downtime. Another factor is that more and more firms are striving for operational excellence, particularly in the manufacturing process. The greatest issue faced by procurement professionals with responsibility for MRO inventory, is the vast range of products that have to be considered, along with the unpredictability of demand. A non-MRO item such as a component of the end product can be budgeted for, as the buyer will have figures that show when orders need to be placed and when to expect increased demand. The requirement for an MRO item, such as rivet shelving for instance, is much less predictable.
Why do firms need an MRO plan?
As a cost category, MRO items now account for up to 9% of indirect cost for the average manufacturing company, rising to between 10 and 12% for utilities and pharmaceutical companies. This is a significant rise from the figures 20 years ago, when MRO spend could be as little as 3% of indirect spend.
Formulating an MRO strategy
Putting a satisfactory strategy in place can be time-consuming, but the end benefits mean that this will be a valuable and cost-effective use of time and resources. According to an article in Procurement Leaders, the key steps to take when putting a new MRO strategy in place include declaring the MRO category a priority, assessing how you deal with each of your suppliers and getting an accurate record what you are purchasing.
It may be necessary to select multiple inventory partners to improve availability of critical items whereas for an item like industrial shelving, for instance, a single supplier such as https://www.rackzone.ie/ may be more appropriate.
There has been a significant increase in the number of large firms that are outsourcing their MRO management and procurement processes in recent years.