Fostering supply chain maturity through MRO optimization
Fostering supply chain maturity through MRO optimization
Even in the best of times, manufacturers can’t afford for plant lines to go down and cause delays in production. However, the MRO management process for keeping lines running is a key area of supply chain management that is often glossed over as far as optimization is concerned.
For many companies, simply ensuring required materials and services are available to maintain ongoing plant production and operations is good enough. Unsurprisingly, MRO’s nuanced inventory management can spell doom for plant managers who assume MRO materials are readily available when in reality they may be short handed on necessary parts. Such a situation injects a significant risk of stalled production, missed customer orders, and spiraling OTIF levels.
Falling into the trap of believing that MRO optimization across your plant ecosystem isn’t a feasible priority prevents your organization from implementing an intelligence-based MRO inventory investment strategy.
Five common challenges impacting MRO management
1. Data spread across multiple systems
As an operations director, you commonly find yourself managing inventory levels from systems that are disconnected from other facilities in your supply chain. The lack of visibility into other plants or ERP instances can lead to your MRO specialists ordering parts that may already exist within your network or are labeled under a slightly different part number after a supplier change occurs.
This disconnect hinders you from digging deeper into materials inventory levels to determine where optimization can occur. The ability to reach across multiple systems will show significant opportunities for where you can reduce redundancy of low velocity items or increase levels where a critical shortage exists.
But optimization isn’t just about controlling costs, it’s also about allowing your organization to reduce the risk of costly downtime and shipping expedites when items are short at one facility but available at another. Increasing visibility across the enterprise allows your teams to drive a more strategic approach to both MRO risk and MRO cost reduction.
2. Too much inventory or not enough
When it comes to MRO inventory, you and your team frequently lack real insight into just how much maintenance material a plant or facility may have on hand, let alone across the entire organization. As a result, you may find yourself dealing with an exorbitant number of certain items or scrambling for backups due to a detrimental shortage of others.
Without knowing what items are available when scheduling both regular and emergency maintenance, you may be unable to complete crucial operational tasks for keeping production on track. However, holding too much inventory results in extra costs due to wasted working capital dollars, excess storage, and wasted time and labor from unnecessary put-away.
On the other hand, holding too little inventory can lead to the inability to promptly handle maintenance emergencies, ultimately leading to lengthy downtimes and major disruptions to service levels. Moreover, if the missing repair part is needed immediately, you may incur additional overnight shipping costs to source the required MRO supplies.
Luckily, technology exists today that allows you to achieve the perfect balance of existing and needed MRO materials without the costly, burdensome data cleanse and data governance projects that companies typically take on every couple of years. Using modern supply chain intelligence solutions to augment internal team knowledge allows you to check your order volume to affirm the correct flow of MRO inventory into a particular facility and across your enterprise network.
3. Duplicate materials go unnoticed
Item usage metrics provide a gateway into your purchase history so that you can spot areas of waste. This is a great place to start when beginning the process of reviewing areas for MRO optimization. Since MRO supplies typically don’t have a standard procurement regime, companies tend to overstock, leading to duplicate materials.
A good way to identify and avoid duplicate materials is by utilizing an AI-enabled inventory management platform to track historical patterns and identify areas where you have duplicate materials. Lastly, true optimization can’t be realized without a spend analysis to discover where rogue or non standardized spending occurs in MRO purchases.
Spend analysis can catch these small incursions and help create the budgeting plan needed to prevent rogue spending from occurring in the future.
4. Trouble measuring supplier performance
Without a centralized MRO technology in place, your team struggles to gauge supplier performance history.
Monitoring supplier performance gives both parties deeper insights into overall supply chain operations. When standardized metrics are available, you have the ability to see whether suppliers are meeting SLAs regarding MRO inventory goals set by your company and where performance trends may be trending negatively.
This inventory risk management ensures the suppliers you’re collaborating with aren’t adding unnecessary risk to your company while giving you a better idea about which suppliers you can lean on first should your MRO inventory be in a pinch.
5. Manual efforts are not sustainable
Companies hesitant to adopt new technologies in their supply chain operations experience a number of hardships including downtime, unfinished orders, overstocking of MRO materials, or equipment malfunction.
Manually managing inventory levels and needs on spreadsheets results in the inability to convert the institutional knowledge your MRO experts possess into strategic decision-making due to time wasted on columns and rows. Modern technology can infuse long standing employee expertise into the existing data using machine learning algorithms and allow you to build on your MRO strategy without undertaking a traditional data cleanse initiative that are often obsolete before the process is complete.
Al is no longer just a buzzword
With an AI-driven solution and process in place, you gain greater visibility around maintenance and repair inventory, allowing your company to plan and aggregate materials spend across the entire enterprise, rather than investing on a plant by plant basis.
Additionally, the advanced decision support means you can shift your focus to selecting suppliers with proven reliability and who represent far less risk. In fact, a recent Gartner report of AI use cases reveals MRO spend analysis solutions to deliver the most business value and are the most feasible for an organization to adopt.
Switching to an AI-enabled MRO inventory management platform to provide decision support while simultaneously capturing human intelligence can improve efficiency, productivity, and reliability of everyday manufacturing operations.