MRO Inventory Sourcing: Navigating Today’s Challenges with Strategies

Large group of broken and shining light bulbs with fibers in a shape of Problem and Solution isolated on black background

What’s in stock, where they’re stocked, how they’re stored, and when shipments will arrive — MRO inventory management is a complex process that is often rife with friction. Managing these processes comes with a range of obstacles that makes it difficult when sourcing MRO inventory. Here are a few challenges and solutions that can help establish organizational alignment.

Challenges to sourcing MRO inventory

Maverick spending

Maverick spending often occurs in a downtime emergency situation or when operations teams can’t find the part they need due to poor visibility in their existing systems. When situations like this occur, the company doesn’t benefit from the discounts they worked so hard to negotiate. Costs can accumulate over time and if left unchecked, they can harm supplier relationships, affect future contract terms, and open the door for poor business practices. 

For example, let’s say your sourcing team negotiated 20% off of the contract with a supplier. Instead of purchasing from this particular supplier, other business units find themselves purchasing from another supplier who has a higher price, or process the transaction manually instead of through the procurement system, negating the discount. 

Relying on manual processes

Storerooms are often crowded and disorganized, making them difficult to manage manually. Manual storeroom management can create significant pain points, and if not handled carefully can incur serious losses when items are marked differently despite being the same part.

Humans, by nature, are error prone. Furthermore, human performance is affected by many variables such as emotional stress, fatigue, and distractions which can translate to poor levels of productivity. Relying on manual processes to keep track of inventory can result in inaccurate data, especially when rushed to get an asset operational, and can have adverse effects on how a business performs.   

Poor visibility

Relying on disparate systems to manage your MRO inventory landscape is a surefire way for steep costs, low profit margins, and broken customer trust. If your business cannot reliably monitor spare part availability from anywhere within your enterprise network, you’re at risk of overspending on excess materials or overlooking critical shortages until it’s too late.

There is arguably nothing worse than a maintenace team placing an order only to find out that the part is already on hand under a different name. This results in unneccessary spend which can result in way more inventory than needed. Annual write-offs can drive revenue down if continued for a prolonged period. 

Solutions and strategies to sourcing MRO inventory

Implement a centralized MRO platform

Almost 75% of organizations report that one of the main causes of maverick spending is the lack of guided buying tools. It is recommended to implement a single, centralized MRO management platform that ensures that all parts are visible at all times, regardless of name or location.

Sometimes purchases may not be intentional and are genuine mistakes or simply due to a lack of knowledge. Therefore, it can be beneficial to ensure that all stakeholders in the company are educated about the consequences of maverick spending and non-compliance. Implementing a purpose-built MRO solution ensures all stakeholders have access to the information they need.

If necessary, review, evaluate, and modify existing policies on purchasing. Not only does this allow for regular collaboration between departments, but it also eliminates the need to buy parts that are available in other locations in your network. You’ll cut down on labor and your sourcing team can focus on other priorities.   

Replacing data cleanses with artificial intelligence

Purpose-built MRO optimization solutions can help achieve end-to-end visibility by harmonizing all the MRO data variances that exist between business units. By having a unified, real-time view, a MRO network can avoid unnecessary purchases or unplanned downtime because of hidden inventory or critical shortages that you weren’t aware of.

Cloud-based solutions are equipped with powerful tools such as Artificial Intelligence and Machine Learning. Their algorithms can analyze historical data such as BOMs, purchase history, consumption data, and plant location to eliminate duplicate materials, reconfigure outdated stocking policies, adjust for dynamic lead times, and eliminate tail spend. This information can be used to yield valuable insights and make informed MRO purchasing decisions. 

Make MRO a strategic business function

Sourcing MRO inventory comes with its own set of problems. Cloud-based solutions offer a range of features such as real-time visibility, predictive analysis capabilities, and a centralized platform that can help mitigate these challenges. 

To learn more about overcoming the challenges of managing MRO inventory sourcing with strategies, take the self-guided tour today.

Leave a Reply