Does an effective MRO supply network rely on its efficiency or its responsiveness? Should enterprises sacrifice one over the other or is there a possibility to strike a balance?This comprehensive guide aims to explore what MRO supply efficiency and responsiveness are in 2024, what their differences are, and answers the age-old question: whether you should value one over the other.
What is MRO supply efficiency?
MRO supply efficiency refers to an organization’s ability to utilize its existing inventory, resources, technology, workforce, and expertise to minimize wasted spend and maximize network inventory availability. The primary goal of MRO supply efficiency is to enable people and optimize processes to ensure maintenance needs and service levels are met without incurring unneeded costs.
Improved MRO inventory visibility
One of the main contributing factors to inefficiency is disparate, siloed legacy systems and data repositories across the organization. Often caused by mergers and acquisitions, this results in a lack of visibility due to data being scattered across multiple sub-systems, often leading to inventory levels and needs that are inaccurate, not up-to-date, and all together obsolete.
The effect of not having access to real-time data can snowball throughout the enterprise supply network, leading to maintenance delays, frustrated end customers, and lost business.
An efficient MRO supply network seeks to harmonize disparate systems and siloed departments to gain better access to real-time data. Utilizing a purpose-built MRO optimization solution that provides a single source of trusted information about all MRO needs – including inventory levels, usage, lead times, and even potential disruptions in a single platfomr – allows your team members to make informed, proactive decisions regarding inventory purchases and replenishments. The increased transparency gives businesses a bird’s eye view of the entire enterrpise network, allowing them to quickly identify and resolve any issues with production assets that may arise.
Minimalize manual tasks
MRO inventory management and procurement processes are rife with monotonous and menial tasks from manual documentation to time consuming analysis of charts and spreadsheets. These manual processes not only lack visibility over numbers and performance, but they carry a high risk of human error, with potentially serious consequences.
Research has shown that for every 100 steps, a person makes 10 mistakes. This number increases substantially if the task is redundant. In the context of MRO inventory management, if a business uses manual data entry techniques to enter inventory information into spreadsheets and systems of record (ERPs, etc.), the percentage of human errors lies between 18% and 40%.
Relying on outdated processes while expecting a better outcome is sure to end in disappointment. An integral part of having an efficient MRO supply network is continuous evaluation and adoptation of new tools and methodologies that allow you to enhance your existing tech stack and drive continuous MRO optimization.
What is MRO supply responsiveness?
A responsive MRO supply network can smoothly respond to maintenance needs or changes in suppliers purposefully and within an appropriate time frame. But what does this look like?
Helps generate insights around MRO needs
Artificial intelligence is revolutionizing the way businesses manage their MRO procurement and inventory management. By employing a purpose-built MRO optimization and collaboration platform, businesses can harmonize and analyze large volumes of data faster than ever before in order to reach new levels of MRO responsiveness.
These digital tools can be leveraged in such a way that large historical data sets can be analyzed to spot trends, find patterns, and generate useful insights. This data typically includes but is not limited to overages & duplicates, critical shortages, supplier lead times, part consumption data, storeroom location, and min/max levels.
This can help businesses make informed business decisions to reduce costs where warranted and replenish shortages that present risk. A McKinsey report found that, for early adopters, AI-enabled supply chain management improved logistics costs by 15%, inventory levels by 35%, and service levels by 65%, compared to “slower-moving competitors.”
Artificial intelligence and machine learning can pinpoint which MRO inventory is overstocked and recommend the accurate amount of inventory to be stocked according to asset maintenance. This way, businesses can optimize production levels and maintenance schedules to prevent unplanned downtime situations and ensure that their customers are satisfied.
Ensuring the parts you need when and where you need them
It’s always a good idea to take a look at your store rooms and overall needs of your production network to ensure you have all the necessary MRO materials to keep production lines running. Instead of managing these critical items only on a plant by plant basis, it is best to evaluate the entire enterprise network to make sure wasted working capital doesn’t build up over time.
Investing in purpose-built MRO solution in 2024 that allows you to gain full visibility across your manufacturing and production facilities ensures that you have a greater chance of avoiding unplanned production outages so that you don’t experience critical delays for customer orders. This way, you can not only achieve quicker insights of MRO requirements, but you can also ensure that you can keep your customers satisfied.
MRO supply efficiency vs. responsiveness
While MRO supply efficiency historically focuses on cost reduction and ensures that no resources are wasted on non-value-added activities, the primary goal of MRO responsiveness should be to reduce risk as much as possible in order to maintain a fluid and informed production environment that can easily navigate changes.
With this in mind, where should the focus lie?
While the answer to this question heavily depends on the type of business you have, research has shown that organizations that can strike a balance between characteristics possess a competitive advantage over their competitors. But can businesses achieve that?
Leveraging intelligent MRO optimization tools like material management software provides a digital solution to get the best of both worlds. These cloud-based solutions provide end-to-end visibility across all manufacturing operations in your supply network so that you have access to real-time, accurate, and reliable data around MRO inventory levels and needs. This can help identify the parts in your storerooms that need more attention and help take the necessary steps to make the system more efficient.
The integration of artificial intelligence and machine learning gives the luxury of carrying out complex tasks like working capital reduction and risk analysis. These algorithms are capable of processing large amounts of information, evaluating patterns, making projections, and then recommending the optimum actions to produce probability-based outcomes that best serve your enterpise.