MRO Inventory Procurement Essentials for an Effective Purchasing Strategy
The efficiency of MRO inventory procurement is vital to sustaining seamless production operations and maintaining a competitive edge. Often overshadowed by other aspects of supply chain management, MRO inventory sourcing is the backbone that ensures equipment reliability and reduces unplanned downtime. Despite its importance, many organizations overlook the strategic significance of an optimized MRO inventory procurement process, leading to inefficiencies, inflated costs, and potential disruptions.
While MRO materials and spare parts vary in price and can seem inexpensive at times, as the number of parts becomes large and diverse, MRO inventory purchasing can account for a large portion of your total purchasing power. Optimized MRO inventory procurement is essential to an efficient and timely manufacturing and supply chain operation.
What is MRO inventory purchasing?
MRO inventory sourcing and purchasing involves the procurement of materials and spare parts, which are required for a business to keep the lights on and production lines running. An MRO item can include spare parts, consumables, safety equipment, janitorial supplies, and more. Maintenance, repairs, and operations (MRO) items are not often considered high-value purchases; however, in a manufacturing environment, MRO procurement is a significant share of capital expenditures, especially over long periods.
The Most Important Criteria for MRO Inventory Sourcing
Understanding and implementing the right strategy for MRO buying is crucial for achieving cost-effective and efficient manufacturing operations. It’s about more than just MRO inventory buying; your team will need to consider sourcing, the available data for making informed decisions, and the vendors used as essential to sustaining operations. From understanding the key components of MRO inventory procurement to implementing best practices for supplier management and inventory control, we aim to equip you with the knowledge needed to fine-tune your approach.
1. Prioritize MRO Goals
MRO procurement is complex because the inventory classified as MRO materials are diverse and wide-ranging. Moreover, the demand and supply of each product vary, making the use of simple classification and procurement systems even more challenging.
MRO inventory buyers must find the sweet spot between fast and slow-use consumables.
The first step to optimizing this process is harmonizing the data of all your MRO inventory purchases. There are two classifications for your MRO sourcing needs.
- Specialty parts: These include critical manufacturing items that are required for operations and must be available at all times to keep production going, like safety equipment.
- Commodities: This list includes the things used for routine upkeep and safety, such as gloves and other forms of PPE.
By tracking your MRO inventory levels and separating them into appropriate categories, companies can plan and allocate funds for diverse MRO necessities while maintaining optimal stock levels. This also helps reduce the amount of suppliers as you will gain visibility to your MRO inventory procurement strategies and can use that to exploit bulk discounts.
Segmenting and prioritizing MRO inventories lowers instances of unused stock and keeps your company safe from the risk of unplanned downtime or missing parts. This will free up money and time spent on more customer-facing aspects of inventory management.
2. Invest in Digital Solutions
Technology is changing MRO inventory management. Relying on outmoded forms of management typically leads to errors, leaving your company open to risk. Analog systems that don’t utilize data-driven decision-making to predict demand are under pressure to evolve or risk extinction. Several different technological solutions are designed to optimize your MRO inventory procurement and handling strategy.
These solutions often take the form of Computerized Maintenance Management Systems (CMMS) or Enterprise Asset Management (EAM) software, which supplies master data but may not provide an easily digestible format for maintenance managers and procurement teams to use in making strategic decisions. With this in mind, it’s critical to implement a solution that offers genuine insights and is intuitive to users.
The benefits of employing technological solutions are numerous; it facilitates data collection for intelligent decision-making, improves MRO inventory procurement strategies, tracks MRO inventory for easy location, makes inventory needs accessible, lowers and simplifies costs, and can predict future stock levels for easy stock control and stocking policy adjustments.
Centralization is a crucial component of MRO inventory optimization software. It increases visibility over supply chain enterprises, allowing all employees to locate and use MRO supplies at any time or place. This way, maintenance and procurement leaders get real-time data insights on the utilization of MRO supplies. With accurate and reliable data, decision-makers can forecast demand for future productivity.
3. Ensure Maximum Utility
All departments must understand MRO inventory management programs and procurement strategies for a smooth and long-lasting transition. Since consolidating suppliers and introducing technological solutions to MRO inventory sourcing involve several stakeholders, achieving buy-in from multiple departments is crucial to optimizing your MRO inventory and management processes.
Include multiple departments in the decision-making process to learn the issues your employees face with current MRO inventory procurement and use practices. This prevents the misallocation of supplies and the purchase of unused items.
Invest in tools and training to improve overall productivity and confidence for improved MRO inventory procurement and mitigated risk. Windows for training also provide time to introduce key performance indicators that will provide data to influence future MRO procurement strategies.
Conduct an initial audit to optimize your process and ensure an accurate MRO sourcing strategy. Decision-makers can identify areas of risk and waste, set key performance indicators that directly address these areas of weakness, and redefine objectives to improve resource allocation.
4. Buy From Reliable Vendors
Companies often mitigate risk by offloading MRO inventory procurement requirements to third-party vendors such as vendor managed inventory and integrated suppliers. These vendors can help improve MRO strategies in the short term and disseminate those improvements via easily digestible digital formats.
Procurement and maintenance leaders can employ third-party vendors to procure, transport, and supply MRO items to all required actors. However, they are often utilized to catalyze MRO procurement and lower suppliers. This frees up employee time to support auxiliary business endeavors.
MRO items are already treated as a low priority by many companies. If they are truly something that you don’t have the resources or time to optimize, third-party support can take this stressor off your shoulders to save you money. However, it’s still important to keep up-to-date metrics around your MRO inventory to avoid the risk of not having the right materials on hand should an emergency occur.
Modernize Your MRO Buying Strategy
MRO management doesn’t have to be an afterthought or a drain on resources. An effective MRO inventory strategy can be an area of business that increases revenue and protects your company from unplanned risks.
