Managing Your MRO Supply Chain
by Brant Morwald
Streamlining the MRO (Maintenance, Repair and Operations) supply chain is a crucial part of maintaining a competitive advantage in an asset-intensive industry. This involves properly managing the supply of spare parts, materials, chemicals, equipment and supplies that are required to ensure company assets achieve optimal performance. There are many benefits associated with improvements in the MRO supply chain including – but not limited to – a reduction in procurement spend, reduction in inventory levels, increased material availability, improved productivity and reduction in asset downtime.
For an MRO supply chain to be effective and yield the results above, cross-departmental coordination is required. Typically, this involves maintenance planning and scheduling, procurement activities, inventory management and finally field maintenance execution. Without effective collaboration across all departments, efficiencies cannot be realized. Below are some strategies that can be deployed in each area as preventative measures to avoid a kink from forming in the value chain.
Maintenance Planning and Scheduling:
The process starts upstream in the planning and scheduling department which is why inefficiencies here easily jeopardize the entire MRO supply chain. The goal is to have a reliable preventative maintenance program in place that is up to date and meets the company’s specific asset requirements. If done properly and well enough in advance, the procurement spend on material and labor can be minimized and constant for PM related work. In terms of a corrective maintenance program, the planning and scheduling department should have a stable schedule that is clearly communicated in advance to all departments with live updates on work order delays or emergency work order submissions. Strong oversight on schedule deviations and visibility on schedule attainment as a KPI is necessary for root cause analysis and ultimately continuous improvement.
The focus here is to minimize the overall spend while still improving vendor responsiveness and product supply. Companies often surround themselves with too many vendors instead of focusing on the key suppliers who can provide quick and accurate lead times at the lowest cost with optimal contract agreements such as longer payment terms, warranty terms, etc. It is also important to have an accurate replenishment process for inventory stocked items. Many companies rely on inventory management systems to manage their data but do not implement an ongoing audit process to ensure accuracy. Having incorrect lead times, safety stock levels or re-order points will generate inaccurate replenishment volumes resulting in an increase in slow moving inventory, stock-outs for critical items and an increase in direct purchases.
Often, the warehouse is seen as a ‘holding facility’, having to react to the disfunction upstream and downstream with minimal corrective capabilities. The inventory management department can play a significant role in streamlining the entire MRO process by having ongoing audits of inventory levels, feedback loops in place when unused items remain for completed work orders as well as accurate KPI’s to track and monitor fill rate, productivity, and other key metrics. the inventory management division can help expose and eliminate the waste resulting from a lack of coordination between the other departments.
For MRO supply chains still in infancy, it is common to see low productivity in the field due to poor planning. For the maintenance execution team to drive improvements, it is important for management to set in place recurring KPI reviews as well as manual trackers to document and obtain data points such as incorrect supply of materials rate on high priority work orders or how often preparation work is incomplete. Accurately tracking the resulting inefficiencies at the end of the process is necessary to understand where there are gaps in the MRO supply chain.