Essential to all kinds of businesses, manufacturing processes, service deliveries, are the items that don’t form any part of final products and goods. In order to run your business successfully, it becomes very important to manage your MRO inventory effectively. MRO is a term collectively used to refer to such important materials. That depends upon the kind of business and production operation, Maintenance, Repair and Operation can range from the finances spent on the office space cleaning, furniture, spare parts, machinery lubricants, building to safety supplies.

Transforming Your MRO Storeroom from an Expense to an Asset

What’s MRO Inventory Management?

The MRO inventory management is a process of storing, procuring, replenishing and using, the products and materials used for maintaining the assets at the lowest cost. The process generally involves ensuring that you have full stock on hand when factoring inaccessible storage space & budget. In a simple term, the primary goal of the MRO management inventory is having the stock at a right time and the right cost. That depends on the kind of business and production operation, MRO can range from the finances spent on the office space cleaning, furniture to machinery lubricants, building, spare parts, or safety supplies.

How to rightly manage the MRO inventory?

The MRO inventory generally accounts for 5 to 10% of COGS that is the Cost of Goods Sold of a company. Though it may appear a bit less, in a long term, the cost will add up. The MRO inventory management generally includes various activities that decide the company’s spending on the essential items involved indirectly in the manufacturing procedures. What is more, operational inefficiencies that are caused by improper MRO management can compound with time. Hence here are some tips that will help to manage your MRO inventory in the right way;

Check Obsolete Material

Each MRO storeroom has certain parts, which are for the equipment and no longer in the service, are redesigned, or unusable. So, any such items found obsolete must be flagged in your system & segregated physically.

Find Excess Inventory

An excess inventory is generally the stock of the usable materials, which exceeds the short-term anticipated needs. For the majority of the items, the highest the inventory must go is a sum of Reorder Point and Reorder Quantity. So, the excess is just an amount of the on-hand inventory over that highest level.

Prioritize Your Active Inventory

The regular analysis may determine the right items that have the highest impact on the service & investment, and thus identify ones that you must spend most of your time on. Ensure to exclude anything that is identified as obsolete.

Buy Products Strategically

The main contributor to the inefficiency is when the teams fail in communicating the cross-functionally. Same MRO items will be needed over multiple teams for various purposes. Make use of the inventory management process where managers will look at the purchase orders before going out, adding or editing orders based on what the team needs & benefit from the discounts or cost-saving, which arrives from the bulk orders.

Establish the Baseline

The baseline profile uses the results of the above activities and depicts a view of your current inventory state. This shows the amount of investment tied up in the obsolete & excess material. This shows how the inventory will be distributed by the activity level & how fast materials will turn over at the aggregate level.

Using MRO Management Software 

Investing in the MRO management software will be a smart decision with sound merits. Not just will access to the storeroom management program streamline the supply chain but will help to predict track, and pre-empt your MRO needs in real-time. Besides using MRO software can provide you with valuable data that will help to analyze the supplier performance as well as adjust the storeroom vendors as needed.

Set of KPI

For any project and operation, KPI’s are established to measure certain factors like costs, savings, etc. Setting up a Key Performance Indicator for the MRO management will not just benefit in optimizing your project performance, but can see the quantified benefits on the MRO inventory.

Final Words 

Understanding your approach to inventory management & embracing small changes can take a little time, but the upfront investment can be worth the savings to your company in the future. Having the correct data & processes in place can help you to make the right decisions required to positively impact its bottom line.

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