Business Transformation

The Importance of MRO Inventory Planning

People who have gone inside factories and production plants of large manufacturing and assembly companies have seen how most of the production process is done and handled by large manufacturing and industrial machines. It would certainly be astonishing to find out that a vast majority of the products and items people buy and use almost everyday wouldn’t have been produced without these large machines.

It’s important to keep the said machines running. A critical aspect of maintaining them is making sure there are always enough spare parts available should any need for it arise. An example is if a manufacturing equipment or industrial machinery bogs down. This is the job for maintenance inventory management.  You can check out https://www.stephengould.com/ and similar sites if you want to know more details about maintenance inventory management.

What Is MRO?

MRO stands for Maintenance, Repair, and Operations. Maintenance inventory management or MRO inventory management is the process of taking control and making decisions about how to maintain the assets of the company at the lowest cost.

The purpose of MRO is to make sure the company will always have the stocks of equipment, parts, materials, and supplies which are needed to maintain the company’s assets. MRO also has to take into account the space needed to store the maintenance inventory, and the financial cost.

The goal of MRO inventory management is to make sure the right stocks are available at the right place and time, of the right make, model, level, and amounts, and at a cost within the projected budget or expenses of the company. The scope of tasks that are part of MRO inventory management include procurement, storing, using, and replenishment of the materials and supplies needed to maintain the company assets. Many companies have resorted to using enterprise resources planning (ERP) software for efficiency.

Why MRO Is Important

MRO inventory management is an important aspect of business operations and management. The company’s assets are critical to the production capacity and level of productivity of a company’s workers and employees. This is especially true in a manufacturing or industrial setting, where the manufacturing and industrial machineries and equipment are an essential component of the production process.

Without their industrial, assembly, processing, and packaging machineries and equipment, a manufacturing company can’t produce anything.

This is where MRO inventory management comes in. Since the principal role of MRO inventory management is to provide readiness of support and maintenance of the company’s assets, it plays a critical role in making sure the company’s production and productivity are maintained at their required levels even if something disrupts the production process. In short, the task of MRO inventory management is to keep the company’s operations running even if a disruptive event happens.

  1. What Happens When Production Stops
    MRO Inventory Planning is important to production. Part of MRO inventory management’s scope of responsibilities is to ensure the availability of materials and supplies that will keep the assets operating, and in good running condition.
    For example, imagine what happens when a factory machinery which is vital to production bogs down in the middle of a rush to produce items which have been ordered by a valued customer for an urgent delivery.
    If the troubleshooting or repair of the machinery requires a spare part which wasn’t kept by the MRO inventory management, then operations and production will be disrupted. The disruption can go on for several hours or days, while everyone waits for the needed spare part to be procured.
    This kind of disruption doesn’t stop there. It has the potential to have a negative impact on other aspects of the business operations. Production can’t meet the deadlines for the urgent order. Logistics can’t deliver the expected items even though they’ve already reserved priority shipping at premium rates.
    Accounting still has to pay the salaries of workers who, in the meantime, have nothing much to do until the machine is fixed. Of course, the customer will most likely be disappointed. They might think twice before placing an order again.
  2. MRO Inventory Avoids Overstocking
    Another important goal of MRO inventory management is to avoid overstocking. The opposite or another de of making sure there are enough stocks to keep the machines running, is to make sure there aren’t too many stocks of equipment, parts, materials, or supplies needed for production. The goal is to manage your MRO inventory in such a way that production will always have enough stocks to keep the machines going, but not too much that parts will just be sitting on the shelves for weeks or months on end.
    Inventory stocks also entails spending on the part of the company. From an accounting perspective, inventory stocks aren’t really just expenses because they’re part of the inputs of production and would thus make money for the company once the production output is sold.
    But the fact is inventory stocks would be money of the company which would be sitting idly in inventory storage rooms and stock shelves, until they’re pulled out for their intended purpose. The company could’ve made use of the cash if it wasn’t stuck as idle items.
    This is why it’s important, as much as possible, to keep your stock levels of the various equipment, parts, materials, and supplies, at just the right amounts as needed. Part of your MRO inventory management’s scope is to make sure the inventory of stocks is at their optimal levels at any given time; not too few but likewise not too many.
  3. MRO Inventory Reduces Productivity Losses
    Another aspect of business operations which is part of the scope of the MRO inventory management is reduction of productivity losses. MRO inventory management is critical to the continuity of business operations because its primary role essentially is to provide support to manufacturing and business production. Understood in this way, MRO inventory management affects the daily operations of the business.
    Some studies have found that technicians who troubleshoot equipment or machineries which bogged down, have to spend as much as 25% of the time they spend on troubleshooting, just to secure the parts needed to repair. This may seem like a very small factor, but if you take into account that this could lead to domino effects down the production process, such delays could have an adversely negative impact on production, sales, and consequently, on the company’s revenue and income.
    Aside from the delays incurred by the technician, it would also have a negative impact on the productivity of the rest of the production workers who will have to be sidelined in the meantime. They can be given other tasks by their supervisors, but if the disruption affects their primary tasks in production, then it will certainly have adverse consequences to the company’s business operations.

Enough Ready Spare Parts

One of the biggest challenges to MRO inventory management is how to strike the right balance between keeping enough stocks of any spare part which might be needed, and at the same time not keeping too much in the shelves which might end up not being used at all. Companies need to pay attention to MRO inventory management because it has the potential to impact several aspects of any business operation.

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Anna Papadopoulos
Vice President & Executive Editor. Anna Papadopoulos is the Vice President and Executive Editor of the CEOWORLD magazine. In that role she resumes responsibility for the CEOWORLD magazine newsroom, setting daily news priorities, and directing all of CEOWORLD magazine's news-gathering teams. Previously, Anna was the senior supervising editor of CEOWORLD magazine's International Desk. Follow her on Twitter, Facebook, Instagram, or connect on LinkedIn. Email her at AP@ceoworld.biz