Every year, US businesses spend over $100 billion on MRO purchases. Everything from cleaning products to light bulbs falls under the heading of Maintenance, Repairs, and Operations.
But every year, inventory languishes on the shelf in supply rooms across the nation. Why? Simply, about half of US businesses aren’t effectively managing MRO. Grainger’s Consulting Services arrived at this shocking evaluation, revealing that these companies are basically paying to store inventory which becomes obsolete before so much as seeing the light of day.
And that’s not a great use of resources.
Is your MRO program managed by procurement? Or is it in the hands of other stakeholders, all with individual agendas? Empire building, over-estimating need, and budget-padding are just some of the results of taking a haphazard, de-centralized approach to MRO. Let’s look at some of the reasons that managing MRO more attentively and professionally is in your best interests.
The managed approach
When MRO is done on the ground (especially if you have operations in multiple locations), there is no overarching control mechanism to ensure that only those items needed are purchased.
Using data from inventory and process allows you to manage MRO based on historical information. This methodology frames MRO as an operational necessity, opening the door to a more hands-on, analytical approach that avoids over-stocking.
The foundation of the managed approach to MRO is data. This is crucial information which provides a window into past stocking practices and how they stack up against need. In the data, you’ll discover patterns which can inform purchasing habits.
From there, asking the right questions is the way forward. Knowing what’s in stock, what it’s there to do and how often it needs to be replaced translates into data that allows you to more efficiently manage MRO, controlling the costs involved.
When your MRO program is leveraged, it becomes a value center and a crucial part of your business strategy. Centering MRO in procurement creates a framework which has its eye on all links in the supply chain and a clear idea of what’s in stock, what it’s there to do and how often it needs to be replaced – because you’ve set up the data foundation for procurement to leverage MRO.
Discipline is key to this approach, as keeping a handle on MRO needs means there’s no more ad hoc transfer of items. Someone’s minding the store and someone is accountable – a keyword.
That means less languishing inventory and that’s a good thing because languishing inventory is like money gathering dust on the supply room shelf.
There are better uses for money, we’re sure you’ll agree. And when procurement manages your MRO, that money will be soon be doing other things because leveraged MRO reframes the program as a key engine of your business.
At CenterPoint Group, we bring you the power of numbers and data analytics that help you make the most of your MRO program. If you’re ready to revolutionize your MRO, contact us. We’ll give you the tools you need.