2. TAKE A PROACTIVE APPROACH TO REDUCING OPERATIONAL BUDGETS

With so much money at stake, MRO is a critical category that must be managed efficiently. Each year in the U.S., companies spend $500 billion on MRO, with 70% of that spend committed to MRO inventory and the remaining 30% on non-inventory industrial purchases, according to Omnia Partners.
A proactive MRO strategy reduces operational budgets and inventory costs, which are two of the biggest business pressures facing MRO procurement and supply managers.  

3. TRACE DEPARTMENTAL SPEND WITH ANALYTICS  

Streamlining MRO purchases across categories optimizes spend. MRO purchasing is time consuming and involves multiple business units within an organization. Informed purchasing requires compiling data from each business group to enable comprehensive analysis that accurately determines where and how the MRO budget is spent. Benchmarking, comparisons and spend history also allow data-driven decision making.

Many MRO vendors were significantly impacted by COVID-19. The pandemic restricted vendors’ and suppliers’ ability to maintain their usual SKUs for MRO as a result of disruptions across the global supply chain. This makes tracking departmental needs and item usage more critical than ever.

4. REDUCE INVENTORY WHILE INCREASING SERVICE LEVELS

Controlling costs for repairs and maintenance is essential, which requires managing MRO at a granular level. Keeping expenses in check requires smartly controlling MRO inventory to ensure necessary parts are available without having overstocked items that add to costs. Facilities must follow best practices for effective inventory management of critical parts. These are parts that can immediately impact the business if they’re not readily available.

The value of the MRO market is expected to grow at a 2.19% compound annual growth rate from 2020 to 2026, according to Mordor Intelligence. Its report says the global MRO market was valued at $616 billion in 2020 and is projected to be worth $701.3 billion by 2026.

5. MANAGE OBSOLESCENCE TO REDUCE COSTS

Sometimes medical or business equipment has been replaced or upgraded, yet the facility is still storing parts for the old model. Storing obsolete inventory is unnecessary—and expensive. Required active inventory ranges from 25% to 30% of total inventory, “excess” active inventory, which is the overstock of required active items, is about 10% to 20% and inactive inventory is the remaining 50% to 60%, according to Reliable Plant. Meanwhile, Grainger Consulting Services found that up to 50% of MRO inventory items are inactive for more than 12 months, and up to 60% of on-hand MRO inventory levels exceed a one-year supply.

If inventory isn’t routinely managed, parts for an old MRI machine that’s no longer in use, for example, may still be taking up space on the shelves. Facilities can avoid this problem by having visibility into upcoming equipment changes to identify materials or supplies that will no longer be needed. Understanding MRO usage can also help avoid items occupying storage space for extended periods of time. 

6. TAKE ADVANTAGE OF PURCHASED SERVICES

Organizations sometimes require specialized MRO services for complex jobs, such as plumbing or electrical work. Purchased Services, like those available through a GPO, provide extensive expertise to fill specialized needs, such as elevator maintenance. General and sporadic MRO needs such as office cleaning or preventive maintenance on office equipment are also available through Purchased Services.

7. CONSIDER OUTSOURCING THE ENTIRE MRO PROCESS

A study found that 94% of industry professionals view MRO inventory as being extremely or somewhat important, yet it is not managed as closely as production inventory.

Even before the pandemic, MRO procurement processes were constantly changing. That’s why outsourcing the end-to-end MRO process to a GPO provides several benefits. For example, with outsourcing, organizations no longer have to worry about MRO because the GPO handles everything. Having a professional team manage MRO also enables facilities to benefit from planned maintenance rather than reacting to breakdowns.