Asset management strategies often do not recognize the importance of work processes that include maintenance, repair and operations (MRO) stores management. The operating costs of a typical MRO storeroom represent a drain on profits and a diverse effect on plant reliability. In most organizations, these expenses are viewed as a cost of doing business.
However, recovering the incurred costs offers an opportunity to contribute to plant reliability and ultimately to the organization's profits. MRO operations should be viewed as a plant function just like any other activity that is utilized to support a reliable plant.
In a manufacturing environment, any function that loses money, detracts from reliability or is a hindrance to production would be changed, substituted or eliminated. So why is the MRO function allowed to exist when it loses money, increases mean time to repair (MTTR) and lessens reliability?
To optimize the investment in an organization's internal MRO supply chain and to make MRO operations a profit contributor, it frequently is necessary to change from the existing MRO mode of operation to a reliable MRO status. Following are four functions that must be implemented, operated and sustained to achieve greater MRO reliability:
Master Data Leadership
It all begins with master data leadership (MDL), which means there must be a standard that properly describes each part on a consistent basis while eliminating SKU duplication. This will lower inventory, increase inventory accuracy, increase fill rates and reduce downtime. Just as important, it also ensures the correct part and quantity are on hand when needed.
For instance, a multi-national pharmaceutical company maintained eight facilities in North America. A total of 260,000 MRO SKUs were listed among the plants. An MDL program was initiated to identify each SKU, establish a consistent description protocol, determine duplications (the same part under different names) and consolidate with sustainability.
Among the duplications discovered were six separate SKUs for AA batteries. The proper description should have been: "Batteries, AA, Energizer #E96." Instead, they had batteries, flashlight batteries, penlight batteries, batteries for lube checks, AA batteries and Energizer batteries.
If requisitioners only recognized one SKU number that was out of stock, they wouldn't know that many were in stock under a different name and SKU number. Consolidation reduced the inventory by 85 percent with zero stockouts, and this was just for AA batteries. Imagine what it did for the other 260,000 SKUs.
An Asset Reliability Strategy
Organizations must have an asset reliability strategy to take advantage of the technology that can connect the MRO strategy to plant reliability goals. For example, a billion-dollar food processer had an excellent maintenance team that was adept at correcting maintenance problems as they occurred in the plant.
They were proud that they could restore a down asset quickly, but they did not improve plant reliability. Management invested in an asset management system, which failed because of resistance from the plant disciplines.
A third-party company was then engaged. It set objectives and key performance indicators (KPIs) that included the MRO storeroom as part of the solution. Plant maintenance soon evolved into a world-class operation, optimizing MTTR, worker efficiency and plant reliability.
A Customized CMMS
A computerized maintenance management system (CMMS) can connect the benefits of MDL and asset reliability into usable data to support maintenance reliability programs. A CMMS must be more than processing work orders, controlling budgets, etc. It must be capable of "connecting the dots" of all principles of preventive maintenance procedures to optimize MTTR.
For instance, a heavy manufacturer in the Detroit area maintained an enterprise computer system to control its activities. The system offered a CMMS system for maintenance use, but it was difficult to use and did not provide the necessary controls and information to support reliable maintenance efforts.
When a separate CMMS system was employed, it connected MRO operations to maintenance programs, putting both parties in sync while still integrating with the company's enterprise system.
Supply Chain Management
The overall management of the MRO supply chain, from the manufacturer through to the consumer in the plant, must be directed by experts. Unless the storeroom management has the knowledge and authority to operate at a world-class level, the benefits obtained from master data leadership, asset reliability and a customized CMMS program will not deliver a return on investment (ROI) or be sustained.
Going from an existing process to a reliable MRO storeroom requires change, which in turn requires management support. To gain this support, the potential benefits, both financial and non-financial, must be calculated and documented. These benefits can accrue to all plant disciplines, including procurement, finance, engineering and maintenance.
To calculate the potential, it may be necessary to select a provider that can implement and manage the MRO supply chain. By evaluating all the factors that comprise the current total cost of MRO distribution, a provider can show the benefits that are accruable to all, i.e., an ROI document.
The ROI should be accompanied by a proposed statement of work supported by measurable KPIs that ensure performance supporting the goals of the procedure change.
In conclusion, the MRO supply chain is replete with duplicated tasks and unnecessary costs. In addition, the strategy used to manage the MRO storeroom is often not in sync with the asset management approach employed by plant maintenance. By employing the four functions outlined above, you can achieve MRO coordination with asset reliability as well as optimize the total cost of ownership.
About the Author
George Krauter is the vice president of Synovos in Radnor, Pennsylvania. An authority on optimizing costs and achieving reliable maintenance-connected MRO storerooms, he is recognized internationally as the originator of the MRO supply chain concept, which became known as integrated supply. George has also published a book, "Outsourcing MRO … Finding a Better Way." He can be reached via email at gkrauter@synovos.com.
