It’s not easy managing a maintenance, repair and operations (MRO) supply chain. But what many don’t realize is that one of the reasons the process can be difficult is all the different departments involved in its performance. Those departments, which may include finance, maintenance, engineering/reliability and purchasing, all have competing interests. That’s why bridging the gap is a necessary and acceptable strategy for managing your MRO process.
The aforementioned departments are all working toward the common goal of sustaining a profitable business. However, the way those departments manage that process – and the individual goals often tied to their own performance — can cause stress.
Consider the impact of a single decision by just one of the departments on a company’s supply chain. Say the purchasing department decides to procure a less expensive part. This decision impacts maintenance, with the less expensive part needing to be replaced more often. This in turn increases the costs for the maintenance budget, although it may decrease the costs for purchasing.
The less expensive part could also impact production because of more frequent downtime, which means still higher maintenance costs. Meanwhile, the finance department may prefer to have less inventory, which could result in more spot buys and expedited freight costs – costs that must be absorbed elsewhere. So, while one decision may decrease costs for some departments, it could increase costs for others, putting those departments at odds with perhaps a net-zero gain for the company as a whole.
Understanding the cause and effect that every company must face enables leaders to work through the discrepancies between departments. This is why the concept of bridging the gap – particularly between procurement and maintenance – requires consistent communication. The relationship requires a building of trust, especially if a third-party service provider is involved. The integrator acts as the bridge between procurement and maintenance by talking technical with maintenance and pricing with procurement. Professionals in multiple departments need to communicate and discuss part requirements, sourcing requests and additional information. This goes hand-in-hand with listening to client requests and understanding the factors driving them.
The epicenter for these strategic discussions may be the MRO storeroom, where spare parts and other materials are received, stocked, issued and tracked. This is why bottlenecks can occur when trying to manage the MRO storeroom. While “process” may be a four-letter word to some managers, establishing a best-practice process requirement is often critical.
It should come as no surprise that your processes must be defined. Research shows that 6-10 percent of a company’s overall spend runs through the MRO storeroom. Yet the time spent on those transactions – purchase orders, invoicing, vendor and customer follow-up, managing pricing and shipping disputes, and more – can account for 10 times that in terms of transactional activity. In other words, too much time is often spent on operational items that can lead to inefficiencies.
You might have the most well-defined processes in place. They could be documented by your employees, recited by memory and posted on your walls. But issues are sure to occur because of the number of people and transactions involved.
Consider the challenges of turning a purchase requisition into a purchase order or combining a work order and purchase order. The number of purchases that occur and the manpower required, even with technology, can lead to work delays from maintenance to downtime. The service provider is responsible for making this all run smoothly and in large part for identifying both current and potential errors. As a result, your provider should be part of the solution for effective communication.
Even in today’s remote world, don’t downplay the importance of monthly reporting calls, with management, procurement, operations and maintenance all participating. Face-to-face meetings or even video conference calls are still important because such interaction often eliminates misconceptions or misunderstandings. These meetings should be treated with reverence and only postponed for true emergences.
The topics discussed in these meetings should be led by the review of a balanced scorecard that includes safety, program savings, storeroom item counts, inventory value, repair savings and more. These scorecards should be tracked and measured over a period of months, so any dips in production and performance can be discussed.
Once a regular set of “touchpoints” is established, problems with communication and processes often decrease. Of course, each department must be committed to these plans. This will help finance, maintenance, engineering/reliability and purchasing to not only be working toward the same corporate goals but also to be aligned in the strategies implemented to achieve them.
About the Author
Dan Brennan is the marketing manager at Synovos. He can be reached at dbrennan@synovos.com.
