Effective Maintenance, Repair, and Operations (MRO) management is vital for operational efficiency and financial stability, yet it comes with challenges such as inconsistent data, conflicting priorities, and fluctuating demands. These issues often result in inflated inventory levels, critical stockouts, and costly production delays.
This blog draws on insights from industry experts across sectors like food and beverage, mining, and industrial manufacturing to present ten MRO best practices for inventory optimization. By aligning MRO processes with organizational goals and leveraging modern technologies, organizations can enhance reliability, reduce costs, and drive continuous improvement.
Overview:
What Comprises MRO Inventory?
MRO inventory consists of the items and supplies required to maintain, repair, and operate machinery, equipment, and other assets within a business. Unlike production inventory, MRO items do not directly contribute to the production process but are vital for ensuring uninterrupted operations.
Typical MRO inventory includes repair components, lubricants, fluids, fasteners, valves, motors, bearings, seals, packing materials, office supplies, ladders, and other essential maintenance tools and consumables.
Common Challenges Facing the MRO Industry
Some of the common challenges facing the MRO industry include:
- Differential treatment of MRO vs. MRP procurement
- Lack of proper planning
- Lack of a centralized inventory management system
- Reliance on manual or paper-based processes
- Procurement triggering only during stock-outs
- Storage of inventory across multiple locations
- Significant shrinkage, theft, and obsolescence
- Management of multiple vendors and distributors
- Underestimation of true costs and their importance
- Desperate and fragmented data
- Manual management issues
- Poor governance
Top Ten Best Practices for Inventory Optimization
Now that we understand what MRO inventory entails and the typical challenges in this industrial segment, let’s explore some best practices and their potential benefits. Some of the best practices include:
- Leverage existing resources
- Manage MRO inventory centrally
- Let vendors manage inventory
- Implement self-service checkout for inventory
- Track and control MRO inventory
- Lay the ground for preventive maintenance program
- Resolve data quality issues
- Strive for real-time updates
- Provide real-time inventory visibility for technicians
Let’s review each of these best practices in brief:
1. Leverage existing resources
Optimize MRO inventory management by leveraging your existing Oracle SCM Cloud, EBS systems, SAP ECC, or SAP S/4HANA for efficient procurement and inventory tracking. Additionally, enhance real-time visibility with mobile barcode scanning solutions for accurate data capture and streamlined processes. Integrating these systems with ERP or third-party platforms ensures seamless information flow, reduces manual errors, and boosts efficiency. By maximizing your current resources, you can improve productivity and minimize costs.
2. Centralize MRO inventory
Centralizing inventory in a single, well-organized location instead of scattered or unidentified areas is key to effective inventory optimization. This approach ensures seamless tracking, streamlined management, and precise control, reducing the risk of overstocking or understocking critical items. Enhanced visibility across the facility helps identify inefficiencies, leading to cost savings, improved productivity, and smoother workflows.
3. Let vendors manage inventory
Allowing vendors to manage your MRO inventory streamlines procurement by reducing purchase orders and optimizing stock levels through direct visibility. This approach lowers carrying costs, shrinkage, and dead stock while freeing your team to focus on core activities. Shifting inventory management to vendors enhances efficiency and reduces overheads.
4. Track and Control MRO Inventory
Optimize inventory by cataloging all items systematically and using barcodes for parts and storage locations. Enable real-time tracking with mobile barcode scanning apps and prioritize critical items to minimize downtime. These practices enhance visibility, control, and efficiency in inventory management.
5. Initiate a Preventive Maintenance Program
Proactively plan repairs and maintenance to improve forecasting and ensure necessary inventory is available, reducing unplanned shutdowns. This approach minimizes overstocking, lowers carrying costs, and keeps workflows running smoothly, balancing operational readiness with cost efficiency.
Explore: MRO Inventory 101: The Ultimate Guide to Optimizing Maintenance and Operations
6. Resolve Data Quality Issues
Accurate data is essential for effective MRO inventory management. Eliminate duplicates, ensure consistent part descriptions, and avoid purchases outside central systems like Oracle SCM Cloud or EBS to simplify data management. Improved data quality streamlines procurement, reduces errors, and enhances inventory efficiency.
7. Provide real-time inventory visibility for technicians
Ensuring technicians have real-time access to part information is crucial for efficient MRO inventory management. Providing up-to-date details on available parts and their locations streamlines workflows and reduces the need for multiple trips. For out-of-stock items, offering available-to-promise (ATP) timelines helps set clear expectations and improve planning, minimizing delays, enhancing productivity, and ensuring technicians have the resources they need.
8. Automate replenishment
To optimize MRO inventory management, implement automation for replenishment processes. When bins are emptied, they trigger cycle counts for timely checks. Automated creation of Purchase Requisitions (PRs) in Oracle EBS or SCM Cloud follows, with PRs under a specified threshold automatically approved. This streamlined approach reduces manual intervention, accelerates replenishment, and maintains optimal inventory levels, enhancing overall operational efficiency.
9. Standardize through existing procurement
One MRO inventory optimization technique is to standardize the procurement process, treating MRO procurement with the same rigor as material requirements planning (MRP). Leverage your existing procurement department to streamline processes, reduce suppliers, and benefit from bulk purchasing or negotiated terms. This approach improves efficiency and cost-effectiveness across inventory management operations.
10. Foster continuous improvement practices
To drive ongoing enhancements in MRO inventory management, establish and regularly review minimum and maximum parameters, reorder points, and safety stocks to ensure optimal inventory levels. Implement continuous training and education programs for staff, aligned with KPIs, to keep the team informed about best practices and emerging trends. This proactive approach not only helps in fine-tuning inventory processes but also fosters a culture of continuous improvement, enabling your organization to adapt to changes, address inefficiencies, and maintain high standards in inventory management.
Also Read: Your Ultimate Guide to Understanding MRO Software in Aerospace
How do you benefit?
- Reduce lead times for procuring parts and total acquisition costs.
- Provide visibility across the organization.
- Simplify operations and inventory management processes.
- Track transactions and control
- Reduce maintenance and repair costs.
- Improve system reliability.
- Reduce downtime and unplanned shutdowns.
- Reduce errors and automate data collection
Looking to maximize your MRO inventory strategy?
We at Propel Apps have a team of experts – functional and technical, who can assess your current organization’s MRO landscape and suggest the right strategy that works best for your organization. What’s more? We have developed ERP solutions in supply chain management (SCM) and plant maintenance domains that are aimed to accentuate your organization’s journey towards rapid digital transformation.
To know more about us and how our mobile solutions play a major role in optimizing your MRO inventory processes, schedule a free demo with us.
Final Thoughts
Effective MRO inventory management is essential for optimizing operational efficiency and reducing costs. Addressing common challenges such as inconsistent data, fragmented procurement processes, and inadequate planning can enhance reliability and drive continuous improvement. Implementing best practices like leveraging existing resources, centralizing inventory, automating replenishment, and fostering preventive maintenance programs significantly improve efficiency and reduce downtime.
By prioritizing real-time visibility, resolving data quality issues, and standardizing procurement processes, organizations can achieve smoother workflows, lower costs, and greater overall operational readiness. These strategies are crucial for maintaining high standards in inventory management and enabling businesses to adapt to changes effectively.
