MRO is Maintenance, Repair and Operations items, which includes Supplies consumed in the production process but do not either become part of the end product or are not central to the firm’s output. These include consumables (such as cleaning, laboratory, or office supplies), industrial equipment (such as compressors, pumps, valves) and plant upkeep supplies (such as gaskets, lubricants, repair tools), and computers, fixtures, furniture, etc.
MRO expenditures in any organisation typically vary in the range of 5-10% of cost of goods sold (COGS). This is minor portion of expenditure in comparison to major spends like Raw Materials, Capital expenditure etc., hence often it doesn’t get a lot of attention, but when MRO is not managed properly it can also stop our production line immediately.
So not managing MRO properly could lead us to miss customer deliveries, lose revenue and incur lack of performance penalties, and we will lose money and bleed cash.
So, MRO is critically important!
Common types of Maintenance items
MRO in maintenance items category is broadly classified in three groups. For preventive maintenance, for corrective maintenance and for predictive maintenance.
- Preventive maintenance items are critical because they extends the life of machinery and reduces the number of failures.
- Corrective maintenance items are needed for fixing equipment, machinery at the time of break-down.
- Predictive maintenance items are procured based on historical performance of the item and for anticipated use in future.
- Assign a dedicated, experienced Procurement person, or people, in charge. The key to success is an active and proactive approach with clear responsibilities.
- Deploy a proper Supplier Relationship Management program
- It is essential to have a proper metric set and performance tracking process. we need to monitor downtime costs, inventory levels, delivery and replenishment lead times, supplier performance, and spend levels are a few of the critical metrics that.
- Excellent inventory control and lower costs are key for those managing MRO internally.