MRO inventory is the collection of different materials and supplies required to keep assets running. A maintenance, repair, and operations (MRO) inventory contains safety gear, lubricants, tools, spare parts, and other consumables not included in the final product (or service).
MRO inventory is not typically managed as carefully as production inventory. But for maintenance departments, poorly managed inventory can be a significant hassle. This article explains how maintenance, and ultimately the bottom line of an organization, is affected by MRO inventory optimization.
What Is MRO Inventory?
MRO or 'Maintenance, Repair, and Operations' inventory refers to all the materials and equipment supporting a business in its day-to-day maintenance and other operational activities. It includes safety tools, spare parts, cleaning supplies, lubricants, and related consumables retained by a company to cater to maintenance needs without interruption and reduce downtime.
MRO inventory supplies enable the smooth functioning of all routine repair, maintenance, and operations. Unlike raw materials, MRO products are not incorporated into finished products but are used in production.
MRO inventory items also include spare parts and tools needed to repair manufacturing equipment, gloves, and goggles. It plays a crucial role in almost every department, so ensuring accurate MRO inventory optimization is maintained without overstocking is vital.
Examples of MRO Inventory
The MRO equipment and supplies inventory is extensive. Here are some MRO inventory examples:
Supplies for repairing and maintaining machinery: Lubricants, motors, gears, bearings, bulbs, valves, bearing bearings, valves, bearings, and cutting fluids.
Protective equipment: Gloves, masks, earplugs, hard hats, respirators, and face shields. Supplies for cleaning and disinfecting: Sponges, buckets, brooms, dust cloths, rags, liquid and powder cleaning solutions, and disposable gloves.
Supply items for the office: pens, pencils, paper, printers, toner, furniture, and computer equipment.
Supplies needed for testing or research: Beakers, test tubes, syringes, and scales are among the necessary supplies.
The management of MRO inventory includes purchasing, storing, using, and replenishing all products. These activities should be performed efficiently and economically with MRO inventory control, like in other inventory management forms.
Factory machinery can, for example, fail and halt production if it is crucial to the production process. Without MRO inventory deployment, during downtime, employees may have to spend hours or even days trying to locate, order, and wait for a spare part without a spare available.
What Is MRO Inventory Management?
MRO inventory management process involves ordering, tracking, supervising, and replenishing inventory items required for the maintenance, repair, and operation of all the equipment in a business. MRO inventory management is the proactive and strategic control of spare parts, tools, and other materials used in maintenance, repair, and operations. A comprehensive MRO inventory management system will monitor stock levels, help identify needed items quickly, and automate ordering processes with data-driven insights to optimize stock levels.
Efficient MRO inventory management solutions can be instrumental in reducing downtime, improving safety, and increasing productivity and profitability. Furthermore, it may free up working capital that would otherwise be invested in excess inventory.
It is essential to distinguish MRO inventory management from traditional inventory management. Both involve maintaining stocks of physical items, but MRO inventory management focuses on parts, tools, and materials needed to support production processes and maintenance activities. In contrast, traditional inventory systems deal more with the production and storage of raw materials, semi-finished goods, and finished goods.
Additionally, MRO inventory management often involves more intricate considerations than traditional systems. For instance, tracking items in greater depth may be necessary to guarantee they are suitable for the task at hand and compliant with regulations.
Components of MRO Inventory Management
The maintenance, repair, and operations inventory management system organizes, stores, and tracks supplies related to these functions. An efficient MRO inventory management system can save businesses time and money by eliminating waste, improving inventory turnover rates, and minimizing stockouts.
Effective MRO inventory management systems must include four essential elements:
Accurate Data
Businesses need accurate information about past usage patterns to make informed decisions about what MRO supplies to stock. This data can be collected manually or through automated systems like barcoding or radio-frequency identification (RFID).
Effective Planning
Once usage patterns have been identified, businesses must devise strategies for stocking enough MRO supplies without creating excess inventory. These plans should consider lead times, seasonal changes, and other factors influencing supply levels.
Efficient Storage
MRO supplies must be stored efficiently to maximize space and accessibility while preventing damage or deterioration. This often necessitates unique storage systems like racks, bins, cabinets, or shelving to meet these requirements.
Proactive Maintenance
To avoid costly repairs and replacements, businesses should prioritize proactive equipment and facilities maintenance. This includes scheduled cleaning tasks, preventive maintenance tasks, as well as regular inspections.
Why Is MRO Inventory Management Important?
Businesses may face increased downtimes in the absence of an MRO inventory management system and incur high costs, which can hinder their profitability.
An overstocked or understocked stockroom can be one of the significant problems caused by not implementing a digitized inventory management tool. If you do not have the proper maintenance and repair supplies at the right time, you will prolong maintenance delays leading to an increase in unplanned downtime.
In contrast, overstocking and maintaining too much inventory is wasteful. Poor spare parts management can become a key concern for manufacturers, who utilize heavy equipment and machinery in their production processes. A maintenance team or asset manager can manage spare parts efficiently using an automated inventory management system that helps streamline enterprise assets.
How to Manage MRO Inventory?
The procurement of MRO is often overlooked, but it can optimize productivity and improve cashflow if appropriately managed. Consider the following two methods:
Managing In-house
Inventory management techniques such as ABC analysis, Just-in-Time, and other inventory management techniques can help you control the flow of your MRO supplies. When you ensure that your internal staff manually manages MRO procurement, you have more control and tend to spend less money, but you might spend more time manually monitoring stock levels.
Using a Hybrid Approach
This approach combines internal management with outsourcing some aspects of MRO inventory.
As an example, suppose your manufacturing process requires a compressor. If you run low on inventory, the vendor could place a purchase order when it encounters a shortage in your storeroom. In this case, the vendor manages the stock and such stock is known as vendor-managed inventory (VMI). By investing in this approach, you can relax and let your team concentrate on what they do best.
Best Practices for MRO Inventory Management
This list of seven MRO inventory control tips will benefit anyone looking for MRO inventory best practices:
Assess the importance of MRO inventory items for the business.
There will be no crippling effects on your business if some specific MRO inventory items are missing from your business. However, certain other MRO items have a more significant impact. It is crucial to identify these items along with their usage rates and minimum reorder points. Your best efforts should be made to ensure these items are replenished as soon as possible.
The decision of purchasing MRO inventory should consider all required parameters.
Multiple teams within your organization may require similar or identical MRO items. Examine the needs of each team to see if you can take advantage of bulk-order discounts or drive efficiency.
VMI agreements can be negotiated with suppliers.
Take advantage of hybrid MRO approaches by outsourcing inventory management to trustworthy vendors. Many survey respondents have noted a boost in productivity, smoother control of MRO inventory, and enhanced abilities to focus on critical business objectives.
Analytics and forecasting can be used to determine demand.
MRO inventory management relies on demand forecasting, as with all successful inventory management strategies. Adjust replenishment based on your peak usage season and low usage season. Monitor key performance indicators (KPIs) like material shortages and reorder events, which can help plan safety stock levels.
Ensure that all MRO inventory is stored, controlled, and audited centrally and controlled.
A computerized audit can be conducted on the central stock area to track and manage all the inventory. By using this method, not only can inventory management be automated, but private stockpiles will also be discouraged. This has consistently been the most effective MRO inventory practice. Timely inventory audits ensure that the MRO inventory does not go obsolete, no longer needed, or unavailable in the required quantities.
Develop your staff's knowledge of supply chain management.
To expand the skill set of your team and keep your MRO inventory under control, teach them everything they need to know about in-transit inventory, supply chains, and their role when it comes to MRO inventory control. This also helps you to get ahead of your competitors.
MRO Inventory Management Tools
Keeping track of MRO inventory manually in spreadsheets is common among small businesses. While larger organizations widely use ERP software, it may not provide expert MRO inventory management capabilities.
Computerized maintenance management system (CMMS) software allows maintenance teams to manage inventory effectively. A CMMS can help you manage maintenance inventory with features designed specifically for this purpose. Some of the good features of a good CMMS are providing detailed records of inventory, reports on maintenance based on inventory, automatic updation of counts of MRO inventory, keeping track of inventory costs, managing vendors and suppliers, and enhancing purchase functionalities.
Common Challenges in MRO Inventory Management
Here are some common obstacles that make managing MRO inventory difficult:
Lack of Visibility into MRO Inventory Levels and Usage: Without adequate insight into MRO inventory levels and usage patterns, keeping stock at optimal levels and planning for future needs can be challenging.
Inaccurate or Incomplete Data: Inaccurate or incomplete data can make it difficult to accurately track inventory levels and usage, potentially leading to stockouts or excess items in circulation.
Inefficient Processes: Improper processes can make managing MRO inventory difficult. This may include manual, time-consuming, and error-prone steps and a need for more automation within the inventory management system.
High Inventory Costs: High inventory costs can reduce profitability and make budget management challenging. This may be due to excess inventory, overstocking, or inefficient processes.
Keeping Your MRO Inventory in Check
MRO inventory is one of the most important aspects of running your business smoothly. TranZact can help you update and track your MRO inventory and ensure you always have the right supplies. With TranZact, you can track every aspect of your inventory, from stock levels to supplier information. This makes it easy to see where your MRO inventory stands at any given time and ensures you always have the right supplies you need on hand.
FAQs on MRO Inventory
1. What are the types of MRO inventory?
There are three primary types of MRO inventory: consumables, tools, and spare parts. The following are some examples: supplies for cleaning, personal protective equipment, repair and maintenance supplies, electronics, stationery, and laboratory equipment.
2. How do I conduct an MRO inventory audit?
An MRO inventory audit helps you determine whether you have enough MRO supplies and whether any unnecessary items should be removed. You can monitor the availability of items through regular audits, which ensure accuracy in item counts.
3. What is the difference between min-max and EOQ inventory levels?
Min-max and EOQ are two different inventory management techniques. Min-max establishes minimum and maximum inventory levels to trigger orders, while EOQ (Economic Order Quantity) calculates the optimal order quantity to minimize costs. Min-max ensures stock availability, while EOQ aims to balance inventory holding and ordering costs.
4. How can I collaborate effectively with suppliers and vendors for MRO inventory management?
Communicating transparently with suppliers is essential and can be achieved with automated collaborative platforms. For effective supplier communication, it's important to set up clear agreements, share data and insights on a timely basis and develop long-term vendor relationships by avoiding the scope for miscommunication.
