What Is MRO: The Importance of Managing Maintenance, Repairs & Operations Inventory

MRO is the term used to describe a business’s maintenance, repairs, and operations supplies.

While more procurement-led categories like raw materials and finished goods are prioritised among maintenance organisations, managing MRO inventory is often overlooked (especially as MRO expenditures count for just 5-10% of cost of goods sold).

Yet, MRO inventory management directly impacts productivity on the production line. Without it, preventive maintenance strategies are scampered and unplanned downtime costs become a recurring burden.

Use our sophisticated software comparison tool to find an MRO management system that matches your spare parts and equipment maintenance requirements.

What Does MRO Stand For?

MRO stands for maintenance, repair, and operations. It is an acronym used in the maintenance sector that encompasses the equipment and activities associated with the upkeep of daily tasks to keep maintenance operations running efficiently and smoothly.

Types of MRO Equipment & Examples

Your maintenance, repair, and operations supplies will consist of materials and equipment to keep machines and mission-critical assets running smoothly. Types of MRO supplies include infrastructure MRO, Production MRO, and consumables such as smaller tools.

Below are just some examples of what MRO inventory can be classed in the workplace:

• Tools (spanners, ratchets, clamps, fasteners, grinders, etc.)
• Lubricants and oils
• Safety equipment and PPE
• Industrial equipment (pumps, compressors, etc.)

What Is MRO Inventory Management & How Does It Work?

MRO inventory management protocols ensure all relevant information regarding each of a business’s MRO items is recorded. That includes data such as cost, supplier details, location, previous users, stock quantity, and more. This allows maintenance teams, plant managers, and other users to easily view, edit, and upload information about MRO supplies.

This detailed list of information is also referred to as an MRO BOM (Bill of Materials), which is essentially a list of all equipment spare parts associated with your MRO inventory.

Typically, MRO inventory is removed from product inventory lists. This means the majority of MRO stock can be seen as items that do not directly generate revenue. Because of this, spare parts inventory management is often neglected, with 42% of business owners claiming their parts and consumables inventory tracking needed improving.

Along with raw materials and finished goods, keeping stock of MRO items is important to ensure the uptime of assets such as equipment and infrastructure. This is where an effective MRO inventory management process – coupled with EAM Software – can help.

The core components of MRO inventory management can be broken down into four stages:

1. Asset Identification

To ensure the speed and effectiveness of maintenance schedules, technicians and maintenance personnel need to be able to identify what MRO items are in stock. This is also helped with the use of a bill of materials (BOM) or asset registers.

2. Locate Spare Parts and Equipment In the Workplace

Depending on a business’s size of operations, spare parts can be spread out across multiple sites and warehouses. This means, once an MRO item has been identified, it needs to be tracked down in the most time-efficient manner. With technicians spending up to 25% of their time locating spare parts, providing location data is essential to help prevent delays in planned maintenance and repairs.

3. Purchasing MRO Assets With a Successful ROI In Mind

From initial requests to final payments, the procurement process is crucial for making sure the right spare parts are ordered in the most cost-effective manner. Once an EAM system is in place, this process can be automated to make sure spare parts are consistently stocked.

4. Excelling In Inventory Control and Management

Implementing a sufficient inventory control system means the right MRO items are in stock and available at the right time. This eliminates any delays to repairs that may prolong costly unplanned downtime and allows for maintenance tasks to be performed efficiently.

Why Managing Maintenance, Repairs, and Operations Equipment Is Important

Without effectively tracking MRO equipment, a business’s production process will suffer and incur high spending costs that significantly impact its bottom line.

One major problem that can plague an organisation’s neglect of MRO inventory management is having an understocked or overstocked stockroom.

Being understocked (not having the right MRO supplies at the right time) will prolong delays to equipment maintenance and increase unplanned downtime. Being overstocked and having too much inventory results in wasteful spending. 18% of businesses admit to wasting money on parts they already own.

Another trade-off for poor MRO supply management is unplanned downtime. 42% of maintenance workers claim downtime was their biggest issue due to poor spare parts management.

Although planned downtime for updates and scheduled repairs can prolong equipment uptime, unplanned downtime can hurt a business. In 2016 alone, US manufacturing companies lost up to $260,000 per hour through unplanned downtime.

Using Enterprise Asset Management Tools For MRO Inventory Management

In a 2018 study, 94% of respondents admitted that the management of their spare parts and MRO items was important. Couple this with 88% of asset-intensive organisations realising the potential that preventive maintenance strategies have for eliminating unplanned downtime.

Various tools are available to help manage your MRO inventory, including Enterprise Asset Management Software.

EAM Software performs and automates MRO inventory management tasks, reducing inventory costs by up to 40%. As well as offering capabilities like:

• Work order management
• Asset lifecycle management
• Maintenance planning and scheduling
• Data reporting and analytics
• Supply chain management

There are three impactful benefits of deploying an EAM system to control the management of MRO equipment:

1. Improve Time-Management In Asset-Led Output

With staff spending 10-25% of their time searching for the right spare parts, improving stock control is essential for eliminating delays in production. But, with access to a BOM or asset register, staff can locate where the right spare part is located and track it down without delay.

Modern EAM tools also come with the option to deploy asset tags to help improve the tracking of key assets. This allows asset managers to tag MRO items with RFID tags, GPS trackers, barcodes, or QR codes to speed up the process of locating spare parts.

2. Optimise MRO Stock Levels & Ordering Schedules

Using an automated and analytics-based approach, MRO inventory tools enable businesses to optimise their stockrooms. This not only eliminates the issues and cost implications associated with overstocked and understocked warehouses, but it also greatly improves the accuracy of stock levels. This helps to eliminate the order quantity inaccuracies that affect 81% of businesses.

MRO inventory tools also allow businesses to automate their stock procurement processes. Meaning fewer delays when waiting for spare parts to arrive. With 50% of work orders remaining open due to technicians waiting on spare parts, automating spare parts procurement is essential.

3. Take a Preventive Approach to Asset Maintenance

Largely caused by ageing equipment and neglected maintenance, downtime is a leading factor in the loss of revenue. This was certainly the case for the automotive industry in 2005, as an average of $22,000 was lost every minute through unplanned downtime. The main cause of this was poor inventory management, with 50% of unplanned downtime relating to a lack of spare parts or stockouts.

Implementing an accurate MRO inventory management system is key for businesses looking to engineer a preventive maintenance approach. Effectively shifting away from a reactive maintenance strategy.