By George E. Krauter
Procurement is continually under pressure to find areas of cost that can be recovered or eliminated. Although the MRO spend dollars are low when compared to the total amount applied to capital projects and production materials, there is substantial cost saving opportunities that exist. These savings can be realized from both financial and non-financial activities.
First let’s look at the financial side:
I have seen a two-page purchase order with 20 line items result in nine receipts where the freight charges are near the value of the parts shipped.
Once you have negotiated a favorable freight rate with your carriers; allow your supplier to participate and require that orders be complete and on time.
Non-financial opportunities for savings
Now let’s look at the non-financial opportunities:
Is it worth spending time on MRO savings? Are opportunity costs too high? Can savings be measured and reported? When MRO management is left to function without a change for the better, opportunities are lost and profits suffer. Time spent on changing the MRO storeroom into a profit center from a profit eater will bring a substantial return on your MRO change investment.
George Krauter, former founder and president of Industrial Systems Assoc. [I.S.A.] has retired as vice president of Synovos.
Currently, he has initiated, "George Krauter Consulting [GKC]" for effective reliability and cost recovery for consumers of MRO materials. George is a recognized authority on the management of the MRO supply chain and support for maintenance reliability programs. His book, "OUTSOURCING MRO...FINDING A BETTER WAY" is available from Amazon and from Reliability Web.com.
He is published in Uptime, Modern Distribution Management, and Supply and Demand Chain Executive. George has conducted seminars across North America, in Europe, and in the U.A.R. as well as a guest speaker at Temple U., Howard U., Duke, and MIT.
George is a graduate of Temple University; he lives with his wife, Joyce, in Bucks County, PA. All grand kids live within eating distance. He can be reached anytime: email@example.com.
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George E. Krauter
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