Tips for Navigating Productivity-inhibiting MRO Supply Chain Silos

By George E. Krauter

November 09, 2017 at 10:24 AM

Conflicting goals within the silos of the ERP/EAM process are disrupting overall MRO productivity. To address the issue, the problem first needs to be acknowledged and then solutions must be introduced in order to drive more productivity within the MRO supply chain process.  Below are listed some of these silos and the individual (and conflicting) goals of each:

  • Procurement – The paramount goal is to reduce price per part and to reduce inventory no matter what the cost.
  • Maintenance – Here the goal is to provide asset reliability, control unplanned downtime, and to increase inventory.  Piece price is not significant.
  • Operations – The goal here is throughput, product reliability, and best practices. The push is to upgrade to better parts and piece price considerations are secondary.
  • Finance -  This department cares most about cash flow, audit trails, reduced inventory, and lower cost/price.
  • Plant Management – This team seeks operational excellence, reduced total cost of ownership (TCO) and better return on investment (ROI).

With respect to the MRO supply chain, the divergent goals of each of these organizations are not coordinated. Although these silos generate activities that impact the MRO supply chain, the MRO stores management process does not align with the goals of each department. To exacerbate the situation, members of each silo have opinions as to how MRO should be operated (based upon their own individual needs) with little consistency as to who is in charge of procedures.

Manufacturers spend more than 40% of their budgets on maintenance related costs to make sure supplies are available to keep the plant’s assets running safely and at optimum levels. However, companies still continue to allow process duplication, inefficiency, and risky practices to negatively impact plant performance. In many cases, the longer a company exists, the longer it will rely on catalog data comprised of inconsistent and inefficient information. Add to this the lack of re-engineering expertise applied to MRO SKU’s and CMMS underutilization, and you reap significant deterrents to asset management incentives.

All of this points to a need changing MRO procedures in order to achieve efficiencies equal to the operational expertise companies apply to their manufacturing processes. The divergent silos must be coordinated to satisfy the goals of each while benefiting the whole.

Navigating the silos

MRO operational expertise should be centered on the need to employ four basic MRO management components. These include Supply Chain Services, Master Data Leadership, Engineering Asset Management, and Computer Maintenance Management Systems (CMMS). Each of these areas has an important role to play.

Supply Chain Services include sourcing and procurement, storeroom design, storeroom management, and logistic/inventory management.  Some of these functions can be performed off site efficiently; however, proper management must have an on-site presence.

Master Data Leadership (MDL) requires the following components:

  • Proper and consistent descriptions of all SKU’s.
  • Elimination of duplicated SKU’s under various descriptions.
  • SKU locations based on safety and usage logistics.
  • Focus on how data is delivered and used in developing initiatives.
  • Recognition of the need to employ measures that will sustain a consistent structure that will resist any return to unacceptable SKU situations.

The Engineering Asset Management function requires the services of reliability engineers who will achieve dramatic cost savings that benefit each silo. These include:

  • Re-engineering existing SKU’s for better performance at lower cost.
  • Commercializing SKU’s to avoid excessive price levels from OEM sources.
  • Restructuring storerooms for supply efficiencies.
  • Connecting storeroom procedures and inventory levels to maintenance reliability goals and procedures.

Computer Maintenance Management Systems (CMMS), when properly implemented, will benefit all silos by allowing stakeholders to have the necessary MRO communication when needed. Functions include scheduling, planning, preventive maintenance, work orders, safety management, purchase history, inventory levels, P.O. data, and information to control budgets.  Maintenance has the proper procedure to manage the reliability process; procurement has the information to optimize the total cost of ownership (TCO) for MRO.

To achieve optimum return on investment of time and money, an agreement with a single provider with on-site MRO expertise is essential. The provider must have a history of success, a top to bottom dedication to provide the actions necessary for success, and a commitment to sustain all stated goals on a year after year basis.

Tags: MRO supply chain MRO efficiency MRO cost control
Category: Blog Post

George E. Krauter


George Krauter currently serves as Vice President for Synovos in Radnor, Pa. He is recognized as the originator of the concept that became known as “integrated supply.” He has participated as a guest speaker at Reliability 2.0, ISM Indirect Conference, International Maintenance Conference (IMC), The Conference Board, and events for APICS, SMRP, and ISM professional chapters. 

George is recognized as an authority on methods to achieve reliable, maintenance-connected MRO storerooms; he has published his experiences in Uptime Magazine, Food Manufacturing, My Purchasing Center, and Supply & Demand Chain Executive. He holds a B.A. and M.B.A.A. from Temple University (Philadelphia) and has conducted seminars internationally (Oslo, Abu Dhabi) as well as sessions at Duke University, MIT, Howard University, and Temple. He lives in Bucks County, Pa., with his wife Joyce; all grandkids live within eating distance. You may reach George by phone at 610-246-6492.

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