Maintenance, Repair & Operations (MRO)

The consequences of stock-outs (running out of critical products) can cause a damaging impact on the production, installation or manufacturing process. A well-defined MRO solution can significantly help to minimise this risk.

Dealing with a large number of suppliers across a wide range of products is highly challenging and impractical for most businesses. Their procurement teams typically do not have the resource or expertise in all product areas to manage this effectively.

This, in turn, increases the risk that they will not be procuring the most effective products from the best supplier’s at the most competitive prices.

A clearly defined MRO solution can significantly help to reduce these risks.

Inefficient MRO management costs can be substantial and run into many thousands of pounds/euros/dollars.

The cost savings achieved are typically dependent on the current customer’s quality of MRO practice.

Typical;y, many larger companies have considerable MRO maturity and have well-established recognition of the need for a clearly defined MRO strategy. This often means that the easier-to-target solutions have already been implemented, and hence, cost-saving benefits will be harder to achieve and require more advanced solutions.

It is important to note, no company has the perfect MRO strategy, and there are always opportunities and cost-saving benefits that can be identified and realised.

MRO solution experts are better placed to identify and execute these opportunities due to their extensive market knowledge and many years of practical experience.

For companies who are in the early stages of their MRO strategy journey, it is possible to realise cost-saving benefits of up to 25% of their current MRO spend.

Typically this will be outsourced to an expert provider for the reasons and logic described above.

An outsourced specialist provider can provide higher levels of MRO market expertise as it is their core business, the customer’s business approach where it may be deemed as a non-core part of their business and hence the necessary focus and expertise are not duly applied.

An effective MRO solution will recognise the business-critical MRO products and provide an appropriate forecasting and inventory management solution for these to ensure these products never run out of stock, but at the same time keep inventory levels to a minimum. This practice requires professional expertise to avoid undesirable outcomes as a result of errors.

By the same logic, it is equally essential to have a sound strategy for the less frequently used products. These are typically products which may be un-stocked, but still, require immediate supply solutions when they are needed with equally appropriate lead times.

All these aspects require a carefully managed supply chain with multiple supplier options to ensure business continuity, and minimise production down-time due to stock unavailability.

There are numerous benefits which can be obtained by specifically using a single MRO provider for your requirements.

One of the most prominent benefits is one single focal point and only one supplier interface for the client.

By having the MRO solution provider deal with hundreds of suppliers on the client’s behalf, this frees up the client’s procurement team to focus on their strategic critical procurement products/suppliers and utilises the MRO solution provider’s expertise and market knowledge.

As a result, a single MRO provider creates significant cost advantages and also minimises the risk for the business.

While a single MRO sourcing partner may appear like a business continuity risk, in actuality a competent MRO solution provider should be able to minimise this risk on behalf of their client.

The MRO solution provider does this by “backing off this risk” through their extensive supply chain relationships and capability. It is not unusual for best-in-class MRO solution providers to have thousands of supplier relationships, thus ensuring several different potential sources of essential customer products. This means that sourcing can be quickly switched if the current supplier leads times do not meet customer requirements.

This supply chain resilience provided by the MRO solution provider is a critical benefit to the customer and is one which is unlikely to be achieved by an in-sourced solution.

It is also prudent to note that having multiple maintenance repairs and operations companies servicing your MRO requirements could potentially cause unnecessary duplication and most certainly increase the cost.

A robust MRO strategy should be delivering year-on-year Total Cost of Ownership (TCO) savings and with no disruption to production, installation or manufacturing up-time.

The key to understanding and realising this is through measuring performance.

To measure performance, you need useful, reliable data and the appropriate resource and expertise to know both what you are looking for, and also benchmarking your performance against the industry standard

This requires having line detail data at your fingertips which captures every single MRO transaction and highlights potential areas of focus.

Reporting with Artificial Intelligence (AI)  functionality is a massive benefit in this area as it highlights to the customer potential outliers and means that less time and resources are required to identify the opportunities for improvement.

With this information at hand, performance can be monitored, measured and adapted to ensure that your MRO strategy remains robust and achieves high levels of TCO benefits without any production disruptions.

While the party responsible for the strategy is fundamentally the client, there are more areas to consider. The most effective MRO solutions are those delivered with a closely-coupled working relationship between the customer and MRO solution provider.

The ultimate responsibility lies with the CEO of the client’s business, but the importance of stakeholder management across all levels of the client’s MRO solution provider relationship is pivotal to optimal and longer-term success.

There typically exists a primary client interface with a primary MRO solution provider interface, but this is only the primary touchpoint.

A robust MRO solution provider offers a stakeholder management strategy that highlights critical personnel and the communication frequency of the respective customer-solution provider interfaces.

This should clearly articulate routes for escalation and be built to ensure business continuity and ongoing risk reduction.

An outsourced solution is typically provided by a third-party MRO solution professional, whereas an in-house solution is typically done by the customers own procurement team.

Delivering an insourced solution is a very high-cost approach as it typically requires large procurement teams to manage the many hundreds of MRO supplier interfaces. This, in turn, significantly decreases the likelihood to have procurement team members who have high levels of expertise in the wide-ranging MRO product categories and subcategories for the products which they procure.

This is not the case in MRO solution providers, who have category specialists focused on both sector specialisation and also category specialisation, who are thus positioned to provide higher levels of both procurement and technical expertise.

The outsourced MRO solution provider typically has a supply chain consisting of many thousands of suppliers, as they are providing MRO solutions to many industry clients. Suppliers are specially selected based on their capability to deliver on time, at a competitive price and in line with the specific customer quality and environmental specifications.

The MRO solution provider is typically able to gain significant purchase leverage with suppliers of critical products used through aggregated spend derived from supplying high volumes of like products across multiple customers.

The above examples are just a few of the many differences between insourced and outsourced MRO solutions.