Benefits of Optimizing MRO Procurement Services for Your Business

 Change can be challenging, especially when the organization is working to change corporate culture as well as policy. The MRO supply chain and its associated spend can be tamed, streamlined, and improved if the company is willing to adapt and implement a few best practices.

1. Research, Approve, and Integrate a Procurement Software Solution

If the company is not using a software package to manage the MRO spend and supply chain, now’s the time. Modern software makes it easy to track, manage, and control inventory, as well as transaction request, approval, and verification. The company will not only gain control of their inventory but also have access to valuable data that makes it easy to optimize transaction costs for MRO items, evaluate potential vendors (and track performance for existing preferred suppliers), reduce the number of suppliers in their chain, and slash their procurement budget while still building value. Identify and Track Key Performance Indicators (KPIs).

 

One can’t reliably measure the success of their MRO procurement if they don’t have benchmarks and standards. Setting KPIs provides the company with essential information that makes the benefits of their initiative clear to upper management and other stakeholders in monthly/quarterly reports.

Some KPIs to consider include:

• Procurement budget
• Vendor performance/supply contributions
• Number of stock-outs
• Maverick spend
• Days/months of available inventory
• Rush orders versus replenishment orders
• Part attrition due to obsolescence
• Centralize Physical MRO Inventory

1. Streamline Procurement with Preventative Maintenance

Once the inventory is catalogued and centrally located, create a schedule—tied to their benchmarks and  KPIs—for equipment downtime and, as required by demand and circumstance, order adequate quantities to keep their systems working at optimal efficiency without maintaining unnecessary inventory. Companies find budgeting and forecasting are greatly improved as well, since you’ll be able to identify purchasing patterns and plan accordingly.

1. Harness the Power of Vendor-Managed Inventory (VMI)

If the company will not devote staff resources and time to MRO inventory management, engaging a third-party solution that integrates with the procurement software is a very effective way to achieve optimal efficiency and savings.

VMI, pushes less paper, trim the transactions with on-demand purchases tied to just-in-time procurement planning, and easier invoicing thanks to fewer purchase orders. Depending on the VMI organizations choose, suppliers may even provide product storage equipment (e.g. shelves, bins, etc.), and manage inventory ordering and physical replacement. Your staff has what they need, when they need it, and your supplier restocks and invoices based on either usage or a specific time period. 

1. Educate Staff on the Importance of MRO Inventory Management

Best practices are only effective when they’re followed. Connect the procurement team with their MRO staff for interdepartmental educational opportunities, and provide adequate training for procurement software as well as clear explanations of the benefits of value-driven business processes. With everyone on the same page, it’s much easier to work toward the same procurement strategy.

Conclusion:- 

Properly managed, a company’s MRO supply chain can be a source of not just cost savings, but tremendous value for the organization. Bring MRO in out of the cold and into a centralized procurement strategy driven by well-defined KPIs and full staff support. The employees will spend less time on inventory, and more time on what matters: supporting your company’s success.

 

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