Introduction to MRO inventory optimization
In the context of optimizing inventory, MRO (Maintenance, Repair and Operations) refers to the processes that an organization uses to maintain a strategic balance between the costs of inventory and the availability of parts. MRO inventory optimization is crucial for supply chain efficiency, helping to ensure products are available and that you have transparency in your company’s movement of goods required to keep up with predictive maintenance tasks.
Optimizing MRO inventory can lead to significant cost savings, such as avoiding unnecessary downtime caused by a lack of parts and equipment that would hinder or prevent timely maintenance.
You can develop strategic relationships with your key suppliers to negotiate more favorable discounts and arrange for better terms.
Improving MRO inventory plays a strategic role in managing the supply chain. In addition to reducing the costs of procuring crucial items, MRO inventory optimization is instrumental in managing your current inventory level. This helps you avoid tying up too much of your capital in overstock, so you can better use your funds now.
With better MRO management for inventory control, you reduce the likelihood of paying more than anticipated for items currently scarce in your supply chain.
Best practices for MRO inventory management
What are the best practices for managing MRO inventory effectively?
Use modern software
Harness the latest software and technology to manage your inventory. You’ll gain insight into your MRO inventory, such as current levels of stock, using software to predict when you need to replenish items. An inventory management system helps automate product procurement processes, reducing the need for workers to do this task manually (which can lead to errors). As a result, you’ll have a more accurate view of your inventory and can make better decisions about what and when to order (and in what quantities).
Apply demand forecasting
MRO inventory management relies on advanced demand forecasting techniques so you can better predict your fluctuating inventory needs. You’ll also minimize waste, which improves your bottom line while avoiding overstocking your shelves. With excess inventory, you risk products sitting on shelves after their expiration dates or being stuck with obsolete inventory when manufacturers create newer, improved versions.
Test just-in-time ordering
Companies often deploy an MRO inventory management system to include just-in-time ordering or JIT, which, as its name indicates, will reduce the holding costs of your inventory. Be aware that JIT ordering can leave you vulnerable to unpredictable bottlenecks in the supply chain, whether due to labor shortages, tariffs or natural disasters.
Continuous improvement
With a mandate to continuously improve and train your maintenance and procurement teams about industry best practices in MRO inventory management, you’ll be better poised to ride out any interruptions in your supply chain.
Collaborate with suppliers
Ideally, you will collaborate with your suppliers to manage your inventory directly. Doing so cuts down on your team’s administrative burdens as you outsource this work. You’ll also have fewer worries about whether your crucial MRO items will run out when you need them the most. By arranging for VMI, or Vendor Managed Inventory, you may be able to secure more favorable terms and pricing as you enhance relationships with your most important suppliers.
Consolidate and standardize MRO items
Another important best practice is to consolidate and standardize your MRO items. Simplifying how you order equipment and materials can minimize the complexity of your inventory and can be key for negotiating volume-based discounts. You’ll make procurement a much simpler process to manage.
Overcoming challenges in MRO inventory management
What are the common challenges faced in MRO inventory management? Managers want to avoid the problem of overstocking, which is a drain on financial and worker resources. At the same time, managers must beware that running out of crucial stock would impair routine maintenance tasks.
You can overcome such challenges by implementing inventory analytics and instructing your team to follow continuous improvement processes. Use modern inventory control software to automate much of this work.
To avoid MRO inventory inaccuracies and discrepancies, implement cycle counting. By auditing a subset of your inventory, which requires less work from staff as they are only addressing a part of the inventory as a sample, you reduce potential slowdowns or interruptions in maintenance and repairs.
Companies typically do cycle counting on a designated day and time, so they can rest assured their inventory counts are still accurate.
Leveraging technology for MRO inventory optimization
MRO inventory management software transforms inventory operations by streamlining supply chain tasks and enhancing decision making. Install computerized maintenance management system (CMMS) software to programmatically manage your MRO inventory’s master data.
As you integrate inventory analytics into MRO inventory management, which also includes data cleansing to avoid dealing with outdated or irrelevant information, you’ll gain actionable insights into your supply chain, maximizing its efficiency.
Technological solutions that are the most effective for MRO inventory optimization include dedicated MRO software that harnesses machine learning, and AI. These tools enable your team to automatically address large volumes of data. Because of this, workers can devote more of their time and attention to the maintenance and repair tasks.
In many cases, you can deploy IoT (Internet of Things) devices in your facilities to help you determine which pieces of equipment need maintenance sooner rather than later.
Keep in mind the benefits of knowing how long it will take your company to receive a necessary shipment, how long your inventory will last before the next shipment is due to arrive and how much stock you should keep as a hedge against unpredictable surges in demand during maintenance efforts.
Cost-saving strategies through MRO inventory optimization
For effective MRO inventory management, harness key strategies for achieving cost savings, including:
- Reduced inventory — You don’t waste time stocking materials you don’t immediately need, and you spend less money on parts, tools and equipment.
- Optimized inventory — Using tools such as artificial intelligence and machine learning that keeps track of your ordering and usage patterns, you’ll optimize your inventory.
With JIT inventory ordering through MRO optimization, you spend less, as you have lower holding costs while seeing a boost in your cash flow. JIT inventory management should include finding reliable, local suppliers whenever possible for faster stock replenishment to support scheduled maintenance tasks.
This is especially the case when you develop and maintain positive, strategic relationships with key suppliers in pursuit of nailing down more favorable costs. Lean inventory management can reduce MRO inventory expenses, as you determine the optimum levels needed with smart inventory planning to operate with the least amount of stock while avoiding disruptions in your maintenance tasks.
Impact of supply chain optimization on MRO inventory
Optimizing your company’s supply chain directly affects MRO inventory management. As you synchronize your inventory needs with your existing maintenance strategies, you will see enhanced coordination and inventory visibility. Also maintenance teams won’t need to scramble to find parts, equipment or vital tools.
When you optimize your enterprise’s supply chain, you and your fellow stakeholders can make better MRO inventory decisions and negotiate favorable rates with preferred vendors.
After you obtain a firmer grasp of your current inventory levels, you achieve improved operational efficiency.
Improving your company’s maintenance, operations and repairs
It’s evident that MRO inventory optimization contributes to overall supply chain success and improves how you perform crucial maintenance tasks. You can also leverage your partnerships with vendors to gain more favorable prices and terms.
Your company can reduce the overhead that comes with overstock and minimize slowdowns or shutdowns in maintenance tasks because of supply chain bottlenecks that MRO inventory optimization helps you avoid. Of course, you also reduce the prospect of having obsolete products sitting on your shelves.
With a more reliable MRO supply, you can work based on predictions, with appropriate prioritization, rather than on a reactive basis, which tends to cost more in time, labor and supply chain procurement costs. With nearly four decades of MRO asset management expertise, we can help you optimize your MRO inventory. Contact us to learn more today!
