The Case for Managing MRO Inventory

This is an excerpt of the original article. It was written for the March-April 2013 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2013

Inventory needs to be “optimized” to properly match supply and demand. This has become all the more important as competition intensifies globally and supply chains get longer and longer. Learn from a subject matter expert about the benefits of inventory optimization and how to get an IO initiative on track in your organization

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In an earlier job, I was the materials manager in a manufacturing facility. A “tool crib” was the repository for office supplies and safety supplies; the bulk of the maintenance, repair, and operations (MRO) inventory was controlled by the maintenance department and was stocked all over the plant.

My group set out to bring best practice in inventory management to the MRO supply chain.
Fasteners were the first MRO component category that we addressed. We selected a supplier to come in and regularly replenish the fasteners in a central stocking area. The supplier inventoried and stocked the bins and invoiced us monthly. This simple process change eliminated the multitude of purchase orders and the associated costs that had been typical of the previous arrangement; it was also designed to ensure that maintenance staff always knew where to get the fasteners they needed for their tasks.

However, there was continued resistance to the idea of the materials management function taking control of all MRO supply. The turning point came when the stock of foundry tapping cones—used to control the flow of molten metal from a furnace ladle—was allowed to run out and the purchasing team had to source and expedite replenishment on a Sunday. It became clear to everyone that it made more business sense to stock foundry supplies in the tool crib. Soon after, additional supplies of tapping cones were moved into the crib. Not only were MRO centrally maintained and ordered after that, but the foundry maintenance area’s housekeeping improved because there were no longer skids of materials sitting around as “maintenance stuff.”

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