Are you the Master of your MRO Material Master?

If not, it’s time to take control. MRO offers the biggest savings opportunities in asset management.

Reduced unit cost, lower inventory levels, reduced time to repair, and lower levels of maintenance frustration are all obtainable by getting your MRO material master data under control. Below are a few MRO Material Master best practice requirements that will help you get there.

MRO Material Master best practices

Item Number

Each item in the Materials Master should have a single, unique, non-intelligent item number. These numbers should be standardized across all sites.

Item Description

Each item in the Materials Master should have a unique, complete item description. Item descriptions should adhere to the Standard Modifier Dictionary (SMD) format, which is a standard naming convention consisting of nouns, modifiers, attributes, and values. Using this format will improve search and locate efforts and reduce the possibility of adding duplicate items. Item descriptions should be standardized across all sites. The following are examples of best practice MRO item descriptions.

Item Commodity

Each item in the Materials Master should have a Commodity Code assigned to it. The assignment of an item Commodity enhances item lookup and reporting capabilities. The following are examples of MRO Commodities.

Item Class

Each item in the Materials Master should be assigned a class. The class of the item is the noun, which is the first word in the item description. For example, a motor would be assigned a class of “motor.” A pump would be assigned a class of “pump.” Assigning item classes enhances lookup and reporting capabilities.

Item Segment

Each item in the Materials Master should be assigned an item segment to differentiate maintenance and repair materials from operational materials.

UNSPSC Coding

The United Nations Standard Products and Services Code (UNSPSC) provides an open, global, multi-sector standard for efficient, accurate classification of products and services. The UNSPSC offers a single classification system that can be used for:

• facility-wide visibility of spend analysis;
• cost-effective procurement optimization (i.e., contract development);
• full exploitation of electronic commerce capabilities.

Each Materials Master record should be assigned a UNSPSC Code.

An example of Materials Master numbering, description, classification, commodity, and UNSPSC coding structures is shown below. Click the table to zoom in.

Unit of Measure

Each item should have a correct unit of measure. Accurate unit of measure is necessary for cost-per-unit analysis, cycle counting activities, and issue transactions. Unit of measure should be standardized across all facilities.

Storage Location

For storeroom materials, the storage location must be accurate so that items requested on pick tickets can be located and picked effectively and efficiently.

Item storage locations given in the EAM system must exactly match the items’ physical location labels.

Item locations must be unique; only one item is allowed per storage location. This eliminates the need for Storeroom Attendants to determine which of multiple items in a given location is the item requested on the pick ticket.

Inventory Quantity on Hand

For inventory materials, the inventory quantity on hand for each item must be kept up-to-date in the EAM system. The inventory quantity on hand will be adjusted automatically as transactions are processed.

Stock Unit Cost

All inventory materials must have an accurate stock unit cost. Item unit costs are required to calculate inventory values and to ensure material cost allocation across departments and equipment.

Inventory Minimum (MIN)

Inventory minimum or MIN is the lowest inventory level that will not generate a replenishment request. When the inventory level falls below MIN, the EAM system will automatically generate a suggested reorder.

MIN must be optimized for each item in the Materials Master.

Inventory Maximum (MAX)

Inventory maximum or MAX is the “order up to” level. The EAM system uses this level to calculate the size of suggested reorders. The difference between MIN and MAX is the reorder quantity.

MAX must be optimized for each item in the Materials Master.

Preferred Manufacturer

The preferred manufacturer for each item is the manufacturer from whom it should be purchased. Each item should be assigned a preferred manufacturer.

Preferred Supplier and Unit Costs

The preferred supplier for each item is the supplier from whom it should be purchased. The unit cost is the price charged by this supplier for the material purchase.

Correct preferred suppliers and unit costs enable the EAM system to automatically reorder parts, and recommend pricing, without human intervention.

• A preferred supplier should be attached to every Materials Master record. Procurement personnel must work together closely to determine preferred suppliers.
• The Buyer is responsible for managing supplier information in the Materials Master.

ABC Code

ABC Codes are used to prioritize inventory management efforts. The coding structure is based on unit cost and usage information. ABC Codes should be assigned to all inventory and updated at least annually.

Criticality Code

Criticality Codes should be assigned to all inventory identified as critical. An item is critical if a shortage (i.e., not having it on hand when it is needed) will shut down a critical piece of equipment.

Contract

Each Materials Master record should have a checkbox to indicate if the item is purchased on a contract.

“Where Used” Information

All maintenance and repair items in the Materials Catalog should be associated with the assets or locations in which they are used. This is accomplished through the asset or location’s bill of materials. These associations help Materials Management to identify obsolete materials. They also help Maintenance Technicians and the Maintenance Planner to quickly identify materials needed for a job.

If you need help getting your MRO master data cleaned up and producing value, let us know. E-mail us at info@swainsmith.com for free consulting and a 100 record complimentary data cleansing sample.