Did you know that MRO storeroom operations are the #1 driver of maintenance costs, lost productivity, and extended equipment downtime? This is why your MRO Materials Management Policy is a key pillar to success. Ask yourself this:
- Is your MRO storeroom getting the right part, to the right place, at the right time, for the lowest total cost?
- Are your MRO materials being properly stored, controlled, and managed?
Not properly managing your MRO inventory materials puts a big hurt on asset management operations.
- Approximately ½ of equipment maintenance issues involve spare parts.
- Approximately ½ of maintenance delays involve spare parts.
- Approximately ½ of maintenance costs involve spare parts.
The good news is that this is fixable. And the fix has a huge ROI attached to it. There’s a lot of savings to be had by getting your MRO materials management act together.
Improvement Journey
So where do you start?
The journey to optimizing MRO materials management begins with a company-wide mandate for MRO materials to be organized, stored, identified, controlled, and managed. This means an MRO Materials Management Policy.
Not everyone understands why policies exist. Some people may view them as being bureaucratic and overbearing. In reality, however, the existence of an MRO Materials Management Policy means that the organization is serious about MRO inventory management and this means its serious about reducing equipment downtime, increasing maintenance wrench time, and lowering costs.
Mission Statement
Your policy should start with a mission statement. See the example below.
The mission of the MRO Materials Management function is to provide the right part, to the right place, at the right time, for the lowest total cost.
- The right part is the one that meets specifications, is easy to install and maintain, and ensures a high level of reliability.
- The right place is defined by the needs of the user. Generally, MRO materials are delivered to a secure area near the point of use.
- The right time is defined by the work order. It does not mean “at any time.” Although it is a best practice to keep critical spares in stock and available at all times, for other MRO materials, the right time means a scheduled time based on planned maintenance work.
- The lowest total cost refers to minimizing the sum of five costs: the cost of materials, the cost of replenishment, the cost of quality, the cost of storage, and the cost of inventory shortage (i.e., the cost of not having the part).
This mission encompasses all the processes, equipment, and information necessary to manage MRO inventory and to ensure that required MRO materials are available to users (i.e., operations and maintenance personnel) when needed. It should be posted for all eyes to see.
Objectives
Next step is to identify the objectives that will help the MRO materials management operation accomplish its mission.
The MRO Materials Management function has two primary objectives:
Objective 1: Support operations and maintenance by supplying MRO materials that meet quality and delivery requirements.
Objective 2: Create value for the organization by managing MRO materials and storeroom operations as effectively and efficiently as possible.
These objectives should be fully understood by all MRO materials management personnel.
Commitments
Next step is to identify what the MRO Materials Management operation is committed to. This educates users of the MRO supply chain what MRO Materials Management is all about. See example commitments below.
The MRO Materials Management function is committed to safety, respect, and excellence in all areas of the operation. To further these goals, we make the following commitments.
Health and safety: We will protect the health and safety of our staff and those visiting the storeroom by observing safe material handling and storage practices, keeping storeroom equipment in good working condition, and maintaining a clean and safe work environment.
Ethical conduct: We will consistently maintain high ethical standards and honor all commitments in our operations.
Best practices: We will strive to implement best practices in all areas of MRO materials management, including storeroom equipment and technology, material handling and storage practices, inventory management, and master data management.
Continuous improvement: We will promote continuous improvement by measuring our performance against established best practices.
Enterprise asset management: We will work closely with operations, maintenance, procurement, and other business functions to manage physical assets in a way that maximizes value for the organization.
These serve as promises the MRO Materials Management operation is making to the other sides of the business.
Vision
Finally, establishing where you want to go is the final step. This establishes the “to be” environment – what we want the operation to be and become.
The long-term vision for the MRO Materials Management function is to give the company a competitive advantage by building and maintaining world-class storeroom and materials management operations.
By establishing a vision statement, we can look back in a year or two or three and see if this vision is materializing (are we making improvements) or fading (not getting it done).
Summary
Developing your MRO Materials Management Policy is the first step to bringing control and discipline to your MRO storeroom operation. Policies, as much as they are disliked, are the organizational mandates that set the standard for how the company is going to manage its MRO investment. Your MRO investment is critical to asset reliability, productivity, and cost management efforts. A policy formalizes that commitment.
Once your policy is in place then everything else can fall in line. This includes your practices, business processes, KPIs, master data conventions, and EAM/CMMS system.
We help organizations across the globe optimize their MRO Materials Management operations. Our data, process, and organizational solutions can help you get the ROI from your MRO.
Download our MRO Storeroom Operating Model Table of Contents. See the practices that help clients establish world-class MRO Materials Management operations. Contact us at info@swainsmith.com if we can be of help.