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MRO inventory consists of consumables, equipment, and supplies utilised in MRO tasks. In other words, you use cleaning supplies, tools, maintenance equipment, and other miscellaneous items daily to keep your business working.
Under inventory, thinking about the products you sell to customers is common. However, that’s only one part of the equation. Your business also requires proper maintenance, repair, and operations (MRO) supplies to function properly.
MRO items are essential for ensuring your company operates smoothly, allowing you to focus on serving your customers. These supplies include things like air conditioning maintenance, plumbing and lighting, cleaning services, manufacturing machinery and equipment, and general supplies.
MRO encompasses a range of tasks and services, such as regular maintenance and repairs, cleaning, and procurement of supplies. In some industries, MRO expenses can account for up to 10% of total expenditures, making it crucial to manage these costs effectively.
MRO stands for Maintenance, Repair, and Operations. It refers to all the supplies and activities needed to keep a business running smoothly. These include tools, equipment, cleaning products, and safety gear. MRO doesn’t directly affect the final product but ensures machines and processes work efficiently. Managing MRO helps avoid delays and reduces maintenance costs.
MRO inventory includes the items a business keeps to maintain and repair its equipment or operations. These items aren’t used in making products but are crucial for keeping everything running. Examples include spare parts, cleaning supplies, tools, and safety equipment. Tracking and managing MRO inventory properly helps prevent equipment downtime and saves costs.
Key Performance Indicators (KPIs) help measure the effectiveness of MRO inventory management.
Tracking these KPIs helps improve operations and reduce costs.
These practices help businesses save time and money while improving operations.
Here are a few examples of MRO inventory:
While your “typical” inventory management process may involve a few goods or supplies your company sells daily, MRO inventory might be pretty complicated. There may be hundreds of distinct objects that must be monitored and maintained.
MRO can be classified into numerous categories, primarily based on the type of business it supports, such as
Maintenance tasks are essential for keeping your structures and services in good working condition. This category includes activities such as repairing roofs, power washing building exteriors, cleaning interiors, and other related operations.
Maintaining a sufficient inventory of supplies and conducting timely repairs and upkeep for manufacturing equipment is crucial for ensuring that your company can continue to produce items efficiently. This inventory plays a vital role in keeping your business operations running smoothly.
Maintaining equipment for transporting goods to and from your company’s production lines is crucial for ensuring efficient operations. This type of MRO includes vehicles that transfer finished items to a storage facility and other forms of transportation used within the company.
This MRO category includes your company’s most miniature equipment and supplies, ranging from cleaning solutions and paper towels to handheld tools.
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The things you manage with MRO are critical to your company’s infrastructure operation. Having them available in sufficient quantities is essential because they are vital to success. If your assembly line fails, you might face hours or even days of downtime if the necessary parts are unavailable.
Too much MRO inventory on hand may waste space and money, especially for pricey products like specialised components for an assembly line. Because they aren’t things you’ll be selling, you can’t rely on steep discounts and special offers to clear out surplus inventory. Finding the correct balance is essential for cost management.
Gaining control of your MRO inventory requires several steps. Let’s start at the beginning and work through each of the five phases one by one.
When implementing a new inventory management procedure, the first step is to audit the existing inventory. This includes determining if each item is still necessary, whether you have enough or too much on hand, and whether it has expired or is still valid. Asking these questions helps you assess your current inventory status.
After identifying your inventory, the next step is to organise it as efficiently as possible. An effective organisational system allows for quick access to items when needed and prevents unnecessary ordering of items. This system should be tailored to meet your company’s specific requirements.
The next stage in managing your MRO inventory is establishing a concrete replenishment procedure. An effective ordering system ensures that your inventory meets your requirements with minimal waste. This procedure involves setting a replenishment threshold for each item, selecting a supplier for the product, and assigning employees to manage each stage.
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Before placing any orders, take a moment to analyse your MRO inventory utilisation. Look for trends in which specific items are used more or less frequently. These projections can then be used to assist you in placing your initial orders.
Lastly, conduct regular evaluations of your purchasing process and projections, and perform additional audits to identify any weak spots. You can then adjust your strategy as needed.
Managing MRO inventory is challenging, much like any other necessary operation. It involves difficulties such as acquisition expenses, inventory tracking, and poor turnover. Some of these difficulties are discussed below.
High Acquisition Costs: Acquiring MRO inventory can be expensive due to the sheer volume and variety of products that some businesses may require, especially for extensive or highly specialised industrial operations.
Hidden Inventory Counts: MRO inventory is sometimes less apparent than conventional inventory. To maintain availability, discrete teams may store their supplies of products, which might complicate MRO inventory systems.
Slow MRO Inventory Turnover: MRO inventory can sometimes move slowly. For instance, you may need a spare component on hand if vital manufacturing equipment fails, but it may be years before you use it.
Inventory Tracking: A centralised inventory management system can be used to keep track of MRO inventory. Such a system is essential for understanding your current inventory and consumption patterns.
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Best Practices for MRO Inventory Management: Managing MRO inventory may appear complicated, but it does not have to be. The following recommended practices can assist you in getting your process off to a good start.
Identify Mission-Critical MRO Items: Knowing which MRO items are essential to your business operations is essential. You must keep these items in stock at all times. When ordering and budgeting, these goods should be given priority.
Store MRO Inventory in a Central Location: Keeping a single, centralised storage location for MRO inventory can help reduce some of the visibility challenges associated with MRO inventory.
Perform Quarterly MRO Inventory Audits: Regular inventory audits help identify errors such as misrecorded numbers or misplaced items. Maintaining a regular auditing schedule can significantly ease this problem.
Build Strategic Supply Partnerships: Spend time thinking about the suppliers you use for MRO supplies. Having the proper relationships in place can help you expedite your ordering and administration processes while ensuring consistency in quality.
Use Data to Forecast Demand Accurately: Accurate forecasting of MRO demand is crucial. Relying on complex data wherever feasible provides more precise forecasting and controls your inventory.
Use Software to Manage MRO Inventory: Proper MRO inventory management software can significantly improve your process and efficiency. This programme can automatically arrange orders, track item usage and receipts, and provide real-time inventory information.
Below are the MRO KPIs your company must monitor:
Inventory management software simplifies MRO management. It tracks stock levels, usage, and reorder points automatically. This helps avoid shortages or excess stock. The software can also generate reports and alert teams when items are low. It integrates with other systems, like procurement, to streamline operations. Using software ensures businesses manage MRO items effectively and reduces unnecessary costs.
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Effective MRO inventory management is essential for businesses to operate smoothly, maintain their equipment, and prevent downtime. The key to successful MRO inventory management is to conduct regular audits, use efficient organisation and replenishment procedures, and adopt best practices such as identifying mission-critical items, centralising storage, and building strategic supply partnerships.
By following these guidelines and closely monitoring MRO spend, stockouts, days inventory on hand, and rush orders to replenishment ratio, businesses can optimise their MRO inventory and keep costs low while ensuring equipment availability and reliability. With the right tools, software, and data-driven approaches, MRO inventory management need not be a daunting task but rather a strategic asset to your business operations.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.