Is MRO Really A Monster? Can You Afford Not to Treat Your Maintenance and Repair Data as a Strategic Asset?

How often has the business demanded the need to drive savings within Procurement? Initiatives have been run to address direct materials and services but the monster that is MRO remains wild and unmanaged. But why? At the end of the day, MRO spend can account for 40%-70% of your procurement spend, yet some organisations fail to view this area of spend as strategic. It is nearly always significant and can deliver up to 40% savings (source: AT Kearney – Indirect Spend Study 2010). The Challenge to taming the monster lies in turning data, trapped and duplicated in disconnected applications and facilities, into useable and meaningful business intelligence. Even worse, without transformation the data is formatted and described differently, making meaningful comparisons impossible. The lack of visibility across divisions and functions results in higher carrying costs, inefficient operations and ineffective sourcing.

Spend analysis has gradually become the top process in the procurement executive's toolbox, placing itself in the top-tier of functionalities alongside e-sourcing, e-procurement and strategic sourcing solutions. Aberdeen research over the last half-decade has chronicled the rise of spend analysis and its true value within the procurement organization. Spend analysis, and the resulting intelligence gleaned from a deep-dive view into corporate spend data, has enabled sourcing groups to uncover opportunities for savings and has given the CFO a strategic advantage by utilizing this information for future forecasting and budgeting.
Source – Aberdeen Group, July 2010

But visibility is not the end of the story. Data in disparate systems, from ERP and Procurement to Asset Management and Engineering, must be transformed into useable product information that is easy to search and accessible to those who can act on the data. Identify the problems then take on the challenge.
  • Product and MRO data could be dispersed and inconsistent in a multitude of systems and formats. Procurement managers, sourcing specialists, design engineers and maintenance managers cannot access inventory, re-use parts or substitute components. Whether your product data is unavailable in an incomplete “point solution” or buried deep in an ERP package talking this challenge can help you reduce costs and effectively manage information across the business.
  • Imagine the time wasted by procurement managers, sourcing specialists, design engineers and maintenance managers in fruitless searches of parts. Yet with a consolidated view and effective search, engineers can efficiently source parts and managers can control the costs of managing MRO goods.
  • Does the business purchase too few items from too many suppliers. Without visibility into a unified source of procurement intelligence, it is impossible to know how many duplicate parts from how many suppliers you are purchasing across your enterprise. Fewer suppliers mean more operational efficiencies and better discounts achieved through aggregated purchases.
  • Lack of collaboration with suppliers means there may be a win-lose situation in their favour. Collaboration is not about leveraging the supplier on price, however, by realising the benefits of unified procurement intelligence both your organisation and your suppliers could realise savings.
Visibility and accessibility boost efficiencies and fills the functional void in your organisation’s systems. Enhanced data coupled with effective management solutions give you the power to build and maintain a unified catalogue of fully attributed product information for part-level visibility and comparison. Transactions based on this data and managed through one gateway provides a consistent view of spend data and the ability to collaborate with your suppliers to realise savings. Whether the operation is national, regional or international the MRO monster is lurking somewhere within your operation. Don’t be afraid of it, with the right methodology and tools the monster can be tamed.



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