You have likely come across the acronym MRO more than once. But what is MRO, and how does it impact your business?
MRO is an acronym for:
Here are some examples of MRO:
- Office supplies
- Computer equipment
- Pumps, belts, motors, and compressors
- Gloves, cloaks, and workwear
- Repair tools
- Hand tools
These are all classified as MRO items. They are consumables that are used in the production process, but they don’t become part of the end product. Nor are they central to the company’s production/output.
The issue is that many companies don’t place materials management optimization as high on their process and cash flow as they should.
MRO expenses can be up to 10% of the cost of goods sold. But when MRO is mismanaged, then you’ll pay attention.
You are likely to run out of integral tools, chemicals, or elements that are part of your production process. What does that mean?
Your production line will stop. Without these vital tools, your staff, or you, cannot continue to manufacture your goods.
Why is MRO Important?
A lack of repair items can see a stall on your production line. This will cost both wages for staff who can’t do their job due to no fault of their own. As well as missing shipping deadlines, you’ll lose revenue, and depending on your field, your reputation can be permanently tarnished.
You probably don’t need more reasons for MRO to be important. The loss of business income and perhaps your business is reason enough to pay attention to MRO.
MRO is critical to your business processes.
How Can You Manage MRO?
There are several things that you can do to have a smooth MRO process.
The first is to hire a dedicated and experienced Procurement person. Or if you have a big enough operation, you may need a team. They will be in charge of your company’s MRO. You should expect them to be well-versed in a vast array of products.
The second is what will change the way you handle your MRO and actually see you having an improved revenue, due to a reduction in costs. An MRO platform will be able to streamline all of your processes and cut down the time it takes to check all of your inventory. No duplicates. No close calls. You will have access to metrics that really matter, rather than working on a hunch you need cleaning supplies or safety gloves.
Becoming proactive in your inventory is going to see you have lower downtime costs, more control and visibility of spend levels, better target setting, and the metrics to keep track of your KPIs.
MRO is not something you should consider, and it is something you can’t function without. It is an essential function, ensuring your company can successfully fulfill orders, reduce costs, and have a sustainable infrastructure going forward.
Check out this podcast on why you need to be proactive, not reactive in business.