Maintenance, repair and operations (MRO) are a discipline that manages both the day-to-day as well as the long-term process around manufacturing materials, equipment and even the actual factory itself, allowing manufacturers to respond to supply chain issues proactively or in real-time.
MRO helps manufacturers overhaul and manage not only the equipment and consumable materials they use to build items but the actual factory itself. It has become only more important as external and internal pressures have complicated the supply chain in recent years.
Every day, factories depend on dozens to thousands of machines working in tandem to produce finished products that the company will eventually sell. Keeping that factory online and running requires all those machines, which are comprised of hundreds of individual parts, to remain pristine and running as scheduled.
As such, manufacturers need a regimented process to manage every aspect of their factories. So what exactly does MRO mean and how can companies use it to their advantage?
Companies that are prepared for external events are likely to outperform their competitors. MRO’s importance in a competitive world cannot be understated. Every manufacturer is laser-focused on producing value, so they need their factories set up to execute their manufacturing process efficiently and effectively.
Factories need to run like well-oiled machines to successfully turn raw materials into finished products. They must forecast both raw material needs and finished product levels. This prediction helps ensure that they always have the right equipment online, the right supplies and the right personnel to execute. For many organizations, that means they need MRO inventory management.
Prioritizing MRO is a component of supply chain management as it requires managing the flow of goods from different vendors to ensure an organization’s production output is on schedule. But it’s not just a process for managing technology.
Factories depend on dozens to hundreds of workers. These workers do not make the products a company sells. Instead, they are there to make sure the factory is on schedule and the employees responsible for producing products have everything they need to do their work. They depend on a comprehensive process to make sure they have the tools, equipment and cleaners they need to keep the machinery online and working properly.
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MRO refers to the act of maintaining, repairing or otherwise keeping operational the tools, supplies and equipment required to manufacture goods. MRO management is the regimented process by which organizations conduct MRO. While every organization that manages factories conducts its own version of MRO, whether it has a specific approach or even understands what MRO means. Recently, organizations have embraced a more methodical, comprehensive and sophisticated MRO management process.
Ultimately, every organization that produces goods and maintains a factory has to ensure that their machines are clean, have up-to-date parts and are ready to produce goods. However, MRO management is a more comprehensive strategy based on best practices and comprehensive guidelines.
Creating a smarter MRO management approach enables organizations to keep better track of their MRO metrics and key performance indicators (KPIs), such as cost control, equipment uptime and mean time to repair.
Inventory management is a huge component of any MRO strategy. Running out of inventory items can create issues. Similarly, companies also do not want unnecessarily elevated stock levels, for example, too many raw materials and equipment, which creates expensive carrying costs.
Maintaining strong inventory control ensures you have the right amount of MRO supplies. Inventory is best thought of as an investment1 and, as such, organizations must approach it with diligence, precision and discipline to successfully manage their inventory levels.
While the organization likely purchases many of the products that require maintenance, repair and operations, it also may choose to lease some of its tools and products through vendor-managed inventory.
MRO equipment, while necessary, can also become a huge cost for organizations if they do not approach procurement correctly. Organizations that do not have an understanding of their MRO equipment purchases or requirements to effectively run their factories will grossly underestimate the MRO cost of producing their goods. Subsequently, this underestimation can affect their overall profitability. In addition, the absence of a methodical procurement process limits a company’s ability to identify the best suppliers offering MRO goods and equipment at the best possible prices.
Therefore, it pays for organizations to engage in a regimented MRO procurement strategy to streamline their purchasing process for MRO materials.
Regardless of how a company pursues its maintenance, repair and operations inventory, it would be wise to use inventory management software. This software can help optimize its processes and track purchase orders, lead times, inventory costs and the type of inventory it needs.
As companies decide whether to engage in predictive maintenance or preventive maintenance2, they must have the right tools. These tools are for diagnostics, maintenance and repairs to keep machinery in optimal shape, regardless of how they schedule maintenance. This requires more sophisticated methods of digital office supplies, including spreadsheets, other software, hardware and cloud costs for maintaining information management for their MRO items and supply chains.
There are different types of MRO that companies need to focus on. These examples of MRO demonstrate the full range of approaches any organization must consider as they keep their factories running on time.
This includes things like spare parts, lubricants, hand tools and other infrastructure repair products to conduct repair activities like fixing machines before they break down, promoting strong levels of upkeep.
In order to make sure a factory can produce goods, the factory itself must be in working order. Infrastructure repair and maintenance ensures that the foundation of the factory is in good condition and that there are ample supplies (for example, janitorial supplies, cleaning supplies and tools and consumables.
An integral part of any production process, tools are items that are used during the creation of finished goods. Key tools include lathes, drills and injection molds and key consumables include lubricants, adhesives, gases, gloves, masks and tools like welding rods and soldering tools. Therefore, a company must have a good handle on the rate of usage of disposable goods like consumables so they are never at risk of running out of them during a workday.
After a product is manufactured, the company then needs to move it onto the vehicles that will transport it to the wholesaler or retail operation. From conveyors to forklifts to other vehicles and moving equipment, this is a crucial part of any factory management program.
It does an organization no good if it builds products but does not have a reliable way to transport them. As such, it must take as much care to ensure these pieces of equipment are well maintained as the actual manufacturing equipment in the factory.
- Minimizing unplanned downtime: Just one machine not working as intended or the lack of one raw material can throw the entire production line into chaos. This disruption can negatively impact the company’s bottom line and create scenarios where employees are standing around waiting, unable to conduct their work. By avoiding downtime, organizations have productive workers and goods briskly moving out of the factory. In addition, organizations that incorporate MRO can better plan routine maintenance so they can keep their factories online and out produce the competition. By knowing when machines need service or are at risk of breaking down, they can holistically look at the entire operation to decide which pieces of equipment to take offline while using the remaining online equipment to produce their goods.
- Avoid stockouts and overstocking: An automated and meticulous approach to MRO means that organizations are better equipped to know when all their MRO equipment, tools and products are in need of replenishment. Running out of even the smallest glue or cleaning supply can have a knock-on effect on the entire manufacturing process. In addition, organizations can ill-afford to have too many of any product, which leads to an overfilled stockroom. It creates unnecessary storage costs, risks of spoilage or decaying of material and inhibits their ability to respond to decreasing prices based on market trends.
- Track MRO spend: Keeping an eye on spend can help organizations know if and when they need to change suppliers, move to a different product, or look to potentially embrace vendor-managed inventory in certain places.
- Regulatory compliance: Governmental bodies and industry associations have established many rules and guidelines related to the safety of employees and the quality of finished goods used in the creation of products. Those include occupational safety and health regulations, environmental regulations and equipment and machinery compliance. In doing so, they keep their responsibility to their employees, especially those working in difficult manufacturing conditions, to provide as safe a workplace as possible. Ensuring the heavy equipment they work on has the necessary replacement parts, has been cleaned and serviced, minimizes any unnecessary dangers or the possibility of a serious accident.
There are several challenges every organization must understand when undertaking a robust MRO management strategy.
- Implementation costs: Every organization has an approach to managing its MRO process and equipment. But there is an upfront cost associated with creating a more comprehensive and automated MRO process. Organizations may need to purchase new equipment, tools or software and hardware to reinvent their MRO process.
- Pains of making an organizational shift: Embracing a more regimented MRO process requires reskilling employees and purchasing new software and automated tools. It requires buy-in from the executive leadership team, clear guidelines and expectations and ample training. But any upfront complications will disappear after the team is trained and the process is made more efficient.
- Technological integration: Integrating technology solutions, such as computerized maintenance management systems (CMMS3) or enterprise asset management (EAM4) systems, won’t happen overnight. It requires patience and potential parallel pathing, that is, using the existing system while the new one gets implemented, tested and rolled out.
Maintenance, repair and operations
Predictive maintenance helps predict the future potential state of equipment to determine when maintenance operations should be performed.
Reliability centered maintenance (RCM) is a process whereby organizations identify the physical assets (e.g., machines or tools) required to produce their products and create a comprehensive strategy for keeping them online and operating at an optimal level.
Short for computerized maintenance management system, CMMS is software that helps manage assets, schedule maintenance and track work orders.
Footnotes
1 Understanding “Spares Criticality” in your MRO inventory, IBM, 22 June 2021
2 What is preventive maintenance? IBM
3 What is a CMMS? IBM
4 What is a EAM? IBM