Unlocking efficiency: the hidden power of standardizing mro operations

The maintenance, repair, and operations or MRO supply chain is complex, with lots of moving parts – literally and figuratively. Management procedures and practices can vary significantly even between two sites belonging to the same company. There are, however, significant benefits to standardizing MRO processes, including improved business performance with less risk of costly downtime and a stronger health and safety record.

In this article, we ask experts within RS Integrated Supply, including the manager of one of the highest rated RS Integrated Supply stores in the world, for their insights into standardizing MRO management, exploring what this involves and how customers benefit from these measures.

In the manufacturing process there are two different kinds of materials involved: direct and indirect. Direct materials are those used in the final product, such as steel or, in the case of foodstuffs, the raw ingredients. Indirect materials are those used to support the production process, including spare parts, tools, and even cleaning supplies.

A business may keep some indirect materials in stock while ordering others as and when required. Likewise, a business may be constantly replenishing some fast-moving indirect materials but only rarely need another item. Whatever a firm’s specific demands, the high overall number of MRO transactions, often for low-value items, and use of multiple vendors creates complexity.

“Clients may have thousands of suppliers, around 20% of which typically account for 80% of transactions,” says Brandon Coombs, Senior Vice President for Operational Excellence. “This high volume of transactions and invoices combined with low spend per transaction and a huge supply base makes MRO complicated.

“There’s also variation in an organization’s MRO processes depending on their maturity level. It is rare, for example, to find that a client has a shared part number across all their facilities because they’ve inherited legacy systems and done little to standardize. There are a lot of broken processes.”

Because MRO supply chain management is a complex process, involving multiple requisitions, purchase orders and invoices, it takes time and resources to properly manage. If either are insufficient, systems can easily break down – and ultimately this can impact plant reliability.

How? To keep downtime to a minimum, maintenance and engineering teams need to know they can quickly and easily access the supplies they need when they need them. A third-party specialist can provide this assurance, limiting and even eliminating disruptions to supply and keeping storerooms appropriately stocked.

“We bring expertise and technical knowledge,” explains Larry Hortenstine, Director of Operational Excellence and Safety for North America. “We have the processes and systems in place to support standardized MRO supply chain management, including a detailed set of steps that we go through during an implementation: everything from identification of materials to organizing materials so they’re stored efficiently and safely. We are also prepared to start buying and providing materials on day one. There’s a great effort that goes in to making sure it’s a seamless operation.

“In the long run, outsourcing to an expert in MRO supply chain management is more cost effective for customers because we bring so much value to the plate. By managing the back-office work of procurement and working with suppliers on their behalf, they can focus on their core competencies and the products they’re creating.”

Better management of the MRO supply chain has an enterprise-wide impact. Knowing what materials are available and at what quantity, for instance, drives more informed decision-making in terms of purchasing and maintenance. It’s the difference between being stuck in a cycle of reactive maintenance and the ability to move to a more predictive approach.

The extra value that a third-party specialist in MRO can add to a firm’s operations is enormous, argues Robert Galloway, an Engineering Stores Manager in the UK. “We are there to run a client’s stores and also save them money,” he says. “We’re working in the background for them. For example, we’ll see if they have any items in stock that are now obsolete and report back to them on this as well as find ways to sell these items and recoup some of the cost.”

“At the end of the financial year, we can go back to the client and say we have saved you X, whether it’s half a million or £3 million. Here’s the breakdown of savings site-by-site. Cost avoidance is also reported. Anything that’s value added, where we’ve cleaned up their system or improved stock holding value, that’s all recorded and presented to the client. We can say site X has done say seven value-added tasks and record that in the site improvement plans so the client is aware of them.”

As Hortenstine explained, RS Integrated Supply has a standardized onboarding procedure for its MRO supply chain management services. From data collection and part identification to storeroom layouts and safety systems, implementation is carefully mapped and managed.

Once operational, sites are subject to regular standardized assessments, known as the operational excellence framework, that generate storeroom ratings. “Our operational excellence framework is designed to ensure that every store is safe, organized, managed well, and everything has a place,” says Maria Pass, Global Lead for Environment, Health, and Safety, “And we conduct assessments across all of our stores to drive excellence across the board.

“Data accuracy is really important. We aim to count every single item in a store twice annually and, depending on the client, there may be some items we count more frequently. We also do daily stock checks at all of our sites, counting around 50 items. We want to know if any goods are not being controlled correctly.

“We look at data on the progress of orders to make sure deliveries arrive on time, which is crucial for our clients,” she continues. “We also look at invoice queries and material queries to see if there are any issues with goods and to get those rectified quickly. Data accuracy helps us to get it right the first time.”

Another important part of the assessment is health and safety. “We check everything from training, to make sure our staff have the knowledge required to do their job safely and effectively, to physical safety,” says Pass. “Is there anything overhanging in the store? Can it be replaced or moved to a better location? Are any hazardous substances stored appropriately?

“All stores, unless they achieve 100%, receive an improvement plan based on feedback from the operational excellence assessment and containing actions to complete within a set timeframe. However, an assessment isn’t just us turning up and saying you’re not very good at this, you need to improve. We guide and mentor teams to achieve their best and if they’re not performing to the required standard, we do additional performance reviews between assessments so we can further guide and mentor them.

“The operational excellence assessment is unique to our business,” she adds. “It really helps us to gauge how well we’re doing in different areas, and our clients welcome the framework because it ensures quality is being maintained. All of our stores are expected to achieve the gold standard, which is a score of 86% or more.”

Crucially, having objective criteria by which to measure management of the MRO supply chain at every stage drives standardization between different facilities run by RS Integrated Supply, whether it’s a pharmaceutical manufacturer, food production plant or higher education institute. The operational excellence assessment ensures that the benefits of standardizing MRO processes, including the reduced risk of downtime and a robust health and safety record, are felt by all clients in all locations.