Overcoming MRO Challenges in High-Rise Office Buildings: A Facilities Management Case Study

Like manufacturing plants and large campuses, high-rise office buildings in crowded urban environments must deal with MRO. They all face the same challenges:

• Poor purchasing habits.
• Bad or no data governance.
• Failure to integrate systems.

Heavy foot traffic and general geographic location add complexity in effectively managing the MRO supply chain.

One large facilities management company overseeing a 30-story office building in the Northeast U.S. had virtually no oversight of its MRO. There was no inventory management in place for the more than 6,000 SKUs. Materials were scattered throughout the building with no tracking and no visibility to what parts existed and where.

The client relied on knowledge from long-term employees. Such an approach created redundant purchasing, extensive walk-about time locating materials, and lost wrench time or time spent making repairs. Team members were spending on average, 90 minutes per day looking for a specific part, combing the facility’s labyrinth of hallways and storage areas.

The facilities management company engaged us to explore an integrated supply solution, one that addressed existing challenges while also introducing value solutions. Our solution combined strategic sourcing and storeroom operations with inventory management, data standardization and governance, as well as full operational and financial reporting and accountability.

We also focused on redesigning existing storerooms and implementing an aggressive strategy for identifying and reducing obsolete inventory to free up existing – and expensive – space and working capital. The solution included dedicated on-site staff to purchase materials and manage the site storeroom – including the receiving, stocking, issuance, and cycle counting of materials. Sourcing involved aggressive activities to drive material savings, leveraging our $1 billion in global MRO spend. Inventory management activities included a goal of 98% accuracy on inventory and 100% accuracy on all critical spares, as well as establishing proper min/max levels to reduce obsolete stock. OEM commercialization, kitting and warranty tracking were also included.

The integrated supply program returned significant dividends, including:

• Improved inventory visibility that delivered $147,000 in savings in the first year.
• Consolidation of more than 1,200 purchase orders and 2,400 invoice transactions, bring another $85,000 in savings.
• Material cost savings of more than $120,000 from more aggressive strategic sourcing and purchasing leverage.
• Time savings for maintenance staff, eliminating time spent sourcing materials. The savings equated to more than $300,000 of additional wrench time delivered.

The RS Integrated Supply program delivered more than $675,000 in savings in the first year of engagement. The combination of savings and efficiency through improved processes and reliability led the client to expand the program to additional facilities across the country.