Best Practices for MRO Purchasing, Maintenance Storerooms and Materials Management

Poor materials management can be costly; 30% to 70% of a typical maintenance budget is spent on maintenance parts, repair parts, and operating supplies (MRO). Poorly managing this asset could cause spending at double the original cost of the storeroom inventory value every three to five years from carrying costs alone. Could this be the case in your operation?


Struggling with Maintenance Spare Parts, MRO Storerooms?

MRO storeroom effectiveness can have a dramatic impact upon the capacity of your production operation. Are equipment downtimes and mean-times to repair your equipment increasing? Does your MRO inventory languish collecting dust while you continue to expedite needed parts? If so, you are probably questioning the efficacy of your maintenance storeroom and its materials management practices. Some key indications that you may have opportunities within MRO practices include:
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There are few if any KPIs to measure the efficiency and effectiveness of the MRO Storeroom processes. If turnover rate is calculated, it is probably well under 2.0 turns per year, most likely less than 0.4 turns typically seen during assessments.

Your storeroom is not fully secured and store issues are based on an “honor system” for documentation of item removal, most probably the cycle counts demonstrate high count variances to storeroom records which must be reconciled.

A walk through the storeroom shows that many locations don’t have shelf labels or bin location, causing mechanics to roam the storeroom aisles in search of parts for waiting machinery.

The service level of the storeroom is well below requirements; tradesmen complain parts are always out of stock, parts are missing when the computer stated availability, and many parts are damaged from poor storage practices.

The bins are heavy with obsolete parts, choking the allotted space and causing poor storage practices. We’ve seen cases of nearly 50% obsolescence in older operations. Many machines had been removed from operation but the spares remained on the shelves, taking up valuable real estate.

Kitting, staging and delivery of parts and materials for planned work is poorly managed or not done.

There is no “PM” program to care for major spares such as motors.

There are no documented MRO business processes (Flow charts, RACI diagrams, and work instruction documents) for the MRO storeroom and materials management activities. Every day is a new day.

These are just a few of the indicators of poor MRO foundation processes. Any of these can be adding significant expense dollars to your operation due to inadequate support for the conversion of your end products due to operational downtime caused by MRO deficiencies.

MRO deficiencies appear in two areas of impact: lost operating time ultimately causing reduced revenues, and excessive MRO inventory costs impacting shareholder value. The balance between improving throughput and reducing bottom line costs is a tricky area in which to maneuver and only sound inventory management processes and methods based on best practices will help you to achieve this balance.

Solutions for Maintenance Spare Parts Inventories and Processes

People and Processes, Inc. can assist you with a variety of customized solutions to optimize your MRO storeroom and materials management processes based on best practices. Read more

The first option starts with an on-site assessment of your MRO processes to fully describe the root causes of your currently ineffective state. The duration of the assessment is a variable, but at the conclusion of the assessment we provide you with a detailed report of our findings and a plan for improvement. We will generate a business case based on an estimate of the financial improvements that will accrue from investing in MRO improvements, and will also recommend how we may be of further assistance. There is no commitment by you beyond the assessment.

Assistance may take the form of on-site consulting services to manage the project and provide additional resources to assist you in plan execution. In another option, we provide coaching and mentoring on some set frequency (typically one week per month), allowing you to execute the project plan with our guidance. Our consultant(s) work with your internal project team to guide them through the rough spots of design of the improved processes and the difficulties of implementation for sustainability. Regardless of the option, we remain engaged until a sustainable implementation has been achieved. (See “Sustainability Methods") Our methods ensure the knowledge transfer of best practices to your team.

The final option is to utilize our educational and training services' which will focus on providing knowledge of MRO best practices in a classroom atmosphere, either at your plant site or one of the frequent public classes held in various cities. If you have 4-5 people to train, on-site is typically more cost effective. This approach allows you to include additional trainees to further build your internal MRO best practice comprehension. (More information under the Education/ Training header below.)

We welcome your request to discuss your unique situation and let us guide you to a solution.

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Some of the ways we help you succeed

MRO Storeroom and Materials Management Assessment
Our proprietary MRO assessment process is designed to provide you with a comprehensive understanding of the current state of operations in your MRO processes. Our seasoned consultants utilize a variety of tools; interviews, data collection and analyses, and physical field observations to generate their conclusions. All information gathered is fully vetted prior to developing the current state picture. Read more
A written report documents our findings and is shared with the key stakeholders of the site. We then guide the development of an implementation plan for improving the MRO current state with these stakeholders. A Gantt chart combining tasks, dates, and resources is jointly developed, providing an activity timeline for the improvement initiative. A business case for improvement provides the justification for moving forward. This assists in setting an expectation level for the implementation.

Storeroom Best Practices Coaching and Mentoring
Our coach will assist you in improving materials management and reducing storeroom costs by taking each step with you, from laying out your storeroom in a greenfield operation to creating a First In, First Out (FIFO) process, to establishing the proper classifications of your inventory using ABC Analysis for better management control. Read more
Coaching is an ideal follow-up to training to increase the retention of the lessons learned improving the overall effectiveness and the return for your training dollars. Many of our clients that utilize our coaching and mentoring services conduct a Benchmarking Assessment prior to the coaching activity, which can accelerate your return on your investment.

Best Practices Storeroom Implementation
Learn and implement the principles, techniques, tools and processes essential to establishing best practices for MRO materials management. Read more
Some of the typical MRO Storeroom implementation activities would consist of:

  • Development of proper work flow processes for each sub-process in MRO management, work instructions, and RACI diagrams to show responsibilities.
  • Standardization of parts descriptions
  • Elimination of obsolete materials
  • Elimination of part duplication
  • Linkages to Equipment Bills of Materials
  • Performance of an ABC classification analysis of the inventory
  • Establishment of proper cycle counting of items and variance controls
  • Establishment of proper warehouse security
  • Parts storage layouts
  • Parts kitting and delivery to maintenance crews
  • Establishment of a critical long term spare component care process
  • Establishment of the correct meetings and interfaces with customers and suppliers
  • Establishment of a process for supplier management
  • Development of proper purchasing practices
  • Establishment and reporting of proper leading and lagging KPIs to manage the operation

There are many other areas that may be addressed depending on the circumstances and vulnerability points of the operation. We customize our approach and work within the processes and system you currently have in place that are working well.


Contact People and Processes to learn more about how our MRO Storerooms and Materials Management Training, Consulting and Coaching enable your people to succeed, thereby ensuring your organization's success as well.