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What is MRO Inventory? Asset Surgery Without the Pain

8 min read

You love your assets. We know you do. When something's wrong with them, you don't want to scramble to find the perfect fix. That's why MRO inventory should be a clear, consistent concern for your business. Forgetting about it won't just catch you with your pants down but your surgical gloves off, too, lost on a dusty shelf you barely remember.

MRO stands for maintenance, repair and operations inventory control. It can determine whether you're bringing equipment back to peak performance or letting it slide into poor health, simply because you're missing the tools you need.

Think of it this way: You're a surgeon with a patient on the table. Some sensitive, life-or-death surgery is waiting to be performed, yet you're rummaging for the right scalpel, forceps or scissors. The nurses are clueless. The patient has been lying there so long, the anesthesia is wearing off; they're impatiently tapping a hand. Meanwhile, another five operations are scheduled that same day, and they'll all have the same problem. You might as well take some gardening shears to the unfortunate asset in your care and hope for the best.

Then, there's the reverse when you know exactly what's available (and where) for specialized maintenance. Data guides your choices on purchase orders, delivery dates for resupply and safety standards for the staff working under you. That patient on the table is smiling dreamily, glad to be back on their feet again soon. Your organization stays on track with assets that are constantly repaired on schedule.

So, put the shears down! Learn all about MRO inventory and its implications for parts, material orders and the delicate balance of supply chain concerns while running and optimizing your facility.

What is MRO inventory management?

Exact MRO specifications vary across industries. Essentially, though, they're the activities, items and processes that keep your assets ticking over and making a profit. We're talking belts, fans, screws, spanners, wrenches, drills or anything else that brings an asset back to full working order — either a tool or spare component. Additionally, an MRO inventory should tell you how many supporting materials and goods you have in stock: the kind that help staff do a thorough, safe job.

However, it's not only a question of what you have ready for urgent or preventive maintenance, but also whether you're spending enough or too much on your inventory. Cost control is a killer oversight. The Boston Consulting Group estimates that MRO inventory services and parts spending can swallow up to 4.5% of revenue in the manufacturing sector. And, that's important because in a tough economy, pennies saved are pennies earned. We'll talk about holding costs and the like later, but for now, just understand that inventory management keeps an eye on your finances as well as your profitable assets.

So, how do we approach smart MRO inventory control? What do you need to know for a better management strategy?

First, it's worth defining four main inventory types:

  1. Maintenance equipment (motors, gears, valves, repair tools, lubricants, general spare parts, etc.)
  2. Cleaning supplies (brushes, cloth, disinfectants, buckets, etc.)
  3. Safety equipment (visors, gloves, boots, PPE, durable overalls, etc.)
  4. Office supplies (desktops, mobile devices, paper shredders, pens and paper, etc.)

Since some of these elements are consumable and others aren't, you should have a system for categorizing and tracking their use. If, for example, only certain cleaning supplies can be used for some maintenance equipment, then you have extra guidance for the arsenal you'll put together for a new work order. 

We also recommend splitting regular and emergency maintenance inventory. Why? Because emergency repairs are probably going to be a lot more urgent and specialized; there's less time to dither. It's the difference between punctually booking in a hospital patient for scheduled appendix removal or rushing them into the OR after it's already burst. One situation has a lot less room for error, right? Likewise, you need to have the right skills and spare parts close to a critically damaged asset, which determine where you direct specialist technicians or stock amounts of emergency inventory.

Finally, learn the difference between direct and indirect costs. They paint a truer image of what you're gaining or losing from inventory.

Direct spending

These are mainly costs associated with procuring goods and services (the latter includes using a third party for maintenance or inventory management). If you manufacture anything in the inventory yourself, lump that production capital in here, too.

Indirect spending

Indirect expenses encompass your direct purchases, somewhat like an associated charge. Common examples include materials depreciation, insurance coverage, warehouse rentals, energy costs and security fees. They're not actively contributing to a maintenance task, but they're tied to your people and equipment.

The big benefits of your maintenance plan

We've hinted at them; you've probably worked out a couple already. Still, let's be crystal clear about the advantages MRO inventory control lends to your asset maintenance. It's a no-brainer once you really crack the code …

More precise, prepared workflows

Maintenance workflows rely on three things: guidance, priorities and the people who can perform them. Of course, though, those people require the tools and parts for the job, otherwise their talents can't be put to use. And, when that happens, you're risking serious downtime. Solid inventory management ensures your technicians and contractors have what they need at the exact moment they need it.

If you can synchronize inventory and workflow data within a computerized maintenance management system (CMMS), then your real-time list of supplies, components and safety equipment will be there for everyone to see at a glance. Task notes explain what's wrong, how severe the problem is, which tools or parts are due and where to find them. There are fewer questions and mistakes. Your employees can get straight to work.

A fully stocked, economical inventory

Routine maintenance should never be short of equipment, or else you'll be risking more delays as workers wait for the right parts. By tracking what you use and how regularly you use it, restocking becomes much less of a guessing game. You have reliable asset and maintenance data to inform your direct inventory purchases.

This also means you're less likely to overspend or underspend. Leaving stacks of equipment that are  depreciating in value — with hefty storage charges — isn't ideal. Inventory optimization narrows your focus on the investments that are paying off, so you can make more of them where appropriate and save cash on superfluous or outdated supplies.

Extra time on your hands

We're referencing digital inventory management here, but it really is the only way forward for a competitive business that won't butcher its asset strategy. Some software lets you automate inventory checks with a barcode scanner, leaving paper-based updates behind for good. You just hover a smart device over each part, tool or material, and it adds the data to your system.

Eliminating the tedious work associated with MRO inventories gives you countless hours to grow the business and guide the maintenance work itself. Additionally, you can bring up reports on demand, allowing you to compare costs and consumption across weeks, months or even years. Automated inventory management is great for wider business insights as well as making the most of your workday.

Counting a smarter inventory's cost

Once you start operating on asset classes with more planning and care, you'll spend less cash on worthwhile maintenance. But, while we've already covered some of the costs you can save, the true benefits to your bottom line run much deeper. After all, a doctor wants to bring home the bacon as much as they enjoy seeing patients do backflips again. So, let's put said bacon under the microscope. How else does a streamlined MRO inventory allow you to become cost efficient?

You'll reduce carrying costs

Buying necessary material and equipment is only one part of the inventory puzzle. You also have to consider the fees swirling around these investments. Carrying costs encompass some of the indirect expenses we've discussed and a whole lot more. Even when you purchase useful maintenance inventory, those expenses should be analyzed and reduced wherever possible.

Examples include:

  • Vehicle, fuel and handling payments for transport.
  • Taxes paid on equipment, parts and supplies.
  • Replacing an item that's no longer safe or usable.
  • The cost of servicing your inventory e.g., cybersecurity or performance tests.
  • Warehouse storage beyond rent payments e.g., heating, lighting, refrigeration or theft and damage insurance.

A complete, real-time view of your inventory highlights carrying costs across the breadth of your business. You can work it out as a percentage, too. This is the equation:

Total carrying costs ÷ total inventory value x 100 = carrying cost %

If you're seeing high carrying costs for some items, it's worth rethinking how you're storing, servicing or consolidating your inventory. For instance, setting up a just-in-time (JIT) inventory system — in which you only order the exact supplies you require for preventive maintenance — is a popular method for reducing holding and overhead fees.

Improving your supply chain relationships

MRO procurement means you'll have to negotiate with companies all along the supply chain, and that raises a host of questions. Are you getting a good deal? Are the items depreciating too quickly? Can your supplier consistently deliver on schedule? If you're extracting a lot of value from their inventory items, can you ask for bulk order discounts in future?

Sharing insights with your supply chain partners can do wonders for making relationships work better for both of you. You might find that a few suppliers aren't quite passing muster; their components and equipment are faulty, perishable or too expensive. Maybe your business needs will change as well, leaning toward some assets over others. In any case, reviewing inventory costs and profitability puts you on firmer ground for working with the suppliers that are properly and affordably suited to you.

Don't bleed out — 4 things to look for in inventory management software

By now, we bet you're keen to have a finely calibrated array of instruments at your beck and call for asset maintenance. No more hand wringing. No frantic shouts for extra assistance. If an asset could walk and talk and afford a bouquet of flowers, they'd probably be just as appreciative of the tools you're about to have in store.

A CMMS is the final thing you'll have to worry about. There's much riding on the search for a platform that can kick MRO inventory management to life in all the ways you expect and deserve. Therefore, you have to be aware of what's out there. Here are four traits that separates the ultimate CMMS software from the rest:

  1. Automatic parts and inventory levels updates: A first-class digital hub not only records and monitors what you have in stock, but also sends alerts to you and your team when levels fall below a desired benchmark. This makes inventory easier to replenish and adjust before potential issues have a chance to snowball.
  2. Classes and priorities assigned to the asset: Again, automation should be able to designate asset maintenance based on what these tasks require and how soon preventive maintenance should take place. Workflows update in seconds, giving technicians a working schedule that outlines what they must do and where they need to be through the day.
  3. Assignment time tracking: There's every chance that maintenance problems aren't caused by the inventory, but rather the people or approaches used alongside it. CMMS time logs reveal who might be taking longer than expected to complete work, which helps you investigate poor or insufficient maintenance more closely.
  4. Inventory scanning codes: While barcodes are useful for cataloging your inventory items, QR codes are a fantastic choice too, especially if the original barcodes have faded or been torn. Search for a digital platform that can print QR images you can stick on supplies for impeccable additions to your database.

We can't leave you without mentioning that CMMS is merely the lighter version of asset and inventory management. Discover the fuller capabilities of an enterprise asset management (EAM) platform for a total hold on material and equipment life cycles. In fact, we can show you how it works. Book a demo with a MicroMain expert, and we'll unbox more potential for your inventory — slicing straight into the heart of your objectives, sans screaming.


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