Are You Walking by Your Best Cost Reduction Opportunity?

Published February 23, 2015

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MRO (Maintenance Repair and Operating) supplies are expenditures companies make that are not a part of the products they produce or the services the offer.

MRO storerooms exist within manufacturing plants, as well as institutional campuses for hospitals, universities, schools, etc. These facilities are generally considered necessary to support plant maintenance, assets, production activities, and employee safety. There is a dramatic imbalance between the cost of MRO materials (the goods) and the cost to procure and internally distribute those products. These disproportionate costs are not directly recovered in the company’s revenue stream; therefore, lowering/eliminating them should be considered a significant opportunity for profit expansion. Many companies ignore MRO, opting instead to focus on what they perceive to be bigger cost reduction initiatives. In many cases, they are walking by their best opportunity.