Published June 30, 2011
A recent article published by MyPurchasingCenter.com entitled “10 Epic Fails in MRO Master Management Data” by Nupur Agrawal is an accurate account of the perplexities that exist in the data world for MRO SKUs.
Mr. Agrawal defines the real world problems inherent in the naming of MRO SKUs and addresses consequences on most points. He touches on methods that, if implemented, would help alleviate the problems.
To embellish on Mr. Agrawal’s article, here is an analysis of the origin of the problems and viable solutions.
Why does this continue to exist?
- In general, MRO is viewed as a necessary evil for which no solution exists.
- Management spends little thought and time on MRO … “It’s only 8% of our spend … Let’s do the important things.”
- MRO improvement discussions during budget time are minimal if at all. Management has little room for investment in MRO improvements.
- Plant disciplines are at odds as to who should control / correct the situation, resulting in costly duplications of time and production delays. Add Corporate Purchasing input which can exacerbate the condition.
- Plant personnel are trained experts in their fields of endeavor. MRO considerations constitute side functions for which they are not trained experts. For the most part, they may not know what to do, much less have the time or authority to do it.
The basic premise of Mr. Agrawal’s “Epic Fails” is that “clean MRO item data” is lacking, resulting in detriments to plant operations. Examples are: “no work flow”; “no ownership”; “no taxonomy process”; etc. In addition, he points to inefficiencies such as “safety stock piles”, “preventive maintenance” opportunities, etc. It is important to point out that most all of these situations are caused by improper stores management. Requisitioners who cannot rely on having parts available when needed cause many of the Epic Fails to occur; stock-outs cause requisitioners to:
- Create new SKU numbers for the same part to insure availability (inventory duplication)
- Stockpile inventory outside of stores (inventory duplication)
- Purchase parts as spot-buys while going around stores (inventory obsolescence)
- Take more than needed before someone else gets them (increase min / max; inventory increase)
These activities affect uncontrolled inventory increases, obsolescence, and duplications in activities (less wrench time), as well as continuing the “cryptic, abbreviated and unintelligible” descriptions to which Mr. Agrawal refers. For example, may I point out that a self-drilling hand tap has three different descriptions based on where you live geographically. If you move from North to South, you may not know what it is.
In addition, any investment in Lean principles is depleted with inadequate storeroom management … “You can’t be Lean with a fat storeroom”.
Mr. Agrawal states that up-time can be improved by 5-8% and inventory reduced by 5-30% with clean MRO data. What plant manager would not want that? But, how to get it?
- Existing personnel do not have the time or expertise to correct the situation.
- There is little money in the budget to hire a consultant; besides, who has time to implement change?
- The opportunity costs to change / improve are perceived to exceed the benefits … What is the ROI? Who knows how to calculate it?
Mr. Agrawal ends his article with an accurate “picture of the vast duplication, misclassification, inconsistency and inaccuracy that permeates typical industrial enterprises’ ERP ecosystems related to MRO.” He describes the problem with exceptional insight; however, awareness of the problem does not provide the solution.
The plant manager needs to recognize that existing MRO processes have negative effects on production thru-put and on plant net profits. The needed solution cannot be achieved by “Doing It Ourselves.”
The solution is to employ a 3PMRO company that is totally focused on on-site operations as its core competency. This company must show a history of success, the ability to optimize operations, while providing a guaranteed, favorable ROI scenario. Each of the Epic Fails would be addressed and corrected throughout the 3PMRO process, while relieving the pain and burden that exists. A customized scope of work (including KPIs that address the Epic Fails) is constructed to produce a world-class storeroom operation. The cost of change is paid out of the stated ROI benefits; the change is effected by the 3PMRO provider.