IHS White Paper: Cost Savings through MRO Parts Optimization

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Competing in today’s global economy requires peak performance at all levels of operation. Peak performance for asset-intensive organizations is attainable by way of proper management of maintenance, repair and operations (MRO). A 2005 ARC Advisory Group survey suggests that approximately two-thirds of manufacturing companies do not effectively manage MRO parts. As streamlining MRO management can result in overlooked items, which can significantly increase costs.

Proper management of MRO can be fully optimized when MRO data is accessible and current for all users. The key to successful MRO optimization is data, as item data is often inaccurate, incomplete, inconsistent, and inaccessible.

Though MRO parts can yield exceedingly high costs they are a vital component keeping operations running smoothly. MRO item cost breakdown:

• Premium pricing—MRO items are typically purchased as spot buys, outside of negotiated pricing contracts.
• Increased shipping costs— In the event that items are ordered due to a shutdown situation, shipping must be expedited.
• Inventory costs—Due to fears of downtime and loss of productivity, MRO parts are often overstocked in inventory.
• Protracted procurement process—MRO items are difficult to procure on every level.
• Downtime—When an MRO part breaks production stops, which earn the biggest costs.

Incomplete information makes purchasing difficult, extends procurement time, increases downtime, drives shipping costs and results in higher prices. These costs can be avoided by optimizing MRO parts data. In an effort to reduce inventor and carry costs, develop a robust MRO catalog, improve procurement, fully utilize Enterprise Resource Planning (ERP), Enterprise Asset Management (EAM) and searching capability, reduce downtime and improve productivity, this white paper outlines the process of optimizing MRO data:

• Cleansing and structuring data
• Standardize data
• Enrich data with all pertinent information
• Maintain data

On account of MRO optimization, significant savings are realized within a relatively short timeframe. The savings continue as yearly process improvements and best practices continue. This paper illustrates the typical savings that IHS has found companies in the oil, gas, and utilities sectors can achieve through MRO data optimization. Additional savings will be noted as a result of improved uptime and productivity. The financial benefits of MRO optimization results from the following:

• Elimination of duplicate parts
• Optimizing inventory level through reduced carrying costs and less overstocking
• Improving employee productivity through reduced parts procurement timeframes
• Reducing plant downtime and increasing throughput
• Leveraging the full capabilities of EAM and ERP systems

IHS Intermat Solutions holds a strong 27-year record in assisting companies optimize MRP parts data. With a full suite of automated tools and services, IHS Intermat Solutions can provide the right level of assistance to any asset-intensive organization.

Related topics:

• MRO item database
• MRO procurement
• Free-form text
• False stock outs