Materials Management

MRO Strategic Sourcing: Assess Current Spending

In a recent blog post titled "MRO Strategic Sourcing: The Expensive Table Scraps", I explained that too many organizations leave money on the table due to poor procurement practices.  I outlined 7 fundamental steps to optimize strategic sourcing. This post is the first in a 7-part series in which I will go into more detail for each of the 7-steps and discuss how it applies to MRO Storeroom operations.

7-Steps to Optimize Strategic Sourcing:

MRO Strategic Sourcing: The Expensive Table Scraps!

Have you ever heard the old saying, “Money left on the table?"  That’s exactly what North American organizations are doing when they fail to use strategic sourcing activities to source MRO materials.  Conservative estimates have shown effective strategic sourcing has led to reductions in spending ranging from 15% - 25%.  Furthermore, la


rger companies place more emphasis on sourcing strategies for office supplies rather than critical spares.  I have yet to visit an organization that carries more ink cartridges and post-it notes than the value of a typical MRO Storeroom.

Here are a few things to think about and review before heading down the path of strategic sourcing.:

Justify Maintenance Storeroom Attendants measuring current costs

Many companies do not have the proper staffing in their storeroom to provide world-class services to their maintenance department.  These services include but are not limited to; kitting parts for planned work, ordering the right parts in the most economic quantity, reserving parts for future work and delivering parts to maintenance.  The number one reason listed by these understaffed organization's for being understaffed is a lack of money.  

World-class companies overcome this obstacle by identifying the cost savings associated with each of these services.  So, what happens when a storeroom isn't staffed properly and run efficiently? Maintenance craftspeople may start to gather their own parts, reducing their wrench-time; stocking-out of parts when they are needed, resulting in extended production downtime and the ensuing extraordinary efforts and cost of getting parts delivered are only a few to name, the list is extensive.

A Case for Reliability

Even today too many industry leaders do not see the clear case for investing in maintenance and reliability.  Within the reliability community, the message IS clear; cost-cutting and reducing resources as a means to improve performance can be fatal. No one has ever cost cut themselves to World Class.

An older study, yet still relevant today, conducted by Solomon Associates in 1994 in the refining industry concluded the following*… 

  • Improved reliability is unrelated to maintenance spending
  • Highest cost performers are very reactive and repair focused
  • The best performers required fewer expenditures for higher mechanical reliability
  • The best performers view recurring failures as unacceptable

It is fairly easy to understand: high reliability equates to lower operating costs.  To achieve higher reliability performance requires improvement on the following key elements of an effective asset maintenance management system:

´    Work Order Control

´    Materials Management

´    Work Planning and Scheduling

´    Effective Leadership

´    Preventive Maintenance

´    Predictive Maintenance

´    Proactive Maintenance

´    Reliability Engineering

´    Failure Analysis

3 Consequences of a Poorly Run Maintenance Storeroom (Video)

Poorly run maintenance storerooms can impact an organization's performance and bottom line in three ways:

  1. Constrict Cash Flow
  2. Reduce Productivity
  3. Increase Unnecessary Costs

Less tangible, but equally significant, a poorly run storeroom also affects employees' perception of the storeroom's value and their confidence in the storeroom's ability to stock the right parts, in the right quantity, at the right time.

Andy Gager, Director of Consulting, discusses some tactical processes and strategic practices that any storeroom can employ to avoid these three consequences to become a true profit center.  


MRO Inventory Management: 3 Key Factors (Video)

Successful inventory management is dependent upon three key factors: having the right parts, at the right time, in the right quantity. In this short video, recorded at the 2010 NFMT conference, Andy Gager, talks about these key factors as well as the importance of an honest storeroom self-assessment and the value of benchmark data.

The video is hosted by Click on the link below and clicking the green button in the top right corner of the page to skip passed the advertisement.


MRO Video

Maintenance Inventory Strategies: Vending Machines & RFID

Maintenance Inventory Strategies: Vending Machines & 

Part 3 of a 4 part series featured in and Maintenance Solutions Magazine, November 2010.


One proven strategy for streamlining inventories involves placing vending machines strategically throughout a campus or facility. The machines store commonly used items, such as gloves, tape, lubricants, and batteries. Studies show that by placing these items in vending machines, managers can cut storeroom inventories by an average of 20 percent, and labor costs drop by up to 40 percent.

MRO Storeroom Best Practices - Are you Kitting me?

The storeroom is an integral part of an efficient and effective maintenance process. Equipment reliability, uptime, and frontline productivity rely on having the right spare parts and tools available in the right quantity when the work order is scheduled.  That's why having the correct tactical and strategic processes in place can turn your storeroom into a profit center.  Today we are going to focus on kitting, one of the key tactical processes.  Kitting is the process of identifying and preparing - in advance - the material and tools required to successfully execute the work order in the least disruptive manner.  Effective kitting requires other key maintenance systems such as planning, scheduling, and an established PM program to be in place.