Every industry was impacted by supply delays, shortages, and increased costs from aviation to construction during the Covid -19 pandemic. The ripple felt over the last two to three years has subsided. Still, inflation is now a new challenge for procurement and inventory managers to reduce costs and stay within budget.
The Maintenance, Repair, and Operations orOverhaul (MRO) sector is redefined, with many industriesin variousregions expected to return to pre- Covid levels by the end of 2023 but simultaneously face intensive MRO expenses.
A trend expected to reshape the MROindustry's landscape willbe a push toward onshoring capacity. This is to avoid the repetition of the supplychain disruptions that puts many assets into quarantine. Specific initiatives will look at decent inventorycapacity going forward so that trade wars or travel restrictions do not suddenly impact them.
Considering different riskhorizons beyondCovid-19 that could disrupt the MRO industry in terms of costs and delays, we look at some broad Mro Procurement Outsourcing for 2023.
- Access datafor visibility
You will have no visibility if you do not have data, and trying to reduce cost would be like walking blindfold.Strategic decision-making is data-driven and to be effective as well. Data also helps to solve problems for organizations having assets in multiple locations. Real-time data from EAM software allows us to analyze and make quick decisions.
- Review consumption
This is a straightforward strategy, but it is a critical perspective to keep in mind considering the unexpected risks. MRO inventory depends on your maintenance, repairs, and operations efficiency. The MRO consumption gets controlled if you have real-time data such as asset ownership costs, equipment downtime, asset health, and strategies for preventive maintenance. All these steps provide savings opportunities.
- Review order thresholds
Keeping in mind supply chain disruption, stocking up is tempting, but it may not be the best strategy. The cost of holding will go up. It is advisable to review those items that are not used often, and one can wait longer before ordering. Also, look at the levels of inventory maintained and, if possible, reduce the order quantity so that procurement and shipping cost is less.
- Negotiate with Suppliers
Keep talking to your suppliers. If you have a committed relationship with them, Suppliers can be accommodating. Negotiate with them for discounts for bulk orders, or ask them for any cashback of a certain order level achieved annually. Also, it is important to review each part procured and used in different locations of the company. If they are purchased from different suppliers and various price points, it is better to club and consolidate all the procurement centrally and with a single supplier. This will help you to get better pricing.
- Discontinue inefficient processes
Streamline the purchasing and inventory process. There are chances of storerooms being unorganized with inefficient inventory management. This may result in purchasing unnecessary items. Manual systems may result in data entry errors and inaccurate inventory levels. Shifting to automated software will help reduce costs.
Conclusion
It is crucial to focus more on the total cost of asset ownership than getting into Mro Procurement. It will help to take a holistic view of an asset where MRO costs can reduce by replacing the asset.