Properly managing MRO inventory can optimize storage space, ensure access to the right parts at the right time, reduce costs, and improve overall operational efficiency. However, MRO inventory management can also be a daunting task if not handled properly. This comprehensive guide covers the key topics related to understanding and improving MRO inventory management.

Key Elements of MRO Inventory Management

Maintaining control of MRO inventory involves careful coordination across many different functions and facility areas.

Some of the key elements include:

Storage and Materials Handling

From warehouses to storerooms, efficiently storing and handling various MRO items is essential. This involves practices like:

Use of shelving, racks, bins, and other storage aids
Labeling locations and maintaining organized storage areas
Managing inventory in different central and distributed stockrooms
Coordinating with material handlers to pick, use, and replace MRO items

Optimization of space while providing easy item access helps maximize inventory storage and materials movements. And solutions like carousels and automated storage and retrieval systems can also streamline handling efficiency.

Purchasing and Supply Chain

The sourcing and procurement of MRO inventory must align closely with internal demand as well as factors like lead times.

Key practices in this area involve:

Selecting reliable supplier partners
Negotiating pricing contracts for better control
Setting stock reorder points and reorder quantities
Maintaining proper safety stock buffers
Monitoring supplier lead times and inventory availability
Expediting orders urgently when necessary

Strategic purchasing, supplier management, and collaboration are essential to ensuring a smooth, cost-efficient flow of MRO inventory.

Inventory Tracking

Updating records and tracking the quantity, location, and status of every MRO item is no easy task but also necessary.

Some ways this is accomplished include:

Maintaining a catalog of approved MRO materials
Conducting cycle counts and inventory audits
Monitoring stock levels and maintaining reorder points
Tracking inventory issues, returns, and replacements
Reporting inventory status details to key stakeholders
Identifying lost, expired, or obsolete items for removal

With advanced inventory management software, organizations can enable much greater visibility and control over their MRO items. Barcodes, RFID, and other emerging technologies can also help provide item-level tracking capabilities.

Consumption Monitoring and Analysis

Gaining visibility into how MRO inventory is being consumed provides data to guide purchasing and planning decisions. This requires:

Tracking inventory issues from storerooms/stockrooms
Monitoring consumption rates for different parts/materials
Analysing trends to predict future demand patterns
Identifying fast/slow-moving items for changes
Spotting abnormal usage that indicates potential problems

Analytics on inventory data enables fact-based approaches to managing MRO stock. Connecting consumption insights with maintenance also allows better anticipation of operational needs.

Key Metrics and KPIs

MRO inventory management relies on collecting and monitoring key data points as part of everyday execution and planning.

Some vital metrics and KPIs include:

Inventory Accuracy – Compares recorded stock levels to counted quantities to measure data quality.
Fill Rate – Tracks percentage of parts requests filled from available on-hand stock.
Turnover Rate – Indicates how fast inventory moves by dividing usage by average stock value.
Days on Hand – Measures average days of stock coverage by dividing inventory value by average daily consumption value.
Item Criticality – Segments items by importance to operations to guide planning.
Dead Stock – Values obsolete, damaged, or surplus items taking up space.

By setting targets for these KPIs and routinely monitoring performance, organizations can maintain high visibility and control over their MRO inventory operation.

MRO Inventory Planning Best Practices

Managing MRO inventory well requires balancing often-conflicting needs– having enough stock without overspending and unused items while also not risking stock-outs. This requires strategic planning across several areas:

1. Classification – Segment inventory by criteria like part criticality, consumption rate, and suppliers to guide decisions.
2. Standardization – Reduce part variants by consolidating and standardizing items with cross-functional input.
3. Level Setting – Determine the min/max levels and reorder points for each item or segment.
4. Replenishment Planning – Define frequencies and reorder quantities aligned to lead times and predicted demand.
5. Data-Driven Analysis – Leverage inventory data and key metrics to adjust stock levels and policies.
6. Demand Forecasting – Use statistical demand forecasts to better plan item needs.
7. Inventory Optimization – Use advanced analytical approaches to determine optimal stock quantities across the inventory.

By adopting these types of inventory management best practices, organizations can drive infrastructure, policy, and process improvements over time.

Critical Factors for Effective MRO Inventory Management

Successfully overseeing an MRO inventory operation depends on getting many different components right. Some of the most crucial factors include:

Accurate Data – Must have real-time visibility and trust in inventory tracking records.
Item Standardization – Consolidating and reducing SKUs improves manageability.
Storage Optimization – Easy access and maximum space utilization ensure inventory readiness.
Staff Training – Developing personnel’s MRO inventory skills and accountability.
Performance Monitoring – Tracking key process and service metrics versus targets.
Cross-Functional Alignment – Procurement, maintenance, and production teams must collaborate.
Proactive Planning – Using data insights to anticipate inventory needs ahead of time rather than reacting.

Given the mission-critical nature of MRO inventory, organizations must focus on improving each factor to gain control of this complex operation.

Steps for Improving MRO Inventory Management

Transforming a suboptimal MRO inventory function requires a concerted improvement effort. Some key steps include:

1. Map current state – Analyse root causes of top pain points and gaps versus best practices.
2. Define future vision – Set goals and targets aligned to business objectives for inventory management.
3. Assess infrastructure – Evaluate if storage, software, and data capture technologies require upgrade investments.
4. Update policies and plans – Develop new disciplined procedures for item classification, min/max setting, etc.
5. Provide workforce training – Ensure personnel learn updated protocols and leverage technologies properly.
6. Conduct performance reviews – Routinely gauge progress on key process metrics towards goals.
7. Iterate and improve – Use results to adjust tactics towards realizing the future vision.

By following this kind of systematic methodology focused on people, processes, and technology, organizations can drive step-function improvements in the control of their MRO inventory over time.

Notable Technology for MRO Inventory Management

Advanced technologies provide expanded visibility, control, and insights leveraged by leading MRO inventory management approaches. Some notable solutions include:

MRO Inventory Management Software – Specialized applications for deeper inventory analysis/control than typical ERPs allow.
Barcode Technology – Enable tracking of inventory items as they move through various processes.
RFID – Provides autonomous item monitoring without the need for line-of-sight scanning.
Inventory Robotics – Automates materials transport, inventory scanning, and replenishment tasks.
Predictive Analytics – Statistically forecasts future MRO inventory demand.
IoT Condition Monitoring – Use connected devices to monitor equipment health and predict maintenance needs.

By complementing skilled staff with such technologies, organizations reach new heights in MRO inventory management efficiency and effectiveness. The latest solutions also save on labor costs associated with manual approaches.

MRO Inventory Management Organizational Design

Effective oversight of MRO inventory requires coordination across storage, purchasing, maintenance, and production functions.

Some common setups include:

Centralized Model – Consolidates all responsibilities under a dedicated inventory management team.
Hybrid Model – The central corporate team sets overall policies and plans while site teams execute tactically.
Local Model – Each site/facility manages its own MRO inventory while following enterprise standards.
Lead Role Model – Assign primary accountability to one existing department like warehousing or procurement.

Determining the right organizational model depends on factors like company structure, inventory volume/complexity, and site variations. A centralized team often works best for achieving consistency across a multi-site organization.

Developing an MRO Inventory Management Strategy

Crafting a comprehensive game plan to guide an organization’s MRO inventory management policies, processes, technologies, and organization is essential to driving step-function improvements. Elements of an effective strategy include:

Current State Analysis – Thorough evaluation of existing infrastructure, operations, costs, and performance.
Future Vision and Targets – KPIs and objectives for inventory control aligned to business goals.
Organization and Resourcing – Defined roles/responsibilities and staffing model.
Location and Technology Plan – Optimizing warehouses, stockrooms, and data tracking systems.
Inventory Policies – Classification, standardization, min/max quantity setting, etc.
Replenishment Strategies – Sourcing arrangements and inventory planning protocols.
Key Initiatives and Timelines – Sequenced projects focused on critical improvement areas.

With an MRO inventory management strategy backed by leadership support, organizations can transform this critical operation over 2-3 years through dedicated, sustained effort.

Guide to Selecting MRO Inventory Management Software

Specialized inventory management system software represents a best practice for most medium to large organizations.

When evaluating solutions, key features to look for include:

Centralized Database – Single source of truth for all item, transaction, and consumption data.
User Access Controls – Manage inventory visibility and reporting access.
Barcode/RFID Integration – Enable automated data capture from shop floor transactions.
Inventory Optimization – Embedded analytical tools to guide better stock quantity decisions, identify waste drivers, etc.
Purchasing Integration – Automates reorder points and purchase orders based on stock data.
Maintenance Integration – Connect consumption to overall equipment effectiveness metrics.
Real-Time Dashboards and Reporting – Provides self-serve visibility into inventory KPIs.
Mobility – Supports managing inventory via mobile devices.
Cloud Hosting – Simplifies access to advanced systems with lower IT overhead.

By leveraging such capabilities, organizations streamline MRO inventory management while also connecting to broader operational analytics.

Best Practices for MRO Inventory Reorder Point Planning

Setting reorder point levels appropriately ensures parts are reordered while avoiding excessive inventory and risk of stockouts due to variability. Best practices include:

Base Level on Usage – Set levels based on average monthly/weekly consumption rates.
Factor in Lead Times – Ensure coverage for entire supplier order-to-delivery durations.
Analyze Demand Variability – Use historical data to add a safety buffer for high-volatility items.
Implement Minimum/Maximum Levels – Prevents orders outside of acceptable quantities.
Schedule Periodic Reviews – Monthly or quarterly adjustments to align with trends.
Refine via Analytics – Leverage CMMS data and predictive models to optimize levels across all parts.

Fine-tuning reorder points across an MRO inventory maximizes the balance of customer service and working capital efficiency.

Key Roles and Responsibilities in MRO Inventory Management

Successfully overseeing MRO inventory requires developing personnel across several key functions:

MRO Inventory/Storeroom Manager – Leads central planning/control decisions for inventory quantities, technologies, and processes.
MRO Material Handlers – Handles incoming/outgoing parts movement and replenishment of shop floor inventory.
Maintenance Planners – Monitors equipment issues and parts replacement trends to identify common needs.
Procurement Agents – Sources competitive supplier contracts and expedites orders urgently when necessary.
Finance Analysts – Provides oversight into inventory spending, capacity utilization, and process cost economics.

With clear ownership and accountability at tactical and analytical levels, organizations can ensure much tighter MRO inventory oversight.

9 Types of Inventory found in MRO

MRO inventory has incredible breadth across various indirect material types used in manufacturing and facility operations. Common inventory varieties include:

1. Spare Parts – Components used for equipment/machinery repair and maintenance jobs.
2. Consumables – Items that get used up, including wipes, lubricants, solvents, oils, and more.
3. Tools – Powered equipment like drills as well as manual tools like hammers, wrenches, and screwdrivers.
4. Safety and Protective Gear – Items ensuring personnel well-being like glasses, gloves, respirators, and hard hats.
5. Hardware – Standard items like nuts, bolts, screws, washers and nails.
6. Electrical – Wires, connectors, switches, outlets, and related items supporting operations and maintenance.
7. Raw Materials – Metals, plastics, paints, chemicals, and other indirect materials going into production processes.
8. Fleet and Facility – Parts supporting on-site transportation vehicles, buildings, and property infrastructure.
9. Office and Sanitation – Ranging from pens and paper to cleaning chemicals/supplies required across the organization.

These diverse varieties of product types demonstrate the complexity and breadth associated with managing MRO inventory. It drives requirements for comprehensive but flexible stock monitoring and replenishment approaches.

Where to Store MRO Inventory?

Organizations have options when it comes to positioning their MRO inventory stock to balance availability and space needs:

Central Warehouse – One facility stocks the bulk of inventory to serve broader regional needs.
On-Site Storerooms – Forward-deploy items closer to the point of use across maintenance shops and production lines.
Tool Cribs – Provides convenient small parts access via vending machines or staffed checkout desks.
Local Stock in Vehicles/Carts – Allows technicians to carry commonly used items on shift for immediate access.
Vendor-Managed Consignment – Suppliers store and manage replenishment for specific MRO items on-site.

Determining item requirements at the point of use and lead time considerations guides the right forward and reserve storage positioning.

Key Warehouse Management Practices for MRO Inventory

For items stored centrally in distribution centers or warehouses, some best practices include:

Receive & Inspect – Qualify part quality and capture item data immediately upon arrival.
Use FEFO principles – Manage stock picking/issuance based on first to expire, first out method.
Conduct Cycle Counting – Frequently validate warehouse count quantities vs records.
Monitor KPIs including in/out velocity – guides real-time operations and planning.
Kit Parts – Assemble predictable combinations of items to accelerate issuance.
Blast Freezing Protection – Ensure proper storage conditions for items prone to damage.
Establish Return Protocols – Standard process for restocking previously issued materials.

These types of warehouse inventory management disciplines help maintain high levels of MRO item availability and accuracy.

Key Performance Indicators for MRO Inventory Management

MRO inventory managers utilize a variety of metrics to gauge operational effectiveness and guide data-driven decisions:

Fill Rate – Percentage of parts requests filled by available stock
Inventory Record Accuracy – Compare booked vs. counted stock inventory levels
Inventory Turns – Annual inventory value consumed divided by average inventory value
Dead Stock – Total value and part numbers of unused/obsolete stock
Policy Compliance – Audit percentage following defined min/max level policies
Inventory Control Loss – Lost, damaged, and adjustments tracked in issues

By connecting insights across these KPIs, organizations can identify root causes behind deficiencies to prioritize corrective actions that improve MRO inventory health.

101 Guide to MRO Inventory Management