In every manufacturing company the procurement process for direct materials is (to more or lesser extent) well-facilitated and gets the proper attention. This is important as the supply chain depends on it. Non-product related (NPR) purchases on the other hand could do with some thorough optimizing in many organizations.
When talking about NPR purchases, the subject often focuses on MRO (Maintenance, Repair & Operations) materials. Obviously in any manufacturing company the plant maintenance process is an important one. It directly impacts the primary process and therefore the profitability of the company. Secondly, there’s often a large spend involved which provides an opportunity for procurement optimization.
Why is it then that the purchasing process for MRO materials is often poorly facilitated? Or when there is a process in place: why is it so complex? We’ve seen many projects struggle with process design, but why?
It seems the nature of the process makes it difficult to define a solution: it’s a bit of both worlds. It’s the “Inbetweener”. And as often with things sitting ‘in between’: they can easily fall between the cracks.
The way to actually address the MRO procurement process is to simply acknowledge the fact that it is a mixture of different approaches. The foundation of a simple MRO procurement solution lies in identifying the different streams and to approach each of them separately.
At the same time though, these separate solutions all need to work from the same basis: for engineers and operations staff it needs to be one simple, integrated solution. They need a quick and easy way to get their parts and keep the plant running.
A bit of both
So, how do we divide the MRO procurement process into manageable separate elements?
First of all, to keep the equipment running particular parts are critical . Typically those parts have a long lead time, so you want to keep them in stock yourself. You’d want to handle these as a direct item, using the stock management tools in your system.
Also relevant in this process, is considering how to handle repairs. These stocked parts are often complex and when broken, it could be worth the repair. Getting parts repaired/refurbished by a third party is obviously a purchase as well.
Next to these unique parts, you’ll also need all kinds of easy to source parts like nuts and bolts: the consumable items. You definitely don’t want to manage those piece by piece. Secondly, from a value point of view, you want to keep stocks to a minimum. Vendor managed stocks or the use of catalogs for ordering are good options to keep replenishment simple and quick.
Finally there are services. Hiring an engineer can happen, or might even be the required process. The procurement process for services asks for a different approach considering planned and unplanned work. Taking not only the ordering process into account, but also recording the number of hours spent to complete the work.
Clearly this isn’t rocket science. It’s just about setting the structure of which we often see it is lacking. And it’s about acknowledging that a mixture of approaches is required to successfully cover all angles of this versatile process.