To ensure their competitiveness in the rapidly changing global marketplace, manufacturers in all regions are seeking ways to radically reduce their costs. Maintenance, repair, and operations (MRO) is a critical area. MRO spending, which includes expenditures for services and spare parts, ranges from 0.5% to 4.5% of revenues, depending on the industry. In all industries, poorly managed MRO processes can mean unnecessarily high costs, low plant and worker productivity, poor product quality, and elevated inventory-holding costs.
The savings potential from optimizing MRO spending and planning is—in most cases—significant. For example, a large steel manufacturer reduced its MRO spending by approximately 10% and its transaction volume by approximately 25%. The manufacturer’s initiatives included better planning for spare-part purchases, expanding the scope of individual contracts, buying from aggregators, and sourcing from low-cost countries (LCCs). A pharmaceutical manufacturer reduced the idle time associated with breakdowns through more aggressive spare-part inventory management. The better availability of spare parts promoted a 15% improvement in the throughput of the manufacturer’s bottlenecked equipment.