Stop Speculating with Your MRO Inventory Optimization

What do toilets, trains and telephone poles have in common?

Besides the alliterative thread, they all represent technologies that haven’t advanced much over the past 50-100 years. The flush toilet is nearly as old as society itself, and if Samuel Morse were around today and saw our wooden poles and sagging wires, he wouldn’t be wrong in thinking his telegraph was alive and well.

As for trains, there’s the relatively new magnetic levitation technology currently in use in select Asian countries, but financial feasibility has held back this disruptive technology from broader adoption. 

As we contemplate leading-edge technologies like augmented intelligence and IoT, asset-intensive organizations still employ technologies that haven’t changed much since the dawn of Industry 3.0.

Take MRO (maintenance, repair and operations) inventory optimization for example, which is different than inventory management. MRO inventory management is a transactional discipline where assets are tracked, work orders are scheduled, and purchase orders are cut. Technology has actually come a long way in this space — IBM’s Maximo solution does a yeoman's job of it.

MRO inventory optimization, on the other hand, leverages data from enterprise asset management systems to make the supply side of asset management more efficient. It’s in this area that anachronistic approaches abound, and it shows. Less than 20% of companies report having the right spares/materials available when required at least 95% of the time (a best-practice industry threshold).

Some professionals use spreadsheets to try and optimize the hundreds of thousands of SKUs they have in their warehouses. Others simply order more “insurance” spares than what is probably needed, which leads to inventory bloat. Then there’s a small but significant group of practitioners who, in what appears to be a form of supply chain transcendentalism, set inventory reorder levels using pure gut feel. (I kid you not.)

Unlike AI and the Internet of Things, you’re not likely to hear the topic of MRO inventory optimization come up at your next company mixer. But when up to 50% of unplanned asset downtime is due to stock outs, and 40% of the losses of maintenance workers’ time can be attributed to spare parts, this relatively prosaic discipline is critically important to a business’ operational and financial performance.

That’s why I’m excited about Oniqua, one of IBM’s more recent acquisitions. Oniqua is a SaaS-based software solution that brings science to the art of MRO inventory optimization. Oniqua rationalizes MRO inventory levels to minimize costs, increase service levels and maximize asset uptime. 

The company has a track record of consistently cutting up to 40% of inventory-related costs (holding costs, purchasing costs, expediting costs, etc.) for asset-intensive operations, while at the same time maintaining or even increasing service levels to the maintenance organization.

The added benefit is that substantial cost savings are achieved quite rapidly, often within the first 12 months of deployment, providing asset-intensive companies with a funding mechanism to pursue broader, more strategic asset optimization initiatives. 

Asset-intensive companies that leverage specialized MRO inventory optimization tools like Oniqua experience lower average downtime (3.7%) compared to companies that do not (6.5%). It’s time we take stock of our MRO inventory optimization practice and bring them into the modern era of Industry 4.0.

Learn more about Oniqua or schedule a consultation.

Sources:

1.    The Importance of Inventory Optimization and MRO, 2015; Aberdeen Group

2.    Inventory Optimization: A Cross-Industry Comparison of Practices and Performance – August 2017 Survey; ScottMadden Consulting

3.    MRO Best Practices, 2017; ReliabilityWeb.com