MRO Inventory Optimization Program
MRO Inventory Optimization Program
Why implement MRO inventory optimization?
MRO inventory optimization steps
Assess criticality and build ABC framework, to classify each material & determine if it is re-ordered automatically or ordered on-request
while improving service levels
MRO inventory optimization: step-by-step
Gather & transform data to be applied in the analytical model
Data transformation and consolidation are performed to maximize data quality and analytics results’ reliability
Assess criticality & classify per ABC
Criticality definition
- High criticality - shortage of material will cause the shutdown of the operation or impact HSSE policy restrictions
- Medium criticality - shortage of material won’t cause the shutdown of the operation but reduces the total production volume or/and quality
- Low criticality - shortage of material does not have a relevant impact on the production or HSSE
ABC Classification
A. All high-critical and medium-critical fast movers
B. Medium-critical slow movers and low-critical fast movers
C. Low-critical slow movers and medium/low-critical non-movers
When optimizing MRO stock, we answer two questions per each material: (1) Should it be automatically replenished or ordered on request? (2) What are the optimal reorder point and reorder size? To answer them, we use various input data and analytical models, perform calculations, and embed frameworks
Selected project in MRO stock optimization
MRO Inventory Optimisation in a Gold Mine
CLIENT
- High values of stockout and overstock that led to high stock value and/or equipment unavailability
- Lack of alignment between Maintenance (client) and Procurement (service provider) areas
- Inventory management processes are not well defined and are manually performed
ACTIONS TAKEN
- Tools implemented to automate Procurement routines related to restocking and items’ creation processes
- The procurement team intensively trained to perform the restock and items’ creation processes
- Maintenance team trained to provide annual demand forecast and criticality for items
RESULTS ACHIEVED
- Reduction of working capital estimated at 21%, or USD 8.8M, in the 1st year
- Service level resulting from the optimized restock parameters increased by 19% for high-critical items
- Staff fully operational and independent after 11 weeks of the project
Our clients around the world
Frequently Asked Questions
In summary, any organization that relies on maintenance, repair, and operations activities and uses MRO supplies can benefit from inventory optimization to reduce costs, prevent disruptions, and improve operational efficiency.