![]() The approach to better managing your MRO costs is not dissimilar to the strategy of managing direct costs. Teams may “hoard” parts or stockpile inventory to reduce the risk of downtime, but this just leads to further waste and overburdens the procurement budget. Ultimately, MRO procurement is best served by considering the TCO and building long-term supplier relationships.Īnd, finally, MRO spending is often redundant when there aren’t enough controls and oversight to manage MRO procurement. ![]() Procurement teams may seek to take advantage of discounts in this spending category, only to constantly switch vendors in pursuit of a better deal. Next, MRO often suffers from a short-term vision. Team members not only waste time trying to locate parts, but also managing inventory, a manual task that can be easily automated. This lack of visibility can cause teams to lose time re-ordering replacement parts that may be available somewhere in an organization’s network - but no one knows it. The challenges of MROīesides being decentralized, the MRO spending category comes with its own challenges.įirst, many procurement teams struggle to track and verify inventory across an organization, leading to wasted time and talent. Other spending categories (like direct costs) are scrutinized and prioritized over MRO costs but, there are many MRO items in the tail spend that can be better organized and managed. MRO procurement is often seen as necessary - but not necessarily strategic. MRO spending tends to be decentralized, but with the right software, organizations can uncover MRO spending, find efficiencies, and bring down the total cost of ownership (TCO) for their product. Often, the challenge of MRO procurement is that it is “invisible ” it is a spending category that gets overlooked by purchasing teams seeking to optimize costs. MRO procurement includes things like office and cleaning supplies, computers, and items related to maintaining tools needed for production. MRO, despite being vital to operations, is considered part of indirect spending. MRO is a category of spending that covers all maintenance parts used for repairs and to support production at an organization. MRO is part of an overall procurement strategy in that it contributes to the continual and long-term success of your business yet, MRO often gets lost in the bigger picture of indirect costs and decentralized planning. MRO is necessary for maintaining equipment in a way that’s safe for your team members - no matter what industry in which you operate.įirst, what does MRO stand for? MRO stands for maintenance, repair, and operations. MRO is an important spending category not only for the growth and success of your organization but also for the health and safety of your employees. The Meaning of MRO and Its Role in Procurement
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