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How Does Improving MRO Inventory Management Reduce Maintenance Cost?

Controlling the cost for equipment repairs requires careful management of the Maintenance, Repair and Operational (MRO) spare parts inventory.

Controlling the cost for equipment repairs requires careful management of the Maintenance, Repair and Operational (MRO) spare parts inventory. These scenarios are repeated time and time again in many maintenance operations:

  • A part should be available in the inventory but isn’t there because it has been used on a previous job.
  • A part is the wrong part for the job because the Equipment Bill of Material is wrong.
  • A part is no longer service-ready when requested because it has been improperly stored in the storeroom.

All of these situations can result in additional cost because now the request for the part has become an emergency and the purchase will need to be expedited. These three examples seem to be the most common situations that companies encounter and are completely avoidable by implementing some basic inventory management practices.

Keeping the right parts in stock

Security of the storeroom is a basic requirement for a valid inventory management program. Access to the storeroom needs to be limited, and employees that do have access should understand the importance of documenting any parts they remove from the inventory on the off shifts.

Of course, parts removed from the MRO inventory and not documented is not the only cause of missing parts. Errors occur during inventory stocking and item picking that can also cause missing or misplaced inventory. A documented cycle count process will catch many of these situations before they become a problem. Analysis and classification of the MRO inventory using the A-B-C classification of the inventory items establishes a format for scheduling and executing inventory cycle counts.

Critical and insurance spare parts should be in stock 100% of the time and cycle counted quarterly. These are parts that would have an immediate hazardous effect on safety or the environment or cause a stoppage to the production process. An item classified as an “A” part is a part that has a standard usage month to month and should also be counted quarterly. The “B” parts are lower usage items and these items should be counted semi-annually. A “C” item is a low dollar, high usage item (nuts and bolts, fittings, etc.) that is counted annually and should have an accuracy of 90%. Inventory accuracy that is measured monthly should be calculated on the results of cycle counts on the A and B inventory items with a goal of 95% overall accuracy for these items.  

Keeping EBOMs up to date

Equipment modifications should be managed through a formal Management of Change (MoC) process. The MoC process is triggered by a change to form, fit or function of the equipment and includes modifications, changes to the process, operational training and other changes that need to be formally documented. As equipment is modified or parts are superseded, the Equipment Bill of Material (EBOM) should be revised to include the new parts for the equipment. The old parts should be removed from the EBOM and reviewed as potential obsolete items. If the item has more than one equipment application and is not an item that needs to be removed from the inventory the min/max stocking level is reviewed and adjusted to reflect the reduced demand for the part.

The new parts that need to be added to the MRO inventory should be first added to the EBOM by the maintenance planner and a formal request submitted by the planner to the inventory manager for the new item to be added to the MRO inventory. The request to stock the new part should include a recommended stocking level, standard application of the part to other operating equipment assets that will use this item and an item description that includes the complete part description and any supporting documentation.   

Storing MRO parts properly

Improper storage of some spare MRO parts can cause those parts to fail or not perform as expected when put in service. Large electric motors are an example of a spare component that needs a documented and scheduled preventive maintenance (PM) program while they are in storage. Scheduled PMs performed on these components reduce potential for damage to bearing assemblies from vibration and static corrosion. Vibration occurs from passing equipment and other sources in the area and can cause false brinelling of the bearing raceway in these large motors. Static corrosion is the result of the grease being displaced from the weight of the rotor shaft resting in the same position for extended periods of time.

The way to prevent damage to electric motors while in storage is to ensure the bearings are properly greased prior to being placed in storage and a scheduled PM put in place to rotate the motor shaft at least 450 degrees every 90 days. A simple visual method to ensure the motors are getting the needed PM is to use a paint pen to place a line on the end of the shaft from the center to the outer edge. If the line is at the 12 o’clock position it is the first quarter, 3 o’clock it is the second quarter, etc. The date the motor was greased and type of grease should be indicated on a tag that is attached to the motor. The motor itself should be placed on a vibration-absorbing material such as a wood platform or vibration-dampening pads.

Other parts that might need extra care during storage include:

  • Pneumatic valves
  • Rubber components (belts, o-rings, some gaskets)
  • Electronic drive boards and components
  • Gearboxes and pumps
  • Pneumatic and hydraulic cylinders

Keeping the right spare parts in stock, keeping EBOMs up to date and storing MRO parts properly are three ways inventory management practices can help control the cost for material and labor in the maintenance budget. These practices can reduce additional costs from lost production time, lost utilization of the maintenance crafts and excessive procurement costs involved in expediting needed parts at the last minute. 

Wally Wilson CMRP, CPIM, is a Senior Subject Matter Expert in Materials Management with Life Cycle Engineering, Charleston, South Carolina. Wally has more than 25 years of experience in plant management with three Fortune 500 corporations and has helped both domestic and international clients realize multi-million dollar savings through lean inventory management practices and Supply Chain optimization. You can contact him at [email protected]

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