Poor quality MRO material/item master identities harm business results in MRO processes. Inconsistently structured, not comparable item identities allow clutter including duplicates and indeterminate items into the catalogue and warehouse where they frustrate all users. They can make up 20 to 50% or more of the catalogue. This is the pain we live with. Some may call it latent pain because nobody is screaming “this hurts, we’ve got to fix it”, but really, it’s accepted pain. We live with it because we’ve accepted the harm as simply a part of doing MRO material support. We haven’t considered how to make item identities fully comparable and then rationalize the catalogue.
What if we tried to measure and quantify the pain?
Every process using MRO material masters is degraded by the problem. To bring visibility, measure MRO process cost as is. The business case for change opportunity is our current MRO process cost minus the expected monetary benefit for each pain point from change. After transforming your MRO catalogue measure the results. I’m sure MRO users will appreciate the changes, but putting the cost numbers in a report that is sharable up the chain where the challenges of working with MRO materials is not felt will be useful.
Measures:
SCM measures:
- MRO working capital
- MRO working capital spend in past period
- Number of PO items requiring expediting
- Resource hours committed to expediting
- Frequency or number of material returns from Maintenance
- Resource effort handling returns
- Monetary value of the reduction of Maintenance free text requisitions
- Resource effort to source and price Maintenance requisition items
Maintenance & Reliability measures:
- Frequency or number of job (executions) delayed by wrong or missing materials
- Wrench time lost for scheduled jobs that end up waiting on parts
- Frequency or number of stock outs on planned work (causing job scheduling to wait)
- Frequency or number of stock outs for over the counter or immediate material requests
- Maintenance resource time lost due to stock outs above
- Lost production revenue due to production downtime from materials related late maintenance job completions
- Maintenance planning resource effort (reduction in this measure should be diverted directly into making better or more job plans, not captured as a saving)
- Cost of Maintenance materials bought as free text requisition items
Putting it together
The bullets are a mix of event counts and frequencies and their associated resource costs. Many need a reporting period so the report will have resource hours per period. A charge rate is then multiplied with the resources to give a financial value. Choose a useful reporting period, monthly might be a good default. Circumstances may suggest longer or shorter periods to give a clear picture.
Note on MRO working capital. You may not be able to reverse or fully recover yesterdays unnecessary MRO stock purchases, but you can stop buying new stock for indeterminate and duplicate items.
Note on buying MRO materials from free text maintenance requisitions. Where this practice occurs, this may be the biggest cost improvement opportunity. The practice results in extra and next time purchases that are put away in non-system tracked storage (lockers, closets, lay down yards). Most of the just in case quantities never get used. The material costs of current work is bloated from the just in case purchases that are then hidden. The effort to buy this way takes more work from both the Maintenance and Procurement teams. Also, there is never any system learning where the master data is improved benefiting future requirements.
Measure MRO Item Identity Quality
A contributing reason we have lived with poor quality MRO item identities is it can be challenging to measure. By adopting an MRO material identity standard with a taxonomy of noun classes and attributes, there is a simple way to measure conformance to requirements. For each MRO item record it either conforms to its assigned template or does not. Within the item classification record, add an identity quality conformance characteristic with Yes or No values available. A simple percentage of items conforming to the standard is a good measure of item identity quality.