Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing

CHAPTER TWENTY

Making Sense of MRO Spend

THE MAINTENANCE, REPAIR, AND OPERATIONS (MRO) spend category is a catchall for the parts and supplies companies purchase in order to maintain, repair, and operate their facilities and equipment. Sourcing this portion of a budget can be a significant undertaking, particularly for those unfamiliar with the day-to-day operations of manufacturing facilities. What makes MRO a challenge also makes it an interesting category to source. The supplier community is diverse, pricing schemes can be complex, and purchases in many cases are nonrepeatable, meaning you do not often buy the same exact part over and over again on a regular basis. To add to these challenges, in most organizations the maintenance managers and other end users are accustomed to managing the category themselves and can be resistant to change.

This chapter provides an overview of the MRO industry and the types of products that fall into the category. We then review the goals of sourcing MRO, including increasing efficiencies, developing and implementing purchasing controls and, of course, reducing costs. Finally, we provide details about the challenges buyers face when sourcing MRO, and how to overcome each challenge.

AN INDUSTRY OVERVIEW

Picture a homeowner. Think of all the products he or she needs to purchase and use in order to keep a home in good condition. Cleaning supplies are needed to sanitize bathrooms. Lightbulbs need to be replaced occasionally to keep lamps lit. Batteries ...