Future Strategies For Materials Management

Future Strategies For Materials Management

I want to share some fascinating insights about materials management and the evolving practice of MRO (maintenance, repair, and operations). Through an industry survey taken in conjunction with WBR Insights and ProcureCon MRO, I have continued to gain more profound insights into how enterprises approach MRO in their organizations and to what extent MRO is already present in the operational mix.

The survey gleaned the opinions of 250 procurement and operations leaders – from industry executives to decision makers for inventory management and asset criticality, who shared MRO’s strategic importance, the current issues they face, and where they perceive future opportunities for their enterprises. The findings also identified key barriers to effective MRO data management, such as outdated systems like manual inventory tracking and a lag in AI adoption, where many organizations are yet to fully utilize AI for predictive maintenance.

The survey investigated business operations, including purchasing and procurement, MRO sourcing, spare parts management, and inventory optimization. These issues are integral for a number of industry types, from industrial manufacturing to oil and gas (O&G), mining, and beyond.

The results were illuminating. A whopping 71% of procurement and operations leaders believe MRO should be treated as a strategic initiative. But here’s the flip side: only 58% of organizations are actually walking the talk. That’s only slightly over half of the enterprises polled for the survey.

Continuous Improvement Needed

Enterprise leaders see the promise and future potential of MRO, but they are not yet up to speed on implementation. This suggests a fairly significant disconnect between perception and practice in MRO management. This gap underscores the need for a shift in how to approach MRO. This scenario could be improved from a necessary cost to a driver of innovation and competitive advantage.

Other key insights showed that:

  • 33% have decentralized MRO inventory teams across their organization;
  • 44% don’t use predictive maintenance solutions, which would help with data-driven decision-making over emotional, gut-based decisions;
  • 46% currently don’t have a process in place to define and regularly assess the criticality and stocking policies of its MRO materials.

Tools Used for MRO

If you work in enterprise-level operations, you know that ERM and SRM tools are commonly known technologies for inventory organization. And the survey’s results reflected that notion, finding that most organizations use these technologies. The issue is that these tools are not purposely built to manage MRO practices. This would include such well-worn legacy processes like

• Enterprise resource management (ERM) software (80%)

• Supplier relationship management (SRM) tools (70%)

• Inventory optimization and management systems (66%)

• Predictive maintenance solutions (56%)

Risk vs. Reward

The survey highlighted some pain points we’re all too familiar with—data inconsistencies, legacy system headaches, and the struggle to centralize inventory management. Data inconsistencies can lead to inaccurate inventory levels, while legacy systems can be difficult to integrate with modern solutions. Only 39% of respondents report full data uniformity across all materials, indicating a widespread issue that needs to be addressed.

However, perhaps more concerning is the approach to risk management in MRO. As noted above, 46% of organizations do not incorporate asset criticality into their materials planning process. That’s like navigating a ship without knowing which engine parts will most likely fail.

This oversight leaves many companies vulnerable to potential disruptions in an era where operational resilience is paramount. It’s time we started looking at MRO through a risk-based lens.

Data Management Challenges

Data management emerges as another critical challenge. Just over a third of respondents reported full data uniformity across all materials. That makes it clear that these organizations struggle with fragmented information systems and inconsistent data formats. This lack of standardization hampers efficient inventory management and complicates procurement processes.

Reasons to Move Forward with MRO Materials Optimization

Finally, the survey respondents revealed some reasons why they believe MRO procurement should be treated as a strategic initiative. Here are the dominant reasons:

Enhanced Operational Reliability and Availability: Leaders emphasize that a strategic approach to MRO maximizes operational reliability by focusing procurement efforts on critical assets, ensuring high availability and minimizing unexpected downtimes.

Proactive Risk Management: By treating MRO procurement as a strategic priority, companies can forecast and mitigate risks better. Taking a risk-based strategic approach allows companies to balance cost reduction while minimizing operational disruption and ensuring maximum uptime.

Innovation and Continuous Improvement: Strategic MRO initiatives foster a culture of continuous improvement by investing in the training and development of procurement and operations teams. Enhanced skill sets and capabilities drive efficiency gains and foster innovation, allowing companies to explore new technologies and strategies to improve performance.

Employee Morale and Satisfaction: Leaders highlight that when MRO is treated strategically, it addresses employee concerns effectively and improves job satisfaction. Investing in workforce development, providing clear career paths, and recognition help boost morale and job dedication.

Supply Chain Resilience: Companies that excel in their MRO practice respond swiftly to market and production changes. This minimizes supply chain disruptions, improves reliability, and boosts customer satisfaction.

Competitive Advantage: Companies that excel in their MRO practice gain a competitive edge in their ability to provide Return on Capital Employed (ROCE) through optimized asset utilization/ lifespan and cost savings from efficient maintenance and inventory management.

Looking ahead to 2030

As with most business situations, opportunities lie amid the challenges. Advanced technologies, particularly AI-driven analytics, can advance operational prowess and enhance MRO practices. Many of the survey’s respondents showed interest and optimism about AI’s potential to improve operational effectiveness in MRO, paving the way for a more efficient and innovative future.

As much as I love a good tech solution, let’s not forget the human element. Investing in our teams’ education and training while shaping a culture of continuous improvement is not just crucial-it’s a testament to the value we place on our people and their integral role in the success of MRO.

As we look towards 2030, it’s clear that MRO is stepping out of the background and into the spotlight. It’s no longer just a cost center or a necessary evil – it’s becoming a key player in driving innovation and competitive advantage.

The path forward requires a holistic approach – one that combines technological advancement with strategic vision and human expertise. As industry leaders, we must ask ourselves: Are we prepared to elevate MRO to its rightful place as a strategic imperative? The future success of business operations depends on how we move forward with intent, ensuring a comprehensive and strategic approach to MRO.

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