After many years of chasing and fixing problems within the MRO (Maintenance, Repair, and Operations) Supply Chain, I've decided to compile a Top 10 list to help others navigate this minefield.

Over the coming months, I will follow up with a deeper dive into each of these topics.

1. Material Descriptions (Short and Long Text)

If you are only using an unstructured short description that hasn't been built using a taxonomy, you are making it difficult for end users to find these materials—which leads to free text or maverick spend—and you open yourself to duplicate materials. Cataloguing materials as OEM (Original Equipment Manufacturer) or non-OEM makes a significant difference and positive impact on your organization.

2. Material Criticality

Every spare part should be reviewed against its criticality to operations. Most companies do not have a formal process to calculate or establish a material's criticality. This leads to emotional decisions with too many materials classified as critical when they may be important but not critical, diluting the impact on what is actually critical. This designation is also one of the first fields used to segment materials.

3. Lack of BOMs (Bill of Materials)

MRO materials are made up of spare parts (the M's and R's of MRO) and consumables (the O's of MRO). Every spare part should be listed in at least one BOM, and this should ideally be non-negotiable. The only reason these materials are catalogued and stocked is to reduce RISK to operations. If no one knows a material is in the warehouse and it's not listed in a BOM, it tends not to be used. This is pure waste to the business.

4. Lack of Purchasing Master Data

In SAP, this is a PIR (Purchasing Information Record, also known as Info Record). Most ERP systems give you the ability to link supplier information to a material to support purchasing and procurement processes. The Info Record holds three key pieces of data: (1) Supplier Part Number, (2) Price for the associated supplier, and (3) Lead Time for the associated supplier. When MRP is executed, the program attaches the supplier information to any requisitions that are created.

5. Lead Times

Lead times are a critical component of the MRO Supply Chain. I often find that lead times are either ignored altogether or randomly set to arbitrary numbers (like 7 days) and never touched again, generating more problems downstream at the requisition stage. For example, the PO is generated with a delivery date seven days in the future when the actual delivery date is not known. If the maintenance team runs an availability check in this example, the confirmation will be the delivery date listed in the PO (minus any goods receipt processing time). Clearly not ideal—I'll expand on this in a subsequent video.

6. Reorder Points (ROP) & Reorder Quantities (ROQ)

ROP and ROQ are like Min/Max but much more appropriate and cost-effective. No matter which strategy you use, these values need to be regularly calculated. They are NOT "set and forget" values, yet this is how many businesses treat these fields, often resulting in either stockouts or surplus inventory. All materials adhere to a lifecycle and therefore need to be monitored, maintained, and eventually retired.

7. Maverick or Free Text Spend

Free text spend is my arch nemesis, and one of the first questions I ask businesses I support is: "What percentage of your spend on materials is free text?" If you don't know, find out! Anything over 10% is problematic. A high volume of free text spend means you are allowing people within the business to bypass your inventory management and procurement processes. This type of spend is generally not negotiated and, worst case, you may already have the inventory in the warehouse.

8. SLOB (Slow Moving or Potentially Obsolete) Inventory Reviews

SLOB (or sometimes called SLOBEX, which includes Excess Inventory) reviews should be part of standard work for the Reliability, Engineering, and/or Maintenance teams. SLOB materials need to be reviewed regularly because they tie up valuable working capital. Any cash saved in the MRO Supply Chain goes directly to the bottom line and should be measured via a KPI or metric (more details on the difference between a KPI and metric in my future posts). The outcome of this review is to definitively determine whether a material is SLOW MOVING and needs to be retained, or OBSOLETE and should be removed from inventory and the balance sheet (requiring use of your obsolescence provisions).

9. Stock Accuracy

The most important KPI for any warehouse is Stock Accuracy. All ERP systems expect and depend on the system inventory to reflect the physical inventory listed on the balance sheet. When stock accuracy is poor, maintenance planning is bound to also be poor or forced to find workarounds (squirrel stores) to meet their needs.

Key Takeaway: If you do not count regularly to measure your stock accuracy, initiate a stock accuracy program as soon as possible and communicate it across the business. You'd be surprised at how quickly this will begin to build trust between your teams.

10. Reporting & KPIs

What we don't measure, we cannot understand. What we don't understand, we cannot improve.

It amazes me how often I come across MRO Supply Chains that have zero KPIs or metrics documented and implemented within their business. Even businesses with tens of millions of dollars of inventory have little to no KPIs to understand how effective their stocking strategy is. If you don't know where to begin, follow me. I will get into the details and recommend what to measure to help reduce RISK and COST to your business.