Reduce MRO Spares by 10% with “Where Used” reports

The Cost of MRO Spares

MRO Spares are spare parts used by maintenance teams to repair broken equipment.  By holding onto spare parts for critical assets, they are able to drastically reduce the downtime of equipment, by immediately starting repairs and not waiting for new parts to be shipped.

This process, however, comes at a cost.   Insurance premiums often run at 5% of total inventory value, and taking into account embedded costs like salaries and wages, buildings and utilities to manage the spare parts inventory, the total administrative exposure for carrying cost can add up to as much as 20% or more.   These are not one-and-done expenses; they occur every year, year after year, for as long as you carry storeroom inventory for an asset.

A Reason Why Superfluous Spares Exist

Most leading ERP solutions have modules or customizations that address MRO inventory procurement and inventory management. However, there are various holes in their systems that leave businesses at a difficult crossroads: Do you invest the resources needed to identify unnecessary MRO Spares or do you absorb the cost of these Spares and invest resources elsewhere?

For example, a client of ours recently came to us with this issue.  They had just decommissioned an old machine which was backfilled by a substantial amount of MRO Spares in their warehouse.  They were unable to sell or remove the spares used for this machine because some parts were also used by other critical assets – they just didn’t know which ones.  After hiring an SAP Analyst, they learned how rigorous the process of identifying which parts were used on other machines.  The Analyst had to either go through every work order to track down parts or create a custom “Where Used” script in SAP for every part on the machine.

The Cure for Spares Abundance

Asset Information Center (AIC) knows every part used in every machine, and correlates that information with the Bill of Materials.  This allows businesses to see where any part is being used with the click of a button and, in turn, quickly identify their useful or unnecessary spares.

Our client, who initially used AIC to quickly find parts needed for repairs and optimize their work order process, was able to use this additional feature to reduce their total MRO Spares by 10%.  Not only did it work for the asset they had just decommissioned, but they were able to do this retroactively with other legacy equipment.  They found thousands of spares in their warehouse and were able to re-sell them; turning a potential loss into profit.