Eleven years ago, Xtivity Inc. introduced the concept of “a Lifecycle” for maintenance parts to create a context to better understand the often complex and somewhat confusing world of MRO. It became clear that reducing the dollar value and size of MRO inventory played second fiddle to top line revenue and hence – a company’s bottom line results. Xtivity’s goal is to boil down MRO to no more than what it really is: an insurance policy to help support asset availability, enhancing corporate performance and creating competitive advantage.
The MRO Lifecycle simplifies MRO by asking more, fundamental questions:
- What parts are truly required at asset commissioning?
- How and where best to procure?
- What is the nature of the procurement contract and how is it monitored?
- How little can be purchased without harming OEE?
- What is the repair process?
- What is the correct lead time?
- How and where best to store?
- How maintenance planning affects MRO process?
- What is the deployment/issue process?
- If not issued, what is the return/scrap process?
- What is the correct method of accounting?
Xtivity began asking questions of its client base while extracting inventory data. We quickly realized that everyone had data but few had the information they could act on. Analytic and algorithm development led to a complete understanding of MRO performance and measurement. These insights begged a new round of questions and a new understanding evolved – not just for Xtivity, but more importantly for our clients.
Below are examples of simple questions we asked ourselves and their evolution throughout the research process and this is what we learned:
What MRO inventory benchmarks and standards should I work to achieve within our industry sector? Starting with what is the inventory value in relation to the replacement value of the production facility?
- Evolved to – What are common benchmarks such as: 30% of what you purchase will never be used; what you do purchase won’t be used for 9 months on average; 90% of what you spend each year on replacing MRO inventory will be concentrated in 5% of the items you buy; 50% of what you own now, will never be used; and 80% of your dead inventory value is captured in 12% of items.
- Enhanced data analysis reveals many more benchmarks have been unavailable to date but all work to improve OEE.
Through the data and questioning, we were also able to create challenges to conventional wisdom in MRO inventory and practices, such as:
What is the average turn of inventory?
- Evolved into – There is no appropriate average turn?
- Evolved into – Maximizing turns for certain items?
- And when additional analytics and understanding were applied, evolved into – Perhaps 0 turns is the ultimate goal.
My new production asset is recommended for the most part to be supported by OEM suppliers; do I have to purchase it all now?
- Evolved into – No, inventory optimization can determine when and how much?
- Evolved into – How much OEM can be replaced by “like” inventory?
- And when additional analytics were applied, evolved into – If I take the time to understand proper provisioning practice using reliability factors such as MTBF and RPM categorization, I can stop the redundant purchasing before it starts, and still improve OEE.
Our goal over the next few months is to create an open forum for discussion around new, rather thought-provoking notions – by exploring the complete lifecycle of MRO combined with optimum maintenance process – all offered up over a series of blogs.
Each blog will focus on an accepted leading practice of today – with an eye to combining it with additional analytics, to position a future state of MRO in our plants, mills, mines, and factories. Every industry silo can and should be exposed to this thinking.
By agreeing or disagreeing, we hope to broaden our collective wisdom. Keep your eyes on us: we intend it to be fun, quick, out-of-the-box and rewarding for our readers.
You just made your first step into MRO SIMPLIFIED.
Any questions? Send us an email at firstname.lastname@example.org.