Ask fifty people in the manufacturing industry what Indirect Material is and you will get …a lot of differing, unique answers. And, generally most of them are right. But, most of them are not consistent.
Most of the responses will include the term MRO, which in and of itself is a term conveniently used but not often identified. Maybe a good place to start.
With MRO, most agree that the “M” stands for Maintenance. Same with the “R”, most would say Repair. With the “O”, I’ve heard several options. Operations and Overhaul (two different industries) come to mind along with a few others.
In any case, MRO is a part of Indirect Material, but not the whole of it. In the world of Indirect Material Management (which is another term we should talk about-3PIMM or Third Party Indirect Material Management…sometimes referred to as an “Integrator”…which is yet another term loosely used and under identified), the whole encompasses anything that is purchased or procured in support of the manufacturing process (with the exception of raw materials, which would be considered a Direct side material) in the effort to create the saleable product.
So, what actually is Indirect Material?
ValuePoint Material Solutions annually manages over 600,000 SKU’s, over $150,000,000.00 of Indirect Material for their customers. As defined this includes products to support the equipment, people, and facility in any given manufacturing facility. Within a non-manufacturing environment, such as a public municipality, indirect may encompass everything being procured or it may be only what’s not sold to the public as an example.
Blue Print Machine parts, Cutting Tools, Electrical products, Plumbing products, Welding products, Filters, Oils and Lubricants, Janitorial products, Office products, Paper and Packaging products, Pumps, Gearboxes, Automation products, Motors, building materials, and services in all of these areas ….
What is that?
In the world of Indirect Material, the (3PIMM) Third Party Indirect Material Manager or “Integrator” is the group responsible for the process of managing the vendor side purchasing, inventory flow and consumption, replenishment, site shipping and receiving, and the full reporting package as it pertains to each of the facets of this management program. They “integrate” all the necessary components of indirect material management into a transparent process that insures the continuity of supply without stock outs or excess and obsolescence, take financial accountability for the products and usages, and report concurrent to budgetary guidelines and/or departmental or direct product costing.
Now that I’ve cleared all that up for you…
Contact me with questions, I really enjoy the differences and similarities of people’s opinions on this topic…
Business Development Manager
Mobile: (989) 295-0422