…and why Purchasing and Supply Chain Management are most often involved.
It’s not typically a Purchasing function, it’s not typically a Supply Chain function, Engineering, Operations, Quality, etc., etc., although any/all can play a significant role in the success or failure in the process of managing Indirect Material/MRO. Many if not most will be assigned or absorb the duties resulting from upper management direction or strategy. It’s arguably not their core function or competence, but in some cases, they’re duties and functions are the closest to what’s needed.
A quick story to add some perspective-
I recently went to the doctor for a problem I have with snoring. My doctor suggested I get tested for Sleep Apnea.
After the test, the results came back negative. I do not have sleep apnea (thankfully), however the nurse who monitored my 24-hour test commented “I didn’t see any sign of Sleep Apnea, but you snore like a bear”.
Naturally I wanted to find some resolution to this issue for both myself and my wife (a saint for dealing with this, and notably as quiet as a church mouse while sleeping…peacefully….grrr).
In discussing options with my doctor, he said we could do a couple of things. One is see a specialist about a CPAP appliance. Alternatively, see a Ear/Nose/ Throat specialist to analyze the air canal itself. Now, while both have provided relief for many with problems related to the issue, none focus on the issue of snoring itself. Both have strategies that can impact snoring, if accepting a tradeoff (CPAP machine or surgery) but neither would guarantee success or even commit to assuring long term relief.
Similarly, in most corporations there are competent purchasing groups, supply chain, and other disciplines who are experts in their field…but the proper management of Indirect Material/MRO is not their core competency, because it goes far beyond purchasing.
There are computer programs that can provide options on managing data (this is an entirely different subject that needs to be understood that include the proper cleansing and input of data to be managed) which is an important starting point. POU tools to properly allot and account to specific ledger accounts that provide options with usage and/or spend data. Many other options that can be utilized by in plant personnel attempting to manage internally.
However, if you consider relying on someone with a core competency in Indirect/MRO Material Management, what you can and should expect is a group of professionals that can provide ROI to Indirect by utilizing ALL the tools available to the experts in the field.
- Specifically designed PFEP
- Min/Max dynamic management
- Cycle Counting (A, B, C, D, and E)
- Excess and Obsolete management
- SKU accuracy/Data Cleansing
- Product Performance analyzation/management
- P2P analysis
- Predictive Usage
- Usage Forecasting
- Asset repair/warranty management
- Top Ten spend management
- Vendor/Supplier management
- Contracts/personnel management
- Cost Savings commitments
- Spend reductions
- Program inventory ramp up/ramp down
- ERP systems
- CheckBook Accountability
- Many, Many more
One of the most important issues in managing Indirect/MRO Material is being able to understand whether you are leaving money on the table (shelf) by lack of focus, or spending too much due to high transaction volume.
Ultimately you want and need the best product applications, with accurate usage volumes stocked on the shelf, purchased at price points based on real time usage and projections, AND the proper process and procedures to focus on accurate dispensing/accountability, reducing the spend volumes, provide cost savings ideas and plans, eliminate excess and obsolete products, while capably managing the inventory volume dynamics of in-process, on shelf, on order, of both standards and specials, and the lead times relative to both, and a real time report suite to provide accurate and timely analysis on spend/usage data and program performance metrics.
Indirect/MRO Material Management can provide ROI. To get there you will need to use all the tools, have all the intelligence, implement all the proper processes, and focus on the details every day to make it happen.
This takes a group with focus on their core competency, while considering the best practices and techniques of all the management disciplines including Purchasing and Supply Chain management.
A doctor specialized in indirect inventory. An Indirect/MRO Material Manager.
If you have any questions on what you’ve read, please contact me directly with the information below. We’d be happy to provide no cost/no commitment consultation on your process.
Business Development Manager
Mobile: (989) 295-0422
5310 Hampton Suite 1, Saginaw, MI 48604