MRO in Procurement — Everything You Should Know

MRO is one of the frequent words that you will encounter in the procurement industry, especially within its operations. However, many people keep on using this word without truly understanding what it is. 

That is why in this article, we will try to erase your confusion by discussing to you what MRO is. We will tell you about MRO purchasing and MRO inventory management. Further, we will show you some of the best practices in MRO.

After reading all the contents of this article, you will be knowledgeable enough regarding MRO. Thus, you will know how to utilize it in your profession or business effectively. That being said, let us now dive into the world of MRO.

Whatis MRO in Procurement?

Before anything else, the word MRO stands for Maintenance, repair, and operations. Procurement refers to the products and tools acquired to keep an organization running. 

MRO is also referred to within the context of indirect procurement as it allows business activity indirectly incorporated into any final product the company creates. It is also a key part of indirect spending which is known in the procurement industry as indirect spend.

Lack of spending visibility is one of the challenges that MRO procurement faces today. Even though MRO is traditionally focused on managing the indirect spend, it gained increased attention as businesses continue to look for ways to reduce costs. 

MRO in procurement is usually a forgotten category that is commonly left to operations personnel to find and secure their needed supplies. As such, it can become a risky purchase as operations personnel may spend more than what the company needs to operate. 

Whatis MRO Purchasing

MRO purchasing is an indirect spend of businesses that relates to maintenance, repair, and operations. These purchases of a business enable it to keep operating but are indirectly related to the products produced by a company. 

The MRO purchases are often managed through issuing purchasing requisitions, especially when the need arises. Thus, expenditure control may go out of hand. The trick here is to estimate what products and services are often required and issue regular purchase orders. 

Below are some of the examples of items usually included in MRO:

• Cleaners, chemicals lubricants
• Office suppliers
• Hand tools and repair tools
• Protective gears
• Batteries
• Bolts, bearings, and screws
• Fixtures and furniture
• Pumps, motors, compressors
• Computer equipment

MRO Inventory Management– What is it and Why is it Important?

MRO inventory management refers to the acquisition, storage, usage, and replenishment of all products that fall under the MRO inventory. 

Just like any other type of management, inventory management aims to perform activities efficiently as possible so that the business has the right MRO inventory on hand at the right time. 

It is important to take note that managing MRO can be complex and time-consuming as companies may need to purchase and store thousands of different items. 

MRO inventory management plays a crucial role in keeping the business operating smoothly. If a part or component of a machine starts failing, especially in the middle of production, the entire manufacturing process may stop just to fix the machine. 

Without a spare part available, the impact can lead to hours or even days of downtime. Thus, losing revenue and endangering customer relationships as deadlines are missed.

You may think that stockpiling to avoid running out of products is good, right? However, it can also cause problems. Purchasing and storing excess inventories ties up the capital of a company which can be used to fund business growth. Additionally, some items may become obsolete if stored for too long. Thus, your purchases will go to waste.