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Things To Know About Inventory And MRO Optimization

Inventory Optimization

Our industry and economy focus on optimization in every sector. We want to make things cheaper, faster, and better. The economy is constantly growing and just exists because we produce more and faster every second. So, it is obvious that companies invest to optimize Processes and products. An Aspect that gets little attention but has a big impact is inventory optimization and MRO optimization. 

What are inventory and MRO optimization?

Every company which makes products has a stock- sure, easy thing: buy all the supplies and store them until you use them for your product. It sounds easy but if you do it right it is a complex system. Inventory should be managed properly and clear because it can save a lot of money, time, and space!

Rule number one is to always have all things you need. Make sure you have every component and device because if you don’t, the production will pause and you will lose time, money, and maybe clients. You should never risk that! If you know think: it´s easy I will just buy a ton of all devices I need! Don´t do that too. It will cost you a lot of storage space!

The skill is to balance your inventory. Track everything and make a clear analyze what and how many components you need at what time. This can be done using inventory optimization software.

It basically is a method of balancing capital investment, service level goals, and stock-keeping units.

MRO is the Maintenance, Repair, and Operation mainly in industrial companies. Every company has indirect needs which can be machines, tools, and other devices. They are needed for the process of production. So, if a machine is not working anymore the production will not continue as well. If you don’t have any tools left to put together a product you will have a problem. MRO focuses on the maintenance, repair, and operation of all the indirect needs compared to the inventory which is direct needs. 

The MRO optimization should advance the needed tools and machines. A company should always have enough tools and proper management of the repair and operation of those. It will guarantee a smooth production process without loss of time and money. 

The above explanation of MRO and inventory optimization is just very basic but it already shows the importance on this simple level. Both aspects are very complex and individually adapted in the companies. There are various programs, parameters, analytics, and variables which has to be included, furthermore, multiple professionals have to analyze it with different methods and software before it can be implemented and utilized.

Every company has the challenge of matching its supply volume to customer demand. Managing those aspects does make the company more profitable.

A study by IDC Manufacturing shows the impact which inventory optimization has on a company. It reduced its inventory levels by up to 25% in one year and achieved a discounted cash flow above 50% in around two years. Other companies like Electrocomponents, Castrol, and Smiths Medical emphasize the profitable impact which inventory optimization and MRO optimization have when implemented in the companies. 

Sujan Pariyar is the founder of the "Think 7 Figures" magazine and Silicon Valley Time. He shares stories of inspiring entrepreneurs from all around the world and tips to create a better life & business.

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