Reduce unplanned downtime by 50% with data-driven MRO inventory optimisation

A data-driven approach to optimising maintenance, repair and operations (MRO) inventory can cut inventory costs by 40 percent, the time to analyse inventory also by 40 percent and unplanned downtime related to missing parts by 50 percent, while also increasing maintenance budget savings by 35 percent and service levels by 25 percent, according to research commissioned by asset management software specialist COSOL.

With these findings, experts from COSOL say adding a data-driven MRO inventory optimisation solution to Enterprise Resource Planning (ERP) and Enterprise Asset Management (EAM) solutions can fill gaps in forecast requirements, planning for unpredictable demand by analysing historical transactions.

The solution provides stocking-level recommendations based on prescriptive analytics and optimisation algorithms tuned specifically for spare parts. It also uses a rule-based engine to analyse all variables and automatically identify the right amount of inventory.

Optimising MRO inventory involves several variables to consider like criticality, lead time, work-around options, minimum and maximum stock counts, stockout costs and more, multiplied by the number of unique parts while also addressing cross-functional requirements.

Holding too little inventory risks not having enough spare equipment to run routine maintenance and emergency repairs, while having too much would run up procurement, storage and handling costs, while also risking parts becoming obsolete.

Organisations have traditionally used spreadsheets, internal experts and bespoke analytical systems to address shortcomings of ERP and EAM systems, but a data-driven solution is easier to audit and work collaboratively compared to spreadsheets; more scalable and future-proof than relying on an internal expert; and has the backing of years of experience, research and development compared to a custom-built solution.

Organisations using more than one solution to form an asset information ecosystem would have data required for MRO inventory optimisation stored in multiple places, so a solution with integration connectors can interoperate with several host data systems and integrate with EAM and ERP systems.

COSOL recommends IBM’s MRO Inventory Optimization solution, which integrates with IBM Maximo Application Suite, SAP, Oracle, Hitachi Ellipse and more.

Beyond the technology

Optimising MRO inventory doesn’t stop with just implementing technology – starting the process with pre-implementation analysis and data work would fully maximise the process.

To avoid optimisation creating silos, COSOL recommends organisations adopt a criticality score to help understand which parts are critical to operations or employee safety, and which are “nice to have” but not urgent. Some Considerations include where the part was used, practical workarounds, supplier lead times and pricing.

Annual reviews and validation of critical spares and safety equipment are recommended, along with a close collaboration with maintenance to ensure no critical items are inadvertently removed when actioning optimisation recommendations.

Preventative maintenance master data can also impact inventory holdings, where confidence in the data can allow organisations to reduce their reliance on holding stock for just-in-case or breakdown maintenance. Data quality in material masters like item pricing and supply lead times can also help with resilience during periods of disruption.