Poor Service Plague MRO Supply Operations for Chemical Manufacturers

When maintenance repair operations (MRO) suppliers can’t deliver, chemical manufacturing companies experience long down times, which is extremely expensive and costly.

When a supplier of electrical and lighting MRO parts is doing its job well, equipment is repaired proactively to prevent surprise stoppages, inventory is managed well and the plant hums along smoothly.

But many MRO supply providers don’t live up to that ideal.

A very common problem is a supplier not having distributors local to all of a company’s plants. The local distributor is essential to a functional MRO relationship, because if the distributor is not nearby, then needed parts will take a long time to arrive at the plant and cause delays.

When the distributor is local but fails to stock the needed parts, well, that’s another red flag. Many MRO companies operate with a hub-and-spoke model with warehouses of parts centrally located in various areas and feeding local distributors. This operating model is efficient for the supplier, but not necessarily for the chemical plants it serves. The hub-and-spoke model can easily add a day or two to part deliveries, resulting in significant delays for the customer.

After working with a particular MRO solution provider for a long period of time, it is also common for plants to end up with overstocked inventory filling storerooms and increasing costs. This may be due to distributors selling products to customers that they do not need and not re-evaluating the customers’ needs. The customer may indeed have needed a certain quantity of parts at one time, but years later, the customer’s needs may have changed. However, that doesn’t necessarily mean that the distributor has stopped selling the same batch and quantity of products to the customer.

To avoid inventory overstocking, a competent MRO solution provider should regularly check with the plant manager and engineers to see what parts are required, what parts are critical and which are not, periodically adjusting supply levels to fit the plant’s needs.

An MRO supplier can make its inventory investment more efficient through streamlining and reducing on-hand inventory. Reasonable inventory levels of critical items are kept in stock on site, while non-critical items would be warehoused with the distributor and delivered as needed within 24 hours. To further reduce carrying inventory, MRO suppliers should help plants narrow down the SKUs of critical items to eliminate duplicate items in the system.

On the corporate side of MRO management, problems arise when a company has to work with a patchwork network of distributors because each plant contracted locally with a different MRO supplier. This maneuver unnecessarily complicates corporate accounting and means that the company has to manage procurement for each and every plant instead of one company-wide contract.

Another unfortunate side effect of working with multiple MRO suppliersis that each vendor may use a different name for products—meaning that customers’ systems get filled with duplicate products. Using multiple names for the same item makes accounting complicated and it is difficult to determine actual maintenance costs.

The answer to the problems of poor MRO service is to contract with a supplier that has local distributors near each plant and enters into a company-wide agreement with customers to service all plants. With distributors that are actually local to the plants they service, customers get the parts when they need them. Also, customers can enjoy a single point of contact, uniform pricing and product consistency for each plant.

 

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