MRO Materials & Inventory
Optimizing the Hidden Supply Chain for Maximum Reliability and Minimum Capital
Maintenance, Repair, and Operations (MRO) inventory is often a "Black Box" in industrial finance. Unlike raw materials, MRO does not go into the final product, making its value harder to track. However, a missing $5 bearing can stop a $500,000-per-hour production line.
1. Strategic Classification: ABC Analysis
We use the Pareto Principle (80/20 Rule) to classify items by their financial impact. Not all parts deserve the same level of administrative oversight.
ABC Inventory Analysis
Strategically grouping materials for optimized cash flow and flow.
Category A
Category B
Category C
2. VED Analysis: The Criticality Lens
While ABC focuses on **Value**, VED focuses on **Criticality to Production**.
V: Vital
Production stops immediately without it.
E: Essential
Performance is reduced, but line keeps running.
D: Desirable
Minor nuisance if out of stock.
3. EOQ: Economic Order Quantity
To minimize total inventory cost, we must balance the **Cost of Ordering** vs the **Cost of Carrying** (Holding).
EOQ = SQRT( (2 × Demand × Order Cost) / Holding Cost ) 4. Storeroom Kitting: The Technician Force Multiplier
The "Wrench Time" of a technician is drastically reduced when they have to "Shop" at the storeroom counter.
5. Cycle Counting vs Annual Inventory
Stop the annual "Wall-to-Wall" shutdown count. It is expensive and prone to error. Instead, implement **Cycle Counting**: count a small number of items every day. Class A items are counted 4 times a year; Class C items once a year. This ensures inventory accuracy stays above 98% year-round.