Avoiding MRO management pitfalls with MDM – 6
Last week, we talked about process failures that can affect organizations negatively. This week we delve deeper into additional processes that often fall victim to MRO failure.
3. Inaccurate MRO Demand Forecasting – An easy way to save money on MRO parts is by accurately forecasting their demand. The inability to accurately read MRO consumption patterns at an enterprise level makes predicting demand for consumable MRO items much harder than it needs to be.
Industrial enterprises may have bolt-on solutions for creating visibility into MRO consumption (versus spending). But if the item source data in ERP is duplicated, inaccurate, incomplete, and poorly classified, then the process of setting max quantities and automated order triggers becomes corrupted as well. A parts focused MDM solution can solve this problem by de-duplicating, standardizing, normalizing, and properly classifying all MRO data.
4. MRO Spend Management – Here are two of many potential scenarios that can unfold with various combinations due to MRO master data management failures
- The category manager spends a year rationalizing SKUs and suppliers for electric motors. Then, a maintenance engineer fails to find the motor he needs in inventory and with no governance or workflow to stop him, creates a new item master in the ERP. A new item master record has been created by the plant-level buyer/planner. So long rationalization!
- An MRO category manager conducts an analysis of electric motors but has poor insight into what has been consumed and what is still in inventory. Using spend data, he makes a deal that will deliver rebates and discounts for hitting certain volume levels. However, because his view of demand was wrong, he misses the targets, so discounts and rebates never get realized.
Next week’s post will be all about the money as we’ll look at how material MDM can help control MRO costs. In the meanwhile, you can go back and read our previous posts about root cause failures (here and here).
Further Reading –
White Paper – Material Data Quality Project Handbook – Avoiding Pitfalls
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