Avoiding MRO management pitfalls with MDM – 7
As we approach the final phase of this long-running blog series, it will be a good idea to visit the previous posts to know more about the basics of MRO management and root cause fails. This post deals with the last two process failures before we wrap up everything next week and see how dirty MRO data affects an organization’s most important resource – its people.
We have already discussed spend management and forecasting. Let’s look at some more processes liable to fail due to MRO management lapses –
5. Operating Costs – Compared to direct materials spend, MRO spending can seem like a drop in the bucket. But start adding up costs related to bloated MRO inventories and the picture changes dramatically. Costs such as –
- Real estate needed to house bloated MRO inventory.
- Internal storage capacity—bins, cribs, shelves and so forth—to organize it.
- Equipment, such as lift trucks, to move it.
- Hardware/systems—computer terminals, scanners, barcode mechanisms, labels, and so forth—to account for it.
- Labor to receive, sort, move items in and out of inventory (both physically and either digitally or on paper).
- Conduct physical audits of inventory while carrying it on the books year after year.
6. Cash Management – Cash tied up in inventory or spent on non – or negative value add work is not earning returns or investing in innovation, capital expansion, future business development and growth.
The below image depicts some of the many factors that might be used to free up cash and improve an enterprise’s liquidity. The factors in light blue are those that become useless for cash management if MRO data is duplicated or dirty.
Next week’s focus will be on the people that make up an organization and we’ll see how MRO management failures can hamper their performance and productivity.
Further Reading –
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