Executive Briefings

How to Harness the Power of Your MRO Supply Chain

How important are maintenance, repair and operational items in the energy industry? Well, they are what keep a plant functioning on a daily basis, says Mark Johnson, vice president for energy and chemical industries at Exel. In fact, the MRO supply chain is critical for companies in those sectors today.

That's why with all the pressure on supply chain executives to keep costs under control that there is so much attention and focus on the MRO end of things. "The focus today is to become efficient," Johnson says, "and whereas in the past the gaze of these executives was not on MRO, that's changing. Economies are globalizing, supply chains are globalizing, and these indirect or MRO supply chains are extending and becoming global. We see this in these particular industries, where oil and gas used to be in locations that were fairly easy to reach. But now they often are in areas that are hard to reach. So the cost of supply has a focus and intensity that has just increased over the years."

In many ways the challenges facing the MRO executive are the same as always; and so are the responses. Materials management is run by a maintenance organization, usually in collaboration with the procurement department. And as always, both of these organizations have very intense agendas. "Imagine if you're the party responsible for maintenance, the last thing you want to do is jeopardize the supply of some material. It could be relatively inexpensive, but you don't want to jeopardize a task because you don't have that supply. If you don't have a lot of confidence in that supply chain, you tend to acquire things either in an expedited fashion at the last minute or in a fashion where you have confidence that you can access that supply. So we often find what we call 'squirrel piles,' where that maintenance person is making sure his supply is not interrupted. That's not exactly the healthiest supply chain."

The MRO executive wants to increase the reliability and performance of the supply chain, but what does a successful MRO supply chin look like?  The answer varies depending on the industry. But there are some parallels. In the oil and gas sectors, the MRO supply chain is not completely unlike that in automotive or retail, Johnson says.  A successful supply chain starts with a planning process that involves the maintenance manager, sourcing and procurement, transportation, inventory management, and information technology.

What can one expect? "At a high level," Johnson says, "we've seen a 20-percent cost improvement come in a variety of areas. Inventories can come down because the performance of the supply chain itself improves."

To view video in its entirety, click here

How important are maintenance, repair and operational items in the energy industry? Well, they are what keep a plant functioning on a daily basis, says Mark Johnson, vice president for energy and chemical industries at Exel. In fact, the MRO supply chain is critical for companies in those sectors today.

That's why with all the pressure on supply chain executives to keep costs under control that there is so much attention and focus on the MRO end of things. "The focus today is to become efficient," Johnson says, "and whereas in the past the gaze of these executives was not on MRO, that's changing. Economies are globalizing, supply chains are globalizing, and these indirect or MRO supply chains are extending and becoming global. We see this in these particular industries, where oil and gas used to be in locations that were fairly easy to reach. But now they often are in areas that are hard to reach. So the cost of supply has a focus and intensity that has just increased over the years."

In many ways the challenges facing the MRO executive are the same as always; and so are the responses. Materials management is run by a maintenance organization, usually in collaboration with the procurement department. And as always, both of these organizations have very intense agendas. "Imagine if you're the party responsible for maintenance, the last thing you want to do is jeopardize the supply of some material. It could be relatively inexpensive, but you don't want to jeopardize a task because you don't have that supply. If you don't have a lot of confidence in that supply chain, you tend to acquire things either in an expedited fashion at the last minute or in a fashion where you have confidence that you can access that supply. So we often find what we call 'squirrel piles,' where that maintenance person is making sure his supply is not interrupted. That's not exactly the healthiest supply chain."

The MRO executive wants to increase the reliability and performance of the supply chain, but what does a successful MRO supply chin look like?  The answer varies depending on the industry. But there are some parallels. In the oil and gas sectors, the MRO supply chain is not completely unlike that in automotive or retail, Johnson says.  A successful supply chain starts with a planning process that involves the maintenance manager, sourcing and procurement, transportation, inventory management, and information technology.

What can one expect? "At a high level," Johnson says, "we've seen a 20-percent cost improvement come in a variety of areas. Inventories can come down because the performance of the supply chain itself improves."

To view video in its entirety, click here