By Richard L. MacInnes, Stephen L. Pearce
"Strategic MRO is the 1st functional precis concerning the demanding situations dealing with businesses attempting to increase their final analysis. Strategic MRO supplies a concise evaluate of those demanding situations and the engineered techniques that completely lessen the prices linked to plant operations and MRO. This publication might be required analyzing for all procuring, plant upkeep, and engineering personnel."
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Additional resources for Strategic MRO: A Roadmap for Transforming Assets into Competitive Advantage
Demand in excess of actual consumption is created in the industrial supply chain by a variety of mechanisms. This excess demand not only creates excess inventory in the channel, but also creates shortages of other materials. When manufacturing capacity is used to create these excesses, it is not available to make other items that are in short supply. Bottom line: the right parts aren't built simply because of the timing mismatch caused by not knowing what is actually being consumed. There are several contributing factors to the excess demand dilemma.
These are all positive outcomes. The cost savings mistake comes when a figure of 40% of the yearly dollar value in past maverick purchases is recorded as the cost savings attributable to the new purchasing procedures and technology. Sure, the new system will help people procure materials from the right source at the negotiated price in the future. Our point: the material will still be needed and bought in the future. The cost savings is not the value of the maverick purchases prevented. It is the difference in price between what was paid in the past and what will be paid in the future when bought on contract from the correct suppliers.
Thus, time is lost and labor is employed trying to determine whether or not parts needed for a repair are available. If parts must be ordered, notification that the parts have been received by the ERP system may be a manual process. Further time is lost. 46 Chapter 3: Islands of Pain Chapter 3: Islands of Pain 47 Most ERP systems cannot associate MRO material usage with particular assets. This means material usage can only be tracked at the aggregate level. Tracking consumption at the aggregate level means future demand predictions may include quantities for machines that a plant no longer uses simply because past usage for these parts exists in the historical usage database.