Many Companies do not, so they pay more!
Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.
MRO products are those goods and services that a company purchases which are not used in production or offered for resale. Typical MRO purchases include manufacturing supplies, computers and office supplies.
Maintenance, repair, and operations (MRO) or maintenance, repair, and overhaul involve fixing any sort of mechanical, plumbing or electrical device should it become out of order or broken (known as repair, unscheduled or casualty maintenance). It also includes performing routine actions which keep the device in working order (known as scheduled maintenance) or prevents trouble from arising (preventive maintenance). MRO may be defined as, “All actions which have the objective of retaining or restoring an item in or to a state in which it can perform its required function. The actions include the combination of all technical and corresponding administrative, managerial, and supervision actions.”
MRO operations can be categorized by whether the product remains the property of the customer, i.e. a service is being offered, or whether the product is bought by the reprocessing organization and sold to any customer wishing to make the purchase. (Guadette, 2002)
The former of these represents a closed loopsupply chain and usually has the scope of maintenance, repair or overhaul of the product. The latter of the categorizations is an open loop supply chain and is typified by refurbishment and remanufacture. The main characteristic of the closed loop system is that the demand for a product is matched with the supply of a used product. Neglecting asset write-offs and exceptional activities the total population of the product between the customer and the service provider remains constant.
If you like to learn more about how SafeSourcing can assist in reducing your MRO costs, please contact a SafeSourcing customer services associate.