STUDENTS' CORNER - 153

Though MRO inventory takes generally a very big slice, say 35-40% , from the annual budget, it is not given its due attention and planning, experts say.

We have to consider now the fourth type of inventory: MRO Goods.

MRO stands for Maintenance, Repair and Operations. This inventory is dealing those items that cannot be discussed under the other types of inventory:  Raw Materials, Work-in-Process and Finished Goods. MRO deals with goods that are used in the production but they are not part of the finished goods, finished product. 

Let us take Maintenance.  Everything connected with the workplace as well as the work must be maintained lest ill-maintained workplace and machineries required for the process of production will doom the enterprise to final loss and failure in business. And to maintain the company has to spend continuously and sometimes considerably depending on the kind of business.  You need mops at least to keep the place clean and, remember, the mops are never part of the finished product of the company. 

All the tools used in repair also do not form parts of the finished product.  For example; repair tools like screw drivers and wrenches, hammers so on.

Of course, at present with digitalization being a universal phenomenon, your company must have smart gadgets like smart phones, computers, laptops and necessary furniture. Again all these things cost some real money to the company. We therefore understand that under Maintenance some fundamental categories like consumables, equipments and technology-related tools do find place.

MRO also has its inventory. The very goal of any inventory is storing things your company needs for the process of production, to put it very simply.  Over-storing or under-storing affects the business financially. Buying in excess eats into your finance making it scarce when you most need it; buying less affects ultimately the supply of your product to the customer exposing you to the threat of a customer exit.

You may remember we are discussing the drivers of supply chain which are generally five: production, inventory, location, transportation and information. We have spent some time on the first two and now in our next session, we shall go to the next driver: Location.