In the face of a global health crisis and worldwide economic contraction, it is understandable that electronics makers might lose track of their maintenance, repair, and operations (MRO) supplies. While masks, gloves, face shields, goggles, and machine parts are essential to manufacturing, they do not contribute to the end product. However, failing to maintain adequate supplies of MRO can cause major production line problems and harm profitability.
Thankfully, OEMs, OMDs, and EMS providers can protect themselves from the fallout of MRO shortages by embracing digitization.
Why MRO Should be a Priority for Manufacturers
MRO is critical to electronic components production because it keeps workers safe as they carry out their duties on the line. As such, firms need to ensure that adequate supplies of protective gear are available to maintain regular operations. Running into an unexpected MRO shortage can add hours or even days to a tight manufacturing schedule. Worse off, it can and most likely will result in reputational damage.
With the coronavirus pandemic still causing issues worldwide, the demand for PPE has been at an all-time high. From schools to office environments stocking up, it certainly has caused a shortfall to normal avenues of procurement. This has served to underline the importance of keeping crucial MRO supplies on hand.
Companies that cannot supply everyone who comes onto the factory floor with proper face coverings (masks, respirators, and shields), risk cultivating a viral outbreak (in addition to other concerns normally in play apart from the pandemic). One unknowingly ill employee could unintentionally put a swath of workers on sick leave while forcing a temporary shutdown. As the outbreak has sparked massive global demand for certain protective gear, replenishment has been slower than ever and even more expensive.
OEMs, OMDs, and EMS providers need to consider the holistic financial implications of MRO stock-outs.
Supply Chain Management Review points out that MRO supplies can represent up to 40 percent of a firm’s procurement budget. Nevertheless, many organizations do not treat it as a critical aspect of their supply chain management. Instead, manufacturers decrease their profitability with frequent rush orders and bringing in excess quantities of unnecessary or duplicate equipment.
Because of the stakes involved, manufacturers need to utilize cutting-edge digital tools to facilitate seamless MRO management.
How Manufacturers Can Excel at MRO Procurement
The most effective way OEMs, ODMS, and EMS providers can optimize their MRO procurement efforts is by using an enterprise resource management (ERM) program. ERM software can track current quantities of production line gear and create alerts when items are nearing stock out. These platforms can also provide predictive insights that can improve future ordering and reduce the need for rush orders.
By utilizing an ERM solution, procurement specialists can also cut down on duplicate orders and dead inventory. McKinsey & Company reports firms that digitize their MRO management can reduce their operational costs by 15 to 20 percent.
Manufacturers can also gain more control over their MRO expenses by making use of an electronic components e-commerce marketplace. The platform gives manufacturers the ability to compare sources, lead times, and protective equipment types on one page. As many ERMs are interoperable with component marketplaces, procurement specialists can easily integrate them into their digital workflow.
Although crises like the pandemic make manufacturing considerably more challenging, organizations should not resist making changes when they occur. Adopting new methodologies amid turmoil can help businesses become stronger and more resilient than ever before. When it comes to MRO procurement, digitization allows companies to enhance efficiency and improve financial outcomes.
For more help with MRO procurement to maintain production lines, click here.