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MRO Glossary: Common Terms to Become Familiar With

Knowing the terminology of a specialty field such as MRO is essential when working with service providers. In Maintenance Repair and Operations (MRO), there are specific terms that indicate certain processes and functions that are crucial to operations.

Why master MRO terminology?

When searching for effective MRO services, being able to speak the language is key. It is important to be able to clearly outline what is needed and the processes used to accomplish the overall goals. Knowing the terminology will allow you to better understand the thoughts and processes provided by the MRO service provider and let you articulate exactly what your company is looking to accomplish. This allows both parties to see eye-to-eye and understand the required steps that must be fulfilled.

Why SDI?

SDI has provided a glossary of common terms that will assist you in better understanding the business and benefits that are offered. As an expert in the field, SDI specializes in providing Enterprise MRO services to connect your MRO supply chain.

For more information on how SDI can assist in improving the processes of your organization, contact a representative today!

Term Definition
ABC Inventory Policy Collection of prioritizing practices to give varied levels of attention to different classes of inventories. For example, Class A items typically make up 15 to 25 percent of stock items but 75 to 85 percent of inventory value. Class C items, might be 60 percent of stock items but only 10 percent of the inventory value. Class B items would be somewhere between A and C items.
Asset Management The systematic planning and control of a physical asset resource throughout its economic life; the systematic planning and control of a physical resource throughout its life. This may include the specification, design, and construction of the asset, its operation, maintenance and modification while in use and its disposal when no longer required.
Assets The physical resources of a business, such as plant equipment, facilities, building systems, fleets, or their parts and components.
Bill of Materials (BOM) List of components and parts for an asset, usually structured in hierarchical layers from gross assemblies or major end items to minor items down to component parts; a list of all parts.
Blanket Purchase Order (PO) A purchase arrangement in which a buyer contracts with a supplier to take delivery of an agreed upon quantity of goods at a specified price over a fixed period of time.
Carrying Costs Expense of handling, space, information, insurance, special conditions, obsolescence, personnel and the cost of capital or alternative use of funds to keep parts in inventory. Also referred to as holding costs.
Consumables Suppliers such as fuel, lubricants, paper, printer ribbons, bulk fasteners, cleaning materials and forms that are exhausted during use in operation and maintenance.
Corrective Maintenance (CM) Unscheduled maintenance or repair actions, performed as a result of failures or deficiencies, to restore items to a specific condition. Maintenance is done to bring an asset back to its standard functional performance; any maintenance activity which is required to correct a failure that has occurred or is in the process of occurring. This activity may consist of repair, restoration or replacement of components.
Critical Spare Parts or materials that are not used often enough to meet detailed stock accounting criteria but are stocked “insurance items” because of their importance to down time and/or the lead time involved in procuring replacements.
Cycle Count The scheduled process of counting inventory based upon usage and criticality on a daily basis. The cycle count process includes the counting, reconciling and inventory level adjustments.
Demand Requests and orders for an item. Demands become issues only when a requested part is given from stock.
Downtime (DT) The time that an item of equipment is out of service as a result of an equipment failure. The time that an item of equipment is available, but not utilized is generally not included in the calculation of downtime.
Emergency Maintenance A condition requiring immediate corrective action for safety, environmental, or economic risk, caused by equipment breakdown.
Fill Rate The percentage of Storeroom parts requests fulfilled. The fill rate will be calculated by the numbers of successful material issues divided by the number of storeroom material requests.
Floorstock A category of stock items (nuts, bolts etc…) that are low cost and do not warrant stringent inventory control. These items may be supplier managed and will be billed to the client upon receipt. They are normally placed/staged in an easily accessible area outside the SDI storeroom allowing the client unrestricted access. These items do not require issue or return material authorization (RMA) documentation.
Inventory Physical count of all items on  hand by number, weight, length, or other  unit of measure; also any items  held in anticipation of future use.
Key Performance Indicators (KPI) A select number of key measures that enable performance against targets to be measured.
Lead Time Allowance made for the amount of time estimated or actually required to accomplish a specific task such as acquiring a part.
Maintenance The function of keeping items or equipment in, or restoring them to, serviceable condition. It includes servicing, test, inspection, adjustment, removal, replacement, reinstallation, troubleshooting, calibration, condition determination, repair, modification, overhaul, rebuilding and reclamation. Maintenance includes both corrective and preventative activities.
Material Storage Location A defined space in a storeroom where an item physically resides once received until a disbursement order is placed for the item. Also can be referred to as a Bin Location.
MRO Term for maintenance repair operations and generally used as MRO items referring to parts, materials, tools and equipment used in the maintenance process.
Non-Repairable Parts or items that are discarded upon failure for technical or economic reasons.
Non-Stock Item An item that is not tracked or inventoried in the SDI Storeroom. Non-Stock items are also referred to as “Spot Buys” or “Free Form Text Buys”.
Obsolete Designation of an item for which there is no replacement. The part has probably become unnecessary as a result of a design change.
Planned Maintenance Maintenance carried out according to a documented plan of tasks, skills and resources; any maintenance activity for which a pre-determined job procedure has been documented, for which all labor, materials, tools and equipment to carry out the task have been estimated and their availability assured before the commencement of the task.
Preventive Maintenance (PM) Maintenance carried out at predetermined intervals or to other prescribed criteria, and intended to reduce the likelihood of a functional failure.
Purchase Order (PO) A commercial document issued by a buyer to a seller indicating the type, quantities and agreed prices for products or services that the seller will provide to the buyer. The PO will also specify additional conditions such as terms of payment, liability and freight responsibility and required delivery date.
Purchasing Requisition A formal request to initiate the purchase of the required goods or services. A purchase requisition provides the description, justification, and appropriate account assignment (cost object and cost element) for a proposed purchase.
Repairable Spare Part or items that are technically and economically repairable. A repairable part, upon becoming defective, is subject to return to the repair point for repair action.
Safety Stock Quantity of an item, in addition to the normal level of supply, required to be on hand to permit continuing operation with a specific level of confidence if the supply is late or the demand suddenly increases.
Shutdown The period of time when equipment is out of service.
Shutdown Maintenance Maintenance done while the asset is out of service, as in the annual plant shutdown.
SKU Stock Keeping Unit, a warehouse inventory management term for an individual stock item carried in inventory.
Stock Item An item identified by a unique series of numbers and letters that the inventory system will automatically track and replenish. Stock items are items that are kept in the SDI Storeroom.  The system also will automatically suggest that you purchase stocking items based on the demand for the item and the inventory information defined for the item.
Stock Out Occurs when an item is requested from the SDI Storeroom via pick ticket, issue request, etc., but is not available/in stock in the storeroom.
Total Cost of Ownership (TCO) The total cost of your MRO assets includes not only the price paid for parts, but also takes into account cost control, inventory optimization, equipment efficiency and plant operations.
Unplanned Maintenance Maintenance done without planning or scheduling; could be related to a breakdown, running repair, or corrective work. Consists of any maintenance activity for which a pre-determined job procedure has not been documented, or for which all labor, materials, tools and equipment required to carry out the task have not been estimated, and their availability has not been assured before commencement of the task.
VMI – Vendor Managed Inventory Inventory replenishment arrangement whereby the supplier either monitors a subset of the storeroom inventory with its own employees or receives stock information from the storeroom. The vendor then refills the stock automatically, generally issuing an invoice against a blanket purchase order. “Free Issue” storeroom items are usually included in VMI programs.

Success Story

It takes a progressive manager to push the organization to look at indirect spend and managing it in a different way - but once you see it, then you realize the opportunity.

SDI at Work

In the third post in this series on MRO As-a-Service by Spend Matters, Pierre Mitchell and Michael Lamoureux talk about how managing MRO as a process delivers benefits from efficiency to effectiveness and beyond to an evolutionary phase. The next generation of value, MRO-as-a-Service, helps organizations build intelligent, agile, scalable and integrated supply chains (direct and indirect).

The project team has worked its way through Define, Measure, Analyze, and Improve. It’s time to begin the Control phase. The key stakeholders gather to evaluate the solution as implemented and create a plan to sustain the improvements. The goal is to standardize the improved processes, establish an audit schedule and schedule periodic follow-up to identify additional opportunities for improvement.