Coronavirus and the resulting global economic slowdown will continue to take its toll on the maintenance, repair, and operations (MRO) supply chain. SDI has created a webinar to help manufacturers maintain as much continuity as possible in their machine part and maintenance material supply. Webinar presenter Brian Harmon, SDI’s director of procurement, discusses what questions you should be asking across your facilities and some simple steps you should consider to help mitigate the impact of potential supply chain disruptions caused by Coronavirus.
What’s at Stake
Harmon presents a strategy focusing on four key areas of MRO supply chain management: change, demand, supply, and sourcing. He notes that MRO is no stranger to upheaval. In the last 20 years, the industry has overcome challenges presented by Y2K, 9/11, SARS, and other technical failures, manmade disasters, and natural phenomena. Coronavirus is different, he contends. The current pandemic affects businesses on a global scale and has the potential to last months. Moreover, compared to disruptions from the early 2000’s, American firms have come to rely heavily on suppliers in China and Europe. This dependence on overseas manufacturers coupled with logjams at domestic docks, worker shortages, and extended shipping times, requires companies to be more deliberate in securing the MRO supplies they need to see them through the crisis. Exacerbating the problem, suppliers’ pre-Coronal ability to deliver just-in-time materials and 24-hour shipping had reduced the need for manufacturers to carry large stocks of replacement parts and maintenance materials. The virus has turned what used to be two-day fulfillment times into lead times of two weeks or more.
MRO professionals need to think longer-term, Harmon says, and executives must include equipment maintenance and repair as they make decisions to guide their companies through the pandemic. This requires a shift in the way firms view MRO and leads to Harmon’s first action framework for managing MRO in the time of Coronavirus:
Coronavirus is changing the way the world does business. MRO is not immune. To cope and remain competitive, MRO teams first need to identify the risks the virus poses to supply chain continuity, from sourcing and procurement to receiving and handling inventory, to assuring quality and paying for supplies. Harmon explains that, owing to its long tail, MRO spend typically receives less management attention than direct expenditures. But the current situation demands MRO be brought into the light. The webinar explains how spend transparency will allow firms to assess long-term demand so they can extrapolate order times and make arrangements for alternate sources if current suppliers cannot meet their needs.
Companies that have gotten by with a “break and fix” maintenance and repair strategy no longer will be able to manage without a more proactive approach, Harmon says. Preventative and predictive maintenance that maximizes equipment uptime and reduces the need for emergency parts replacement will be crucial during the outbreak. The seminar shows how companies can implement policies that emphasize reusing and refurbishing components rather than discarding and replacing them. Plants should consider retrofitting machines to reduce their reliance on customized critical parts. Machines that use interchangeable, off-the-shelf parts will experience less impact from the depressed business climate and can share limited inventories across facility locations.
The SDI webinar explains how your supplies’ country of origin will come into play, where it hadn’t been much of a concern pre-Corona. Even if you typically purchase spare parts from domestic distributors, those distributors may not be able to obtain the parts from OEMs based in Asia or Europe. To compensate for expected delivery delays, you may want to increase minimum order quantities, accelerate reorder trigger points, and keep a higher level of safety stock for critical SKUs. Harmon also discusses ways to keep your supplies secure and discouraging waste. He recommends staffing your storeroom at all times and locking away high-demand items. Vending machines that track usage by department and individual employees have been shown to reduce consumption by as much as 30 percent.
Finding and procuring critical supplies may require your company to use unorthodox methods, Harmon notes. He advises companies to consider delegating purchase authority to additional employees, perhaps loosening controls and lengthy approval processes. Search out sourcing options you may not have considered before – online marketplaces, machinery refurbishers, used equipment dealers, etc.
Thoughtfulness and planned MRO supply procurement can ensure your company survives the Coronavirus pandemic. The webinar is designed to help you minimize the impact the crisis exerts on your supply chain. SDI offers a range of other services that can streamline and secure your supply chain. Contact us to learn more.