Petrochem/Utilities Industry Trends

Building a Better MRO Database

Issue Table of Contents

Making the Most of Strategic Sourcing With the Right Information Building a Better MRO Database A Story of Database Consolidation: Q&A with George Daniell Related Standards and Publications

How many ways does your company describe a four-inch ball valve? If the answer is more than one, you may be throwing away money, says Jim Crouch, practice director for IHS Intermat Solutions, a leader provider of parts-optimization tools and services.

“An effective supply chain needs to be built on clear and consistent information,” says Jim. Yet most organizations’ maintenance, repair, and operations (MRO) inventory databases are anything but consistent, and are instead comprised of duplicate records and inconsistent and non-comparable information. This leads to a host of problems. For example, maintenance workers and engineers can’t find the parts they need, often because they don’t know how they’re described in the system, so they purchase additional parts, creating excess inventory. In addition, procurement managers receive requisitions from different business units for items, and since the descriptions aren’t consistent, they aren’t able to tell if it’s the same item or not. Instead of buying one item in bulk, they end up buying small quantities from a number of vendors—and at varying prices.

It also causes issues as companies try to work with their suppliers. “If the description of the part isn’t easily interpreted by the supplier, it can lead to delays or inaccurate fulfillment of orders, or even increased downtime for equipment because the maintenance team doesn’t have the right part at the right time,” Jim explains.

To solve these problems, IHS Intermat Solutions created the Standard Modifier Dictionary (SMD), a cataloging methodology designed to provide consistent and repeatable rules for classifying and cataloging inventory, including guidelines on how to name items and describe them in order to ensure consistent data. It’s now the most widely implemented standard for describing industrial MRO parts and supplies.

In addition, IHS Intermat Solutions offers Struxure, an inventory catalog authoring and management application that leverages the SMD taxonomy to help companies create and maintain consistent and accurate MRO parts records. It lets companies save money by helping them to identify duplicate records, avoid false stock-outs, simplify item searches, and reduce equipment downtime by ensuring they have the information they need to order the right parts. Struxure isn’t a replacement for enterprise resource planning (ERP) or enterprise asset management (EAM) systems; instead, it enhances organizations’ systems by forming the foundation for a consolidated, intuitive, and searchable MRO database.

Despite the availability of these tools, many companies don’t realize they exist or may not understand their value. “People will say this is a data-entry problem, but hiring temporary data-entry workers won’t make the descriptions any better. It will just reorder them,” Jim points out. For most companies, duplicate records are one of the biggest signs of an issue, and most have five to eight percent duplication, but he’s seen situations in which the duplicate records were upwards of 25 to 40 percent.

“One customer had 19 different items and 19 different sources for WD-40,” he says. “They had various terms for it such as lubricant, degreaser, and solvent and were buying it in all sorts of different size containers.” By cleansing its part records, the company was able to consolidate its requirements for WD-40 into a more manageable—and more affordable—purchasing strategy.

Duplicate records are only one symptom of a problematic MRO system. Other signs to look for include long or frustrating user-initiated searches, a high number of new inventory records added weekly or monthly, an increased incidence of purchases made outside the usual procurement channels—also known as maverick purchasing—and low or decreasing inventory turn rates. In addition, acquisitions and mergers often signal opportunities for MRO inventory improvements. “Even if two companies have done a good job of managing their inventory on their own, with a merger, you suddenly have two different methodologies for describing materials and therefore have inconsistent information,” Jim says.

For more information on IHS Intermat Solutions products and services, visit www.intermat.com.