Outsourcing solutions
November 1st 2011

The efficient management of maintenance, repair and operations through outsourcing can increase profitability, says Paul Lynch, commercial director of ERIKS

There are many ways to handle your maintenance, repair and operations duties and, if you get the balance right for your business and adopt the most efficient options, you could save a lot of time and money.

One cost-saving option is to outsource your purchasing because, if you choose an established and experienced partner, it won't just be buying on behalf of your business but also for its own activities. Your outsourcing partner will therefore be able to negotiate competitive prices from a range of suppliers and may even be able to negotiate lower delivery charges.

Increased inventory control can also bring down MRO costs, but this is a more complicated activity and needs to be carefully planned; if reducing an inventory causes downtime because certain parts are not readily available, costs will actually rise rather than fall. However, as long as plant-critical and fast-moving items are identified and lead times properly understood from the outset, the potential to cut costs is strong.

The key to unlocking these savings is to choose an expert MRO provider that can assess and organise your stores, identify and prevent potential errors, and optimise efficiency. In some cases, it may be expedient to employ an outsourcing partner to handle your entire stores operation, including the supply of onsite staff. The cost of outsourcing the whole operation is outweighed by a number of important factors, not least the fact that staff supplied by your partner will be experts in stock and warehouse management with good product knowledge. A complete outsourcing option can also provide the effective monitoring and reporting that enables efficient stock control and supplies invaluable management information. Such information might, for example, highlight a sudden increase in the use of a particular spare part, leading to the identification of a potential problem on a machine before it becomes critical. This knowledge can be applied in conjunction with predictive maintenance procedures to bring significant improvements to production line availability.

Good store management is critical, as anyone who has made their way to the stores and discovered that an urgently required replacement item is missing or unusable knows only too well. To avoid costly downtime, vital parts need to be readily available and in good working order. An easily accessible, well organised, on-site store, full of well-maintained parts, saves time and money. A poorly managed store presents a catalogue of problems; components can end up sitting on the shelf for six months in the wrong conditions until they are in an unusable state, while busy engineers can often be too busy to update the paperwork when they collect replacement parts, leaving no record that the store item in question now needs to be replaced.

A good outsourcing partner can evaluate and sometimes redefine what is and isn't a critical part, enabling you to operate more compact and efficient stores. It can not only source components but can replace, repair, or simply manage the problem until a planned shut-down is due. Crucially, the right partner will also keep looking for opportunities to optimise MRO on an ongoing basis, making sure that you get the best out of the relationship.

To illustrate how all this works in practice, let's look at what happened when a large food manufacturer chose ERIKS as its MRO outsourcing partner. It wanted to reduce its MRO costs while increasing productivity and a principal objectives was to streamline the system for requisitioning spares. ERIKS Integrated Solutions replaced the existing paper-based stores management system with its own paperless software solution. Using barcoding, ERIKS enabled the 9500 stock items to be traced accurately, not only streamlining the system, but capitalising on the data gathered to deliver to the food manufacturer a flow of highly useful management information. The outsourcing partnership has also allowed the manufacturer to optimise its purchasing position and reduce its admin burden.

This example shows that outsourcing can deliver a host of benefits. So, whether you consider working with the assistance of a local service centre or opting for a fully outsourced solution, getting some help with MRO could make a critical difference to efficiency levels and, ultimately, to profitability.

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