What is MRO and Why It Matters
MRO (Maintenance, Repair, and Operations) procurement involves sourcing of the products and services required to keep an organization running. These include spare parts, consumables (e.g., lubricants, cleaning supplies, office materials), hand tools, equipment, and repair services essential for plant operations and facility upkeep.
Though typically categorized as indirect procurement, MRO has a direct impact on equipment uptime, safety, and operational continuity. Historically under-managed due to its fragmentation, MRO procurement is now receiving increased strategic focus as organizations aim to reduce hidden costs, improve inventory control, and mitigate supply risk.
For procurement teams, MRO presents both a sourcing challenge and a value opportunity especially when addressed with structured processes and data-led strategies.
The Hidden Complexity of MRO Spend
MRO is one of the most structurally complex categories to manage. Key challenges include:
- Extensive SKU fragmentation – thousands of low-volume, highly diverse items
- Long tail of MRO suppliers – often used on an ad hoc basis for plant-specific needs
- Inconsistent or missing data – such as part numbers, specifications, and units of measure
- Lack of standardization – complicating taxonomy, analysis, and sourcing alignment
- Inventory imbalances – leading to stockouts or excess due to poor visibility or decentralized practices
These factors drive up total cost, create operational inefficiencies, and limit the impact of traditional sourcing efforts. Addressing these MRO sourcing challenges requires a shift from transactional purchasing to strategic sourcing that emphasizes visibility, control, and long-term value.
MRO Sourcing : From Tactical to Strategic
A modern MRO sourcing strategy moves beyond short-term cost savings. It focuses on process optimization, supplier collaboration, and total cost of ownership. Here’s a practical framework to support this shift
Fig 1 : Key steps of MRO Strategic Sourcing
- Data Cleansing & Classification : Begin by cleaning and classifying MRO data into logical categories such as MRO parts, OEM items, and MRO services. Use item descriptions or supplier information for categorization. Implementing industry-standard taxonomies improves consistency and supports more effective classification.
- Build a Representative Market Basket : Construct a market basket that mirrors actual consumption patterns. Include frequently ordered items, high-value SKUs, and products that span key geographies and categories. This enables meaningful supplier bidding and allows extrapolation of savings across broader tail spend.
- Gather Detailed Specifications : Ensure every item has clear and complete specifications. For example: Nitrile glove, size M, box of 100, manufacturer: 3M. Key fields should include manufacturer name, part number, material, unit of measure, and packaging format. This level of detail enhances bid accuracy and comparability, especially in catalog-based purchasing
- Address the Long Tail : While the market basket may include 1,000 core items, many organizations purchase tens of thousands of MRO SKUs annually. Share sub-category breakdowns and request catalog-wide pricing for non-basket items to extend value across the entire MRO spend
- Enable Expressive Bidding : Encourage suppliers to propose alternate or equivalent items where applicable. This promotes flexibility, innovation, and improved availability – as suppliers often have better market insight into comparable or more sustainable options.
- Negotiate Across Multiple Levers : Effective negotiation in MRO includes more than just unit pricing. Consider bundling services such as VMI, calibration, or vending machine replenishment. Leverage payment terms, volume tiers, and delivery SLAs to optimize the total cost of ownership for MRO parts.
- Include Continuous Improvement Commitments : Incorporate mechanisms like rebates or year-over-year cost reduction expectations tied to performance. These continuous improvement (CI) elements help align suppliers with long-term value creation.
- Drive Adoption Through Guided Buying : Strategic sourcing efforts only deliver results when consistently adopted. Use guided buying for MRO with punch-out catalogs, approval workflows, and buying controls to ensure that internal stakeholders purchase from contracted MRO suppliers reducing maverick spend and enforcing compliance.
Conclusion : Start Treating MRO as a Strategic Priority
MRO may not always be a high-profile category, but its strategic potential is undeniable. Organizations that apply discipline, structure, and data-driven practices can transform MRO from a fragmented cost center into a well-managed, value-generating category.
Whether tackling supplier fragmentation, standardizing specifications, or enabling eSourcing for MRO, procurement teams that approach this category strategically will see results in cost, continuity, and compliance. Applying a sourcing maturity model helps benchmark progress and define next steps in MRO optimization.
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