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This can be ranked and totaled to develop and maintain a productive inventory reduction and control program. Figure 3-1 shows a partial view of an actual database download for a typical industrial organization. Clearly, no organization will maintain an MRO database as elaborate or comprehensive as described in this chapter. This presentation 36 Figure 3-1 Abbreviated View of a Typical Database Joel Roth is intended as a template for your guidance, to be adapted to your objectives and resources.

Their estimates ranged from eight percent to 30 percent, and averaged 19 percent. As a result, a key objective for the power company’s program was to achieve a reduction of 19 percent in MRO costs, per million KWH produced, over three years. ) Many other suitable objectives might be considered besides reduction in MRO procurement costs per unit of production. Here are some typical examples: • • Reduce the number of SKU’s by 35 percent over 18 months through product and brand consolidation. Reduce the number of purchase orders by 35 percent over 24 months by vendor and product consolidation.

He delivers, you receive. He bills, you pay (hopefully). Therefore, each partner’s costs are directly affected by the other. For instance, a purchaser who buys “hand to mouth,” placing many small orders instead of less frequent large orders, is more costly (and less attractive) to the supplier. A supplier who creates too many back-orders will multiply the costs of his customer in receiving, expediting, stock-outs, bill paying and other areas. For the end user, the majority of MRO material procurement expenses are hidden.

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