Manufacturers are writing off millions of pounds due to MRO supply chain issues, according to a new report from ERIKS.
Specialised Industrial Service Provider ERIKS has launched the Maintenance, Repair and Operational (MRO) Supply Chain report in association with the Institute of Engineering & Technology. Compiled following a major survey, the report covers MRO procurement, the engineering stores function, and the MRO supply chain, highlighting several critical insights crucial for operational efficiency.
Among the revelations the report makes, for the first time a direct link is made between unscheduled downtime and the operation of the engineering stores, the supply chain, and the MRO procurement function. The survey, which raised close to £5000 for three charity’s including Cancer Research, clearly demonstrated that in 2023 the main causes of downtime in UK manufacturing businesses was due to spares availability and lead time issues.
A further revelation covered in the report is that UK manufacturers businesses are collectively writing off millions of pounds of MRO stock every year. Comparisons between data collected in 2016 and 2023 show that oversight in this area has declined markedly and that stockpiling, undertaken as a reaction to Brexit, the global pandemic and more recently the conflict in Ukraine, has resulted in businesses both tying up cash in inventory and writing that investment off as products age or go unused. The serious issue of MRO product obsolescence is covered in detail in the report.
Another finding of the report highlights the issue of ‘squirrel stores’. These ‘squirrel stores’ occur when engineers build their own private stock of MRO equipment. While seemingly innocuous the presence of ‘squirrel stores’ sadly brings into focus the lack of trust that engineers have with their stores and purchasing teams and the report also looks at the ramifications for the accuracy of data about a sites’ performance. With 55% of respondents declaring this as an issue, the report looks at the trend and suggests some potential solutions.
As well as highlighting, through data analysis, the problems that are being faced by UK businesses the report also provides some guidance as to how improvements can be made. Paul Lynch, Chief Commercial Officer for ERIKS in the UK and Ireland says, “Some of the findings, when we compared 2016 data to that found in the 2023 survey, were a little sobering. The direct link to downtime and the sheer monetary value of stock being written off were really astounding. However, what was positive was that most businesses were not accepting the situation and doing nothing but were exploring potential improvements, such as outsourcing, and looking to improve their operation by recognising the value and embracing technical and supply chain knowledge directly available to them.
“The fact is that the whole MRO supply chain, procurement and engineering stores area is one that businesses have tended to ignore in the past. This report, we believe, highlights the danger of doing that and brings to the fore the huge gains if this area is brought up to World Class standard.”
For further insight download the full report for free.
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