Introduction: MRO Procurement, the Key to Hidden Cost Reduction
In business operations, MRO (Maintenance, Repair, and Operations) procurement is an often overlooked area, yet it accounts for a significant portion of overall costs. From office supplies to materials required for equipment maintenance, efficient management of MRO items directly impacts a company's profitability. This article emphasizes the importance of MRO procurement and presents strategies for maximizing cost reduction and efficiency, contributing to the enhancement of corporate competitiveness. Optimizing MRO procurement creates management value that goes beyond simple cost reduction, improving operational efficiency and supporting strategic decision-making.
Core Concepts and Principles
MRO encompasses all materials, parts, and services necessary to support a company's production activities. Effective MRO procurement is based on the following principles:
Securing Cost Transparency
It is crucial to clearly identify the purchase costs for each MRO item and reduce unnecessary expenditures. Securing competitive unit prices through price negotiations with suppliers and streamlining the procurement process to reduce administrative costs are essential.
Optimizing Inventory Management
Maintaining appropriate inventory levels prevents increased storage costs due to excess inventory and production disruptions due to shortages. Establishing a demand forecasting system and increasing inventory accuracy through regular stocktaking is important.
Strengthening Supply Chain Management
Building a reliable network of suppliers and securing visibility across the entire supply chain are necessary. Ensuring a stable supply of materials and shortening lead times through close cooperation with suppliers is crucial.
Latest Trends and Changes
The MRO market has recently undergone the following changes:
- Accelerated Digital Transformation: Enhancing MRO efficiency through the use of digital technologies such as e-Procurement system implementation, data analysis-based demand forecasting, and smart inventory management is actively taking place.
- Supply Chain Diversification: Efforts to diversify the supply chain and foster the domestic MRO industry are being strengthened to respond to geopolitical risks and supply chain instability. LIG Nex1 plans to target the global MRO market in earnest by establishing overseas MRO branches, starting with the UAE.
- Sustainable MRO: MRO activities that consider ESG management, such as the use of eco-friendly materials, energy-efficient maintenance, and waste recycling, are becoming increasingly important.
The aircraft engine MRO market is expected to grow to $56.48278 billion in 2026 and is projected to reach $118.50719 billion by 2035 (8.6% CAGR).
Practical Application Measures
Specific practical measures to improve MRO procurement efficiency are as follows:
- MRO Item Standardization: Lower purchase unit costs and increase inventory management efficiency by standardizing various MRO items.
- e-Procurement System Implementation: Automate the procurement process and secure transparency by establishing an online-based purchasing system.
- Vendor Management Program Operation: Evaluate supplier performance and build long-term partnerships with excellent vendors.
- Strengthening Preventive Maintenance Programs: Prevent equipment failures in advance and reduce maintenance costs. Automotive manufacturers are improving MRO efficiency by introducing preventive maintenance programs and optimizing parts inventory management.
- Utilizing Data Analysis: Analyze MRO-related data to identify purchasing patterns and increase the accuracy of demand forecasting.
Hanwha Ocean has entered the MRO business through an agreement with the U.S. Navy, and iMarketKorea is contributing to cost reduction and efficiency improvement for companies by providing MRO purchasing agency services.
Expert Recommendations
💡 Technical Insight
Precautions When Introducing Technology: When introducing an MRO system, the possibility of integration with existing systems should be fully reviewed. In addition, it is necessary to increase system utilization through user training and to thoroughly prepare for data security.
Outlook for the Next 3-5 Years: AI-based MRO solutions are expected to become more widespread. AI can dramatically improve MRO efficiency in various fields such as failure prediction, inventory optimization, and supply chain management. In addition, the MRO industry is expected to transition to a cloud-based service model, providing more flexible and scalable services.
Conclusion
MRO procurement is key to hidden cost reduction and operational efficiency improvement for companies. MRO procurement strategies should be established reflecting the latest trends such as digital transformation, supply chain diversification, and sustainable MRO, and practical application measures should be actively implemented. It is important to strengthen MRO competitiveness through the introduction of AI-based solutions and the transition to cloud-based service models, and to build an MRO system that supports strategic decision-making. Ultimately, MRO procurement optimization will be a core strategy that contributes to improving corporate profitability and sustainable growth.