MRO Inventory, its significance in any organisation and how newly emerged company InLiq is helping in managing excess MRO inventory and surplus equipment.
What is MRO Inventory? Why it is required to be optimised by liquidating.
Any company which runs an operation requires to keep some stock in their ware houses to maintain their assets operations by which the company is producing goods. There are different purposes for keeping these in stock like different type of maintenance such as preventive, predictive etc or for breakdown or repairs and for smooth operations of assets like oils & grease etc. Collectively these inventory is called MRO inventory in which MRO stands for Maintenance, Repair & Operations. Unlike the inventory which is generally interchangeably used for Finished Goods stock or Raw material stock in most industries, MRO inventory keeps significantly lower effect on company’s balance sheet. However, it is much important to liquidate the MRO inventory as study shows that in most companies it is as high as 5% of total revenue and the basic problem is that the company’s owner/board is not so aware of this. It must be taken care after identification of excess MRO inventory as soon as possible to infuse extra cash as working capital which will subsequently help in the company’s other developmental activities.
How Company build high MRO inventory?
Negligence is the short answer. Long answer is it’s the controls and practices that MRO inventory is built over a period. Traditional inventories like raw materials, WIP inventory, Finished Goods inventory, etc are subjected to cutting-edge demand forecasting and costing analysis as they control the major cost part on a company’s balance sheet and working capital. But MRO inventory usually isn’t. Rarely is MRO inventory on-hand or usage measured. So, it’s rarely optimized. I wonder why. MRO inventory management is downgraded to a lower status for a few reasons may be and any of these are not acceptable.
-
- Due to lower turnover - typically once in a year or more.
- MRO inventory as purchased on the spot due to urgency in most cases.
- Over ordering - By Mistake Due to wrong calculation of requirement
- Intentional more buffer stock of long lead items to avoid production loss
- Poor approval system
- Drop of project due to business requirement and part or full procurement is done
- Inventory management issues
- Multiple codes of single items
- Shop floor inventory (No account inventory in the plants)
- No return policy of the Manufacturer/Traders/Suppliers to the industries
Unaware management about the cost of surplus material, they don’t want to distract maintenance employees from planned maintenance and repair activities with inventory management.
The same management doesn’t see the other side of bulk-discount and temporary so called “money-saving” which is the huge inflow of MRO inventory which are decreasing its value over period and some of them in Zero due to obsolescence.
How InLiq is the revolutionary solution for excess or surplus MRO inventory and equipment problem?
Excess MRO inventory or equipment not only block the cash in any organisation, it also depreciates over the time and need liquidation once it is identified as surplus or excess. The liquidation helps in cash inflow which company can use in maximise the operation/production which in turns benefit the company. In India, so many small to large scale company scrap the surplus material/equipment due to various reasons. This surplus material/equipment are sold on unit weight basis or some similar mass-based trades are done. Either they are melted down or landfilled which eventually affect the environment. InLiq offers the better way to reuse surplus/excess material which leads to energy conservation by avoiding scrapping and melting and less energy used to make new equipment/material where excess/surplus equipment/material would suffice. Further, the seller can divest equipment/material to recover the investment, on other hand the buyers can bargain and get the required material in significantly lower cost compared to new one. This way industry benefits and nature wins...!!
How InLiq is being major revolutionary company to circular economy?
We all know, the circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended. In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are kept within the economy wherever possible. These can be productively used again and again, thereby creating further value. InLiq is the solution which provides the excess/surplus inventory one more life and acts as a fuel to circular economy.
