A Beginner’s Guide to Maintenance, Repair and Overhaul (MRO)

What Is Maintenance, Repair and Overhaul (MRO)?

A thorough understanding of Maintenance, Repair and Overhaul (MRO) is mission-critical for maintenance professionals — MRO directly impacts KPIs like equipment downtime, operational equipment effectiveness (OEE) and work order completion rate. It’s even important from a financial point of view. MRO spend is typically about 6 to 10 percent of a plant’s total, which means it can greatly impact profitability.

In this guide, we explain the meaning of MRO, MRO strategies and how to manage MRO inventory.

What Does MRO Mean?

MRO involves activities that keep your equipment and machinery running smoothly. These include:

• Maintenance: Regular upkeep of equipment, including tasks like cleaning, lubrication and inspections to identify a potential breakdown.
• Repair: A reaction to equipment failure, repairs include any activity performed with the intent to get the equipment to work again, such as replacing a broken part.
• Overhaul: Overhaul is a more thorough, sometimes major, renovation of equipment. If you disassemble machinery, inspect all components and replace multiple worn-out parts to restore the machine’s original working condition, you’re overhauling it. It’s basically a full reset of the equipment.

Proper MRO Tools and Equipment

Your MRO strategy requires a few essential tools and equipment. Here are examples of key MRO supplies to ensure efficient operations.

Consumable Items

• Cleaning supplies: Degreasers, cleaning sprays, rags, wipes and cleaning brushes
• Lubricants: Oil, grease and lubricating sprays like WD-40
• Sealants: Gaskets, adhesives and thread sealant tape
• Fuses and small electrical components: For minor electrical repairs
• O-rings, gaskets and packing materials: Used to maintain seals and prevent leaks

Repair and Operations Tools

• Hand tools: Wrenches, screwdrivers, pliers and hammers
• Power tools: Drills, grinders, impact wrenches and electrical saws
• Multimeter: For checking electrical issues
• Hydraulic jacks: For lifting heavy equipment during repairs

Safety Equipment

• Personal protective equipment (PPE): Gloves, safety goggles, ear protection and hard hats
• Fire extinguishers: For fire safety during repairs
• Lockout/tagout kits: To safely isolate machinery during repairs
• Respirators: For tasks that generate harmful fumes or dust

Industrial Equipment

• Pumps: For moving liquids in industrial systems
• Motors: Electric motors used in various machinery
• Compressors: Air compressors for powering pneumatic tools
• Generators: For backup power or mobile operations

Common Types of MRO Strategies

Here are the three most common strategies used for MRO.

Corrective Maintenance

Corrective maintenance is a “fix it when it breaks” approach. Your technicians perform maintenance only once the equipment or machine fails or shows clear signs of malfunction. While corrective maintenance isn’t a great primary maintenance strategy for MRO, it’s necessary if unforeseen failures occur.

Corrective maintenance can lead to unplanned downtime, so don’t forget to factor in the cost of that downtime if you’re considering comparing the cost of corrective maintenance with other strategies.

Preventive Maintenance

Preventive maintenance is a proactive approach. It involves creating a maintenance schedule in which your technicians proactively perform maintenance even if there has been no failure. The maintenance schedule includes routine inspections, cleaning and lubrication, which can help minimize unplanned downtime and improve the asset’s life.

For example, a pump that operates in a factory is inspected and serviced every quarter if you’re taking a preventative approach. Technicians may clean filters, replace seals and check lubrication levels even when there’s no sign of failure. This helps prevent unexpected breakdowns and ensures the pump runs smoothly.

Predictive Maintenance

Predictive maintenance is a data-driven approach in which equipment performance is continuously monitored through sensors. The data is fed into a computerized maintenance management system (CMMS) with a built-in analytics feature so the algorithm can predict potential failure events. There are various predictive maintenance techniques, including vibration analysis, thermography and oil analysis — the right method depends on the type of equipment you’re maintaining.

For example, a compressor in a factory could be fitted with sensors that monitor vibration levels and temperature during the production process. When the data shows an unusual change in vibration or heat, it could indicate that the component is wearing out, which is your cue to schedule an inspection on this production equipment.

How to Manage MRO Inventory

Most companies use one of the following two methods to manage inventory based on the complexity of their maintenance system:

• Economic Order Quantity (EOQ): Suitable for simpler systems
• MRO value as a percent of RAV: Suitable for sophisticated systems

Economic Order Quantity

Economic order quantity helps you determine an optimal MRO inventory level based on:

• Demand: The annual demand for a spare part or component
• Order cost per purchase order: The cost of placing an order
• Annual holding cost per unit: The cost of capital and other warehouse costs like insurance

The formula to calculate EOQ is the square root of two times (annual demand multiplied by order cost per purchase order) divided by annual holding cost per unit.

MRO Value as a Percent of RAV

If your maintenance system is complex or if you want to see your facility in the context of global standards, consider using the MRO value as a percent of the Replacement Asset Value (RAV) method. Here are the figures you need on hand:

• MRO value: This includes on- and off-site inventory and inventory that’s not tracked or accounted for in your CMMS. Exclude raw materials and finished products.
• RAV: Costs to replace your current assets while maintaining the same production capacity. This includes pricing for installation, shipping and more.

Here’s the formula to calculate MRO value as a percent of RAV:

Ideally, the MRO inventory should be 1.5 percent of RAV or less. That means if you have equipment and machinery with an RAV of $1 million, the MRO value should be $15,000 or less. A lower percentage is desirable because it indicates you’re freeing up space for more high-value activities.

Benefits of Good MRO Inventory Management

Effectively managing MRO inventory and procurement can benefit your business in the following ways:

• Decreases carrying costs: Stocking MRO products in the warehouse comes with a cost. You pay the cost of capital, storing the inventory (including utilities, insurance and more), and there’s also the risk of theft or damage to inventory. Holding optimal MRO inventory helps minimize these costs.
• Avoids overbuying losses: Overbuying parts or consumables leads to losses like them becoming obsolete or expired. When you store only enough quantity to serve your needs, you can avoid these losses.
• Averts stockouts or missing items: Stockouts can lead to production line delays and reduced operational efficiency. Effective MRO inventory management helps you always maintain enough inventory to meet your maintenance needs, helping you minimize downtime and maximize operational efficiency.

How a CMMS Can Help Optimize MRO Inventory Management

CMMS software solutions can make MRO inventory management significantly easier with the following capabilities:

• Inventory management processes and procedures: A CMMS like Coast can help track inventory in real-time and set up recurring task reminders that notify the relevant team members about performing routine inventory management tasks.
• Data analysis: When your staff performs maintenance tasks, a CMMS records this activity. Over time, you can use the collected data to identify patterns and potential problems in your processes.
• Communication: Coast offers built-in chat, allowing your technicians and employees to communicate in real-time. The group chat feature helps employees seek help from multiple stakeholders while they’re performing tasks on the shop floor.
• Information transparency: Since all maintenance activity is recorded in centralized data, anyone with permission to access the data can do so from anywhere and at any time.