Hi Lee,
I inherited the launch of a new MRO contract service after 20+ years of internal management. We struggled through 4 years of a 5-year contract. After we canceled the contract due to lack of performance, we went back to using company people to run MRO, plus a different service to run vending machines.
It was a real headache. We had some big-dollar problems with invoicing, accruals, and cycle-counting errors. Yet, we managed to improve the MRO service both by bringing in the contractor and yet again when we ended that relationship. At first, things were so bad that any change was an improvement. Later, we were ready to move to the next level and the contractor was not.
My key advice: if there is something wrong with MRO, it's because internal ownership and SOPs for the MRO process were already lacking. Giving it over to a contractor can just make that problem worse. So you have to be really clear about who in your organization is responsible for what, before you can define what you want the contractor to do. Example 1: we had set up a CMMS interface with the contractor's purchasing system. This worked nicely for about 3 years. Then something got upgraded. It wasn't clear in the contract who was responsible for maintaining and updating the interface, so we suffered for months with entering data into two systems. Example 2: operational managers were shocked to find that the contractor would re-order to the max stock level, but didn't want to allow the contractor to change the max stock level based on use history. Example 3: purchase history for many years of specialty items was overwritten in our own CMMS and all changed to the contractor (or so they thought...). Example 4: after contract launch, the contractor was not allowed to access NIST-controlled drawings to get new quotes. So the planners had to be involved in the quoting process even though the contract was supposed to lift this burden.
Setting up a new program is probably very different than the problem I had, but the lesson is probably the same: if your organization doesn't want to own the problem, then giving it to a contractor will probably yield unsatisfactory results unless you can be really specific about the performance measures.
For a new program, I'd really nail down who you want to own the BOMs, and who can change the BOM listing and min/max/criticality. You'll also want to be really clear within your organization if you want vendor-owned inventory or not, and what kind of control of change you want.
One of our esteemed SMRP podcasters said that the most common stocking strategy is fear. You want to avoid that and aim for the whole value, which includes risk retirement and holding costs.
------------------------------
Karl Burnett
General Electric
Anderson SC
------------------------------
Original Message:
Sent: 07-28-2022 07:50 AM
From: Lee McClish
Subject: Inventory control - third party
I am responsible for a number of Data Centers across the US. We want to establish a spare parts program and thinking a third party management option might work the best. I have contacted People and Processes and Allied Reliability, SEAM Group. Does anyone have experiencing with 3PL and could recommend a few vendors to explore?
------------------------------
Lee McClish
Director, Maintenance and Reliability
NTT Global Data Centers Americas
Ashburn VA
------------------------------