What is MRO spend analysis, and how do you run it?

What is MRO spend analysis?

MRO spend analysis is the review of what an organisation pays for maintenance, repair and operations items: spare parts, tools, safety equipment, lubricants and other consumables. It cleans and classifies the item data, finds duplicate items and price gaps, and shows which suppliers and buying channels are used, so buyers can standardise items and agree prices.

MRO stands for maintenance, repair and operations (CIPS writes “operating”). The Chartered Institute of Procurement and Supply (CIPS) describes MRO products as high-variety, low-value products, including consumables, needed to support the manufacturing processes. A bearing for a conveyor, a pair of safety gloves, a can of lubricant, a filter for a compressor and a box of fuses are all MRO. None of them goes into the product, so MRO is usually counted as indirect spend. Production still stops when one of them is missing.

A typical first finding. A maintenance technician needs a bearing for a pump that has stopped. The stockroom has none under the number he searches for, so he asks for an urgent purchase from a local distributor at three times the usual price. Two shelves away, the same bearing sits in stock under a different item number and a different description. MRO spend analysis is built to find that kind of gap, item by item.

The general method (collect, clean, classify, analyse) is explained in spend analysis. This page covers what changes when the spend is MRO. The analysis of parts that go into the product is in direct spend analysis, and the difference between direct and indirect buying in indirect procurement.

Why is MRO spend hard to analyse?

Pages on the subject, mostly written by MRO data and spend analytics firms, agree on one point: the data is the main problem. The features below explain why, and what each one does to the figures.

The many small suppliers at the bottom of the ranking are a subject of their own. CIPS describes tail spend as the bottom 20% of an organisation’s spend, which usually accounts for 80% of its suppliers. How to manage that part is explained in tail spend management; this page stays on the item data.

What data does an MRO spend analysis need?

Invoices alone are not enough. They show what was paid, not which item it was, whether it came from stock or was bought for one job, or which machine it was for. Collect the item level from every channel.

Maintenance and engineering staff are needed early. Only someone who knows the equipment can confirm that two records are the same item, or that a cheaper equivalent fits the machine.

How do you classify MRO spend?

Classification groups items so they can be compared and bought together. UNSPSC, a public code with four levels of two digits (segment, family, class, commodity), is common in catalogues and e-procurement systems. For MRO, the family or class level is usually detailed enough for an analysis. Organisations then map these codes to their own MRO categories. How to choose a taxonomy is explained in the classification section of spend analysis.

Classify on the cleaned description, not on the raw text. A line that reads “misc. parts for line 3” cannot be classified at all; it has to go back to the requester or to the invoice. Write down the rule used for each doubtful line, so the next analysis gives the same result.

How do you find duplicate items in the item master?

A duplicate is one physical item recorded under two or more numbers. The usual cause is that each site, stockroom or buyer created its own record, with its own wording. The fix is a standard description: a noun first (“bearing”), then a type (“ball, deep groove”), then the attributes that define the item (bore, outer diameter, width, seal), then the manufacturer part number. Records with the same attributes are then compared by people who know the item.

Check of the figures: 120 × 4.20 = 504.00; 30 × 6.80 = 204.00; 80 × 3.90 = 312.00; 25 × 11.50 = 287.50; total €1,307.50. At €3.90, 255 × 3.90 = €994.50, so the gap is €313.00. The stock of 290 units equals about 1.1 years of use (290 ÷ 255).

€313 a year on one bearing does not justify a project. The point is the pattern. The urgent orders at €11.50 happened while 290 units sat in three stores under other numbers. Repeated over thousands of items, duplicates raise both the prices paid and the stock held. Merging the four records into one, with one description and one agreed price, fixes both.

How do you run an MRO spend analysis, step by step?

1. Set the scope: which sites, which period and which channels. Twelve months of stockroom issues, purchase order lines, catalogue orders and card transactions is a common start.
2. Extract the item master and every transaction with the item number, the supplier, the site and the channel on each line.
3. Standardise descriptions: noun, type, defining attributes, manufacturer and manufacturer part number. Lines with no item detail go into a separate group to review.
4. Find and confirm duplicate items with maintenance and stockroom staff, and decide which record survives.
5. Classify the cleaned items, for example to UNSPSC family or class, then to your own MRO categories.
6. Calculate spend, usage and stock per cleaned item, and compare prices for the same item across sites, suppliers and channels.
7. Measure the share of spend that comes from urgent or unplanned orders, per site and per category.
8. Review the findings with maintenance, stores, finance and the category manager, and record one decision per item group.

Keep the cleaned item master. It is the main result of the work, and the next analysis starts from it instead of starting again from raw text.

Which buying channels does MRO spend go through?

The same item can reach a site by several routes. The analysis shows how spend divides between them, and whether each item is bought through the right one.

A punchout catalogue lets a requester shop on the supplier’s own site from inside the purchasing system, then bring the basket back as a requisition. It suits MRO because the supplier keeps thousands of items and prices up to date. How it works is explained in punchout catalogue; card purchases are covered in purchasing card, and standing agreements with releases in blanket purchase order.

Which decisions come out of an MRO spend analysis?

One item, one record

Merge duplicates and lock the description pattern, so new records follow it. Who may create a new item record, and how, is part of the decision.

Standard items

Ask maintenance to choose one standard for near-identical items, such as one glove type per task or one grease per application, so volumes add up.

Agreed prices

Extend the best price to every site, or run one sourcing event for the combined volume of an MRO category.

Catalogue coverage

Move repeat spot buys into a catalogue or punchout at contract prices, and check that requesters use it.

Stock levels

Reset minimum and maximum levels from real usage, and review items that no machine uses any more.

Fewer suppliers

Group MRO categories with fewer distributors, or one integrated supplier for a site, where service levels can be agreed and measured.

Do not judge MRO decisions on price alone. A cheaper bearing that fails early can stop a line for hours, and a stock cut that causes urgent orders costs more than it saves. Check each decision with maintenance. The category plan that groups these decisions is described in category management; the ranking of spend by supplier is in supplier spend analysis, and how to choose a tool for the work is covered in spend analysis software.