In many cases, the company’s maintenance costs are so high that they can severely curb profit margins and prevent the company from blossoming. Your maintenance, repair, and operations (MRO) budget should not be one of the things that don’t let you sleep at night. Many managers think of MRO as a bucket of inflexible costs, but digging into that bucket can reveal significant potential cost savings.
Addressing the Issue of High Maintenance Costs
The problem with organizations is the lack of proper reporting or documentation. Moreover, people who work on its development retire or leave without being replaced. Interestingly, the maintenance costs could be as high as three times compared to the cost of development. In most cases, the direct costs of designing and developing software are just a small part of the Total Cost of Ownership (TCO). For any organization, maintenance is more important than development itself and leads to higher costs.
However, during the global COVID-19 pandemic, many businesses are not in the state to pay high maintenance fees for their existing software products. Entrepreneurs may worry about certain aspects; for example, what drives the software maintenance cost, how and why to reduce maintenance costs effectively.
Let’s dig into these different aspects of Maintenance costs and more.
What are the hidden costs that you need to take care of?
1. Unnecessary Consumption: Most MRO managers often consider the consumption of indirect items, tools, and supplies as a fixed cost. However, there are multiple areas and opportunities to reduce consumption, introduce controls, and reduce unnecessary inventories. When fewer MRO items are used, naturally, lesser money is spent.
2. High Purchase Order Costs: It’s difficult to issue a purchase order (PO) that isn’t free. The PO process has costs involved, dominated by associated labor. Multiple research studies have found that the cost of issuing a PO is often higher than the value of the items ordered. One way to save up on these costs is by automating the PO process.
3. Inefficient Order Policies: Order policies may easily be overlooked, but purchasing unreliable suppliers may result in unnecessary increases in MRO costs. The order policy may maintain a relatively high inventory level for certain parts, even if they aren’t often used. It would help if you audited your order policies to optimize costs for whatever level of supply you genuinely need.
4. Too many suppliers: Consolidating your MRO costs with a single distributor instead of multiple suppliers can save some money for you as well. Volume discounts may be the least actual savings as transactions become simpler, shipments can be combined to reduce shipping costs.
5. Narrow mindset on cost control: Many companies can unnecessarily high MRO costs because of how they approach their budget. The way out here is to enhance your supply chain processes, increase your processes’ efficiency, and align yourself with the distributor with the highest value.
Technologies that can Reduce These Hidden Costs and Save Your Day
Here are some technologies that you didn’t know needed to take care of your maintenance costs.
Additive Manufacturing: Replacement parts and fixtures can be quickly designed, replicated, customized, and manufactured at remote depots or the point of use.
Integrated Computational Materials Engineering (ICME): Along with manufacturing processing data, ICME enables a reduction in cost, cycle time, and technology insertion risks through proper material selection at the onset of design.
Dissimilar Materials Joining: The ability to effect repairs using different materials with more desirable properties allows for enhanced performance and lifecycle extension.
Probabilistic Modeling: Evaluating material, process, and design performance capabilities before implementation can minimize testing and development costs.
Advanced Nondestructive Evaluation (NDE): A variety of new non-destructive testing technologies enable fast and reliable testing and inspection, which reduce maintenance downtime.
All in all, ensuring that you keep expenses in line and reduce costs whenever possible is key to running a sustainable business. It would help if you tried implementing some of these technologies and strategies to reduce your maintenance costs. Contact our experts to find an ideal solution for your business challenges.