With industrial equipment repair costs and complexities on the rise, many manufacturers have been rethinking their maintenance repair and operations (MRO) processes.

While they’ve often viewed these activities as a cost center, more manufacturers are using technology and strategy in MRO to drive value. Many are using IoT sensors and cloud-based analytics programs to optimize maintenance and predict failures. Some are even moving to equipment-as-a service models that don’t just sell equipment but include service and uptime.

These new MRO trends are impacting the parts supply chain in many ways, demanding components and parts in a rapid, just-in-time fashion. Despite the challenges, those that actively engage their customers with optimized service and parts supply chains may find MRO to be a new revenue model and a source of competitive advantage.

Smart technologies can predict MRO activities and needs

While many manufacturers have been using smart technologies and applications in production, they’ve been underutilizing those capabilities in their maintenance, operations and repairs (MRO) divisions, Gerald Jackson, vice president of industrial optimization apps at GE Digital, told Supply Chain Dive.

Historically, most manufacturers have offered a warranty reactive service, waited for things to break, then secured parts and repaired equipment as needed.

But innovative organizations are now taking a more proactive approach towards MRO by leveraging onboard sensors and cloud-based applications to track equipment performance and better predict failure. Historical data and complex algorithms can now identify when a component on a machine might have an elevated risk of failure.

This pre-emptive MRO not only demands fast service but a more agile and efficient supply chain for parts and materials. Today's customers no longer have patience for the old model of waiting weeks for a part.

"The trend now is to connect the intelligent nature of the predictive asset to drive service and [parts] replenishment from the supply chain," said Jackson. "I think we are just at the beginning because the technology available today wasn’t available five years ago and we’re going to see rapid transformation in the MRO area."

Some manufacturers are also moving away from static maintenance schedules based on use or time. Instead, they are now using data to drive decisions and determine when their customer-held equipment may not be operating at its full potential or may need a component overhaul.

It’s saving equipment owners costs in unnecessary maintenance and improving uptime by preventing failures before they occur. Manufacturers such as Kone’s Elevator, Caterpillar and John Deere are using on-board sensors to monitor the performance of their customer’s equipment, then acting before failure.

"With the ability of data clouds to ingest large amounts of data at much lower cost, there is a bigger focus on improving the performance, identifying issues and trying to predict failures before they happen," Aaron Parrott, a specialist leader in Deloitte Consulting’s supply chain and manufacturing operations practice, told Supply Chain Dive.

The move to Equipment-as-a-Service

An IFS report noted 62% of manufacturers involved in planned maintenance or service contracts said those operations were profitable. They also said such models were more beneficial for the bottom line than those who simply did reactive service work.

As a result, a growing number of manufacturers are leveraging smart technologies to support profitable aftermarket service contracting, Chuck Rathmann, senior marketing analyst at enterprise software company IFS, told Supply Chain Dive.

As their equipment can cost tens of millions and take years to build and months to repair, aerospace manufacturers are making the most of smart technologies to expand and improve their MRO operations as a critical part of the product lifecycle.

Many of these manufacturers are now competing not just on product performance and value, but on the efficiency and precision of their MRO, offering "equipment-as-a-service" or "power by the hour" models that sell operability and uptime rather than the asset itself. Global MRO spending in the air transport sector is expected to increase by nearly 50% between now and 2026.

To improve the efficiencies in MRO, leading hangars are leveraging things like digital twins, advanced analytics, IoT, and robotics. Many are using a model-based enterprise (MBE) approach with augmented reality and 3D printed models to streamline repair work, optimize inspection processes and even create parts on demand. In aviation and heavy equipment, it’s part of a trend to offer greater value by handling the maintenance end that’s typically done by buyers and third parties.

"They’re experiencing pressure from their customers who want to do things like offload responsibility for maintenance and sustainment of the asset over its lifecycle. They don’t have to keep as many maintenance people around and have a more [stable] environment," said Rathmann.

Driving the parts supply chain

These new MRO models come with great benefits, but they also place greater demands on the supply chain. Manufacturers are seeking spare parts faster across the entire market and supply chain without having to stockpile an overabundance of parts in regional warehouses. Some are also using direct-ship models where suppliers rapidly send parts where they’re needed instead of stockpiling them at OEM facilities.

"The logistics is just as important and the equipment itself in guaranteeing a certain amount of uptime," said Rathmann. "When they dispatch a technician, they need to know they have the right part in the van at the right time."

Manufacturers are also leveraging digital capabilities to track and better manage the parts and supplies inventory they need to service or manage those machines. Some are also trying to reduce waste by recycling parts and pulling them from repaired equipment when there is remaining life or other applications for it, Jackson said.

"Many are adopting a more sustainable model and putting investment and focus into how to get every ounce of life out of the parts they are harvesting out of the equipment that comes to the shops," he said.

In the process, reverse logistics are also an increasingly important part of the MRO supply chain. Manufacturers need new abilities to take inventory, parts and components back from customers and third-party service providers.

"When you think about what digital is doing to the maintenance and repair world, it’s changing the revenue models," said Parrott. "It’s changing how the supply chain will perform and is expected to perform in the field."