Leveraging OEM to MRO Conversion Opportunities

Regardless of what manufacturing industry you look at, OEM to MRO conversion represents a significant cost savings opportunity for any organization. To their own benefit, Original Equipment Manufacturers heavily promote their parts for ongoing equipment maintenance and repairs. You can’t blame them; it’s excellent revenue sustainability. The problem is that the price variance between an OEM and a standard MRO item is often astronomical.

Although it may seem like an easy task to convert all OEM items to standard MRO parts, it most definitely is not. The challenge is to identify equivalent MRO interchange items that can be sourced elsewhere to safely replace these costly OEM items. While most MRO manufacturers are quite generous when providing part specifications, OEM’s usually are not. If you’re lucky, you may be able to retrieve a limited amount of information online or by contacting the OEM directly, but there’s a very good chance you’ll come up empty handed. In most cases, obtaining OEM attribute information requires an on-site subject matter expert to physically inspect OEM parts and collect information such as type, size, material and description.

It is a time-consuming and laborious task that manufacturing organizations rarely leverage to the full potential, however, the return on investment opportunity is tremendous. For example, in a given manufacturing organization OEM items represent on average 40% of total inventory. To further illustrate the savings potential, the purchase price reduction opportunity on OEM to MRO interchange items can range from 25-75%, if not greater. You don’t have to be a mathematician to realize that’s a lot of money that could be kept in pocket.

For more information on OEM to MRO Conversion and IMA services, visit www.imaltd.com or contact info@imaltd.com.