A well-structured MRO Data Taxonomy is crucial to provide a reliable and scalable structure for the MRO materials database. Implementing a good MRO taxonomy enables accurate classification of materials into different commodity groups, so intelligent decisions can be supported by analytical data. For example, good material classification is critical for spend analytics, so you have real-time visibility into procurement spend patterns, optimize inventory and lead to better vendor relationships. The most popular product classification systems are UNSPSC, eCl@ss, ETIM, MESC, etc., and we have extensive experience selecting and implementing the right system based on client requirements. We have the skills and tools necessary to efficiently classify materials and suppliers in a client’s master database using the master data classification system of their choice. In addition, we assist our clients in developing custom classification systems, in order to meet specific needs not covered by standard classification schemas.
Organizations today face increasing procurement costs, and even penalties due to non-compliance of material, that result from ‘MRO Taxonomy’ issues. Let’s take for example, a parallel between the taxonomy for the food industry vs generic taxonomy. Typically, in the food manufacturing industry food grade material or lubricant is vital; because the generic MRO part may contaminate the food during handling or manufacturing. ERP (Enterprise Resource Planning), EAM (Enterprise mro material taxonomy Asset Management), and CMMS (Computerized Maintenance Management System) are software systems that organizations use to manage their MRO data, track assets, schedule maintenance, and optimize inventory. It can improve record accuracy, reduce duplications, enhance supply chain efficiency, and support better business decisions. I couldn’t help but laugh, when I think about the trials and tribulations that I went through crawling around stores looking for parts.
Walk downs also include assignment of criticality and other inventory related information such as quantity on hand. Just as important, walk downs also mitigate potential audits and Sarbanes-Oxley issues that arise from unaccounted for inventory of very expensive assets to the organization. In a study I conducted, the short descriptions of over 700,000 MRO material masters were reviewed looking at their content and length. However, the striking finding was how skewed the frequency of use was distributed. From there the frequency of use drops off quickly with the top 500 nouns representing 90% of records and the top 1000 nouns representing 94% of records.
- If Operations needed a spare part that wasn’t readily available, it often resulted in equipment downtime or costly stockouts.
- Improving data visibility required to streamline inventory, supply chain and asset management.
- Not all organizations may be ready to jump to digital solutions, but traditional sourcing improvements can still deliver value.
- Improved spend analytics capabilities which leads to insights into purchase inefficiencies.
One technique of reducing the number of templates and simplifying the description forming process needed for universal MRO coverage is to generalize templates for some item types. Possible examples of generic templates would include PPE, tools, fasteners, fuels. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. A well-designed MRO material classification will not only classify the items but will also provide information about the item’s part number, supplier, date of purchase or manufacture, quantity on hand, and other pertinent information.
Real Life Comparisons Illustrate the Energy Business Material Description Standards Problem
External standards available to use in solving the MRO material master identity problem are not designed to achieve the requirements for efficient effective MRO business processes. Since this is not available from external standards, an internally developed taxonomy is necessary. In an asset extensive organization, there is a significant focus on the MRO supply chain, as MRO items are critical for plant uptime and reliability. There is also considerable spending on MRO items, driving the need for good spend analytics capabilities. A good data classification system enables powerful spend analytics, while also enabling commodity managers to manage procurement more efficiently.
Data Duplication can lead to inconsistencies, increased storage costs, and incorrect decision-making. It can also result in overstocking or understocking of materials, impacting operational efficiency. Consistent Data Quality ensures that MRO operations are based on accurate and reliable information, leading to better decision-making, reduced operational risks, and improved efficiency. It’s an optimized and standardized database that serves as the primary reference for an organization’s MRO data needs. The level of detail in your organization’s asset hierarchy will be based on the needs of your organization, the level of reliability required and your ability to analyze and act on the data. 5 min read – With new tools and technologies in hand, organizations can find new ways to use it to reach their own goals—and a more sustainable future.
Companies have implemented master data systems to conquer their material master problem and not had the desired results. That is because the solution did not address the root cause of the problem, weak master data identity standards. Implementing master data systems and processes are useful and valuable in providing standardized multi-domain administrative processes. A materials company that deployed this solution reduced MRO inventory levels by 40 percent and raised working-capital levels by 20–30 percent. The reductions came from eliminating obsolete inventory and slow-moving items, while reducing “squirrel stores”—secret caches of critical tools and other supplies that maintenance and repair staff hoard to ensure they won’t run out. Furthermore, the improved analytics and forecasting capabilities the company built increased the overall efficacy of the procurement function.
If the goal is to be able to form unique description identities, then synonym mapping is necessary, as well as boundary definitions for similar nouns. If some of our users call a tool a wrench and others call it a spanner, we need the taxonomy to point to the unique noun our enterprise will use to identify this type of tool. Synonyms are a significant challenge to overcome in creating a useful identification taxonomy. There are considerable overlaps in many common MRO items including gaskets and seals. Where gaskets start and seals end also is not always consistent, and terminology variances may come based on the machine or system type, the OEM, regional usage and more.
However, in my experience it is far more common that businesses use an internal taxonomy, thereby limiting any external benchmarking. Moreover, I find that adherence to an agreed upon process within the business results in a lack of structure specific to that internal taxonomy. The Co-Innovated with SAP® program is designed to help partners through the development lifecycle that culminates in an SAP-certified and tested solution against SAP Product Standards.
Advanced analytics can look at actual usage data and run iterative simulations to generate more accurate forecasts. The solution compares current inventory levels against demand and service-level requirements, and an analytics engine identifies optimal stock levels and locations. This can reduce inventory stock by up to 40 percent and attendant holding costs by 10 percent. The tool also visualizes performance on a live dashboard, enabling procurement leaders to track results over time (Exhibit 3). At Enventure, we design industry-specific taxonomy and develop cataloging for clients across the globe, cutting across different industries such as pharma, life sciences, food and beverage, mining, oil and gas, power and multiple other process industries.
The typical company in the oil, gas and chemical industry has a material master system for maintenance, repair and operations (MRO) that includes hundreds of thousands of parts. Valves, gaskets, hoses, piping and other critical components – in multiple sizes, configurations and pieces – are needed for safe, reliable operations. Downtime is expensive and can often cost upwards of half a million dollars in lost production for every start/stop – so accessibility to those parts is vital. Managing that inventory is a major endeavor that many companies don’t handle well. With vast enterprise-wide records; siloed functional groups; and various field operations locations, equipment and personnel, data is generally inaccurate, disconnected, and often becomes an operational liability. Improving data visibility required to streamline inventory, supply chain and asset management.
How does Taxonomy benefit an ERP or EAM/CMMS Implementation or Migration?
When descriptions are built this way, an automated program can generate short and long descriptions from the classification data. MRO storerooms often require identifying materials/parts data attributes in order to identify the item in the system correctly and ensure accuracy of the specifications. Walk https://business-accounting.net/ downs are necessary to improve the accuracy of material/part item descriptions that cannot be processed remotely and can only be achieved through physical identification. Walk downs are often necessary to validate and convert materials/parts from one host system to another with accuracy as well.
We have the skills and tools to efficiently upgrade a client’s master database to classify materials and suppliers based on the selected classification system. We also help develop custom Material classification, for clients having specific needs that are not met by standard classification schema. The terms Noun and Modifier, and Class Identifier are used interchangeably in this analysis. Both refer to the primary object descriptor used to identify a material in a material master description. Class identifier is used where Classification functionality is used in support of material master identities. An appropriate class is assigned to a new record, and the class has the appropriate characteristics to assign values to, uniquely identifying the item (and allowing meaningful duplication checking).
Most companies struggle due to a deficiency in one or both of these, which leads to data elements like item descriptions or data classification taxonomy become subjective and prone to inconsistencies or errors. Short description field lengths were analysed in three sample SAP material catalogues containing 350,000 items. A common assertion is that the 40-character short description field size is a significant barrier to identifying items. There are various data classification systems available today, such as UNSPSC, eCl@ss, ETIM, MESC, and ECCMA (ISO 8000) to name a few. Our team of MRO Engineers are experts at most industry-standard classification systems, and we have also developed customized classification systems for clients to meet specific business needs. For asset-intensive organizations, the volume of MRO data increases every day, making it a challenge to manage data inside ERP, EAM / CMMS systems.