Introduction

Outsourcing of Maintenance, Repair, and Overhaul (MRO) to a third-party service provider is now emerging as a credible solution for organizations that would like to offer benefits beyond spend reduction. This in itself can offer savings in the range of 10 to 20 percent.

The rising awareness of outsourcing benefits resulting from MRO is driving increased adoption of MRO outsourcing over time. Consequently, Procurement Outsourcing (PO) contracts with MRO category in scope show a phenomenal growth of nearly 35 percent Compound Annual Growth Rate (CAGR) from 2005 to 2010.

There are multiple flavors to outsourcing MRO – from piece-meal approaches involving sourcing through aggregators, Vendor-Managed Inventory (VMI), and Procure-to-Pay (P2P) outsourcing, to end-to-end comprehensive outsourcing that spans across planning/forecasting, sourcing, procurement, and inventory management.

In order to achieve success in outsourcing MRO, organizations need to manage the complexities inherent to the MRO category – highly fragmented spend, lack of technology investments, and involvement of multiple stakeholders.

The purpose of this research is to educate buyers on the benefits and challenges of MRO outsourcing. This report discusses:

• The process and category scope of MRO
• The benefits of MRO outsourcing
• The emergence of MRO outsourcing as a credible option for MRO optimization
• The various MRO outsourcing approaches and their pros and cons
• The challenges and corresponding best practices to be observed while outsourcing the MRO function illustrated with a case study