Considering Outsourced MRO Services? Get a Purchase Analysis First.
For many manufacturers — especially small operators — the cost of machine maintenance is high. This is largely due to the costs of keeping an in-house team, stocking components, and managing repair operations. It’s for these reasons that many companies choose to outsource maintenance, repair, and operations (MRO) to a third-party maintenance (TPM) provider. But the question is, how much money does this actually save? And what other benefits tie into these cost savings? It’s impossible to know without a purchase analysis.
What is a purchase analysis?
Conducting a purchase analysis — also called a “make or buy” analysis — is necessary in order to maximize savings and efficiency when hiring a third-party service. The analysis will answer several important questions about what you’re paying for, including the overall cost of services rendered, as well as potential savings.
Whether it’s internal or generated by a consultant, a purchase analysis needs to be comprehensive. It should include, at a minimum, the contract price (SLA rate) and any additional expenses, as well as the anticipated cost of these services otherwise. The analysis will also do a deep dive into the service provider’s experience and ability to handle the work.
At the end of the day, a purchase analysis shows the immediate costs of hiring a third-party company, as well as possible long-term savings. It’s a top-down view of ROI.
Understand the cost-benefit structure
If a purchase analysis sounds a lot like a cost-benefit analysis, it’s because it is. But there are some slight distinctions.
Cost-benefit analyses help a business understand the true costs of hiring a third-party service, which could include any additional expenses and fees. A good cost-benefit analysis will list out all these expenses, making it easy to calculate your ROI, as well as internal rate of return (IRR), net present value (NPV), and the payback period. The purchase analysis takes this one step further, to show ongoing returns for both the top and bottom line as part of a working SLA.
Consider the capabilities of a TPM provider
A TPM provider is often a great option for manufacturers without in-house expertise or manpower to take care of certain upkeep services. While some companies opt to keep maintenance and repair in-house, hiring a TPM provider is usually better for efficiency and costs when it comes to smaller operations. Case in point, small-scale MRO isn’t needed every day. Paying a TPM provider to come in from time to time is often cheaper than staffing multiple employees, holding inventory, factory training fees, etc.
TPM providers usually have more expertise than maintenance teams built internally. They’ll know when it’s time to check for repairs and maintenance, eliminating your need to create a maintenance schedule. Maintenance from an expert TPM provider also helps eliminate the need for expensive repairs down the line. With factory training and a wider breadth of experience, many smaller manufacturers are able to get top-tier MRO services for a fraction of the cost of in-house staffing.
Make a smart decision, rooted in ROI
There are many reasons to hire a TPM provider. If you choose to, it’s wise to conduct a purchase analysis to determine if it’s worth the cost. The purchase analysis will give you critical information about what, exactly, you’re getting for your money. Make the decision to hiring a TPM service with ROI in mind.
