Master Data Management Saves Money, Reduces Risks

Updated: Sep 16

An Interview with Lance Gilbert of Net Results

Over $500 billion of Maintenance Repair and Operations (MRO) materials are purchased annually in North America and $3 trillion are purchased globally. Lance Gilbert, Managing Partner at Louisville-based Net Results Group explains how master data management of MRO materials saves businesses money and reduces risk.

Net Results Group is a Louisville business that was established in 1996 and primarily works with Fortune 100 companies to provide master data management solutions for their MRO materials.

MRO materials are the parts that keep a production line moving. They are found in an array of discrete and process manufacturing industries such as automotive, oil and gas, pulp and paper, mining, food and beverage, pharmaceutical, and utilities/power generation. The value of spare MRO materials maintained within company’s store rooms often make up a third of an overall inventory line on a balance sheet for any given business. This balance sheet item is especially critical from a corporate audit perspective since inventory values are misrepresented due to unaccounted, unusable, obsolete stock.

“A corporate enterprise may have 20,000 to 25,000 distinct SKUs (unique item codes) for the MRO materials they need; and with multiple quantities of each item throughout all their storerooms, the total item count in inventory can typically exceed 250,000 parts,” said Gilbert.

The sheer number of parts makes it difficult to track where parts are and what parts are needed for each machine. This puts businesses at risk in one of three ways:

  • When replacement parts are not in stock, businesses lose money every minute a part’s failure causes disruption in production. “One of the many statistics that we at Net Results Group know of is about a leading global automotive manufacturer. When a car or truck line goes down, $25,000 per minute is lost.” Gilbert explained.

  • When parts are not described in the item master correctly, or labeled correctly or organized properly, employee time is wasted. Gilbert explains, “When a person goes into the storeroom to find a part to fix a machine, 25% of the time they’ve picked the wrong part because the data is bad. That’s two hours a day for a $100,000 -125,000 employee that is being wasted not turning the wrench on a machine but looking for a part.”

  • There are an array of fast facts that affect a corporation’s bottom-line: 50% of items in a storeroom haven’t moved in 3-4 years, seven months equals the time most newly acquired parts will site on the shelf unused, and 6% of SKU’s in your inventory account for 90% of the total movement.

Most businesses use a variety of enterprise resource planning (ERP) systems or enterprise asset management systems (EAM) to manage their materials. However, gaps remain causing errors in identification, location, ordering, and stocking of parts.

Net Results Group uses a proprietary cloud-based software MRO3iTM. (The “i” represents insight, intelligence and impact.) This software allows for pristine data governance, It integrates with any ERP or EAM system such as PeopleSoft, Oracle, Maximo, Infor, or JDEdwards. MRO 3iTM exchanges data on a real-time basis throughout the MRO lifecycle and has been recognized by industry analysts and leaders as the defacto standard for improving capacity, equipment availability, and cashflow.

MRO3iTM creates a taxonomy using noun modifier templates that standardizes the description of the various parts. It also creates a bill of material for each part assigning it to the machines for which it would be used. “Think of this process like you would when you bake. Certain ingredients are used for certain recipes. Some ingredients are used in multiple recipes, like milk,’ Gilbert said. He added, “What it really comes down to is having the right part, right quantity, right price, at the right time.”

“When you think of wind turbines, rolling stock, robotic arms, reactors, and bridges, there are literally millions of spare parts. For instance there are over 35 different descriptors (modifiers) for bearings (e.g. ball bearing, cone bearing). Each one needs its own unique noun/modifier template to describe its accurate specifications and uses.”

MRO3iTM allows businesses to quickly identify parts that are not assigned to assets. The system also identifies low stock items for parts that are needed to keep production lines running and makes it easy for employees to find the items quickly by using barcodes and real-time photos.

Net Result Group provides much more than just their software. “Our clients see us as trusted advisors because they want to get to the root cause of their pains and not just a band-aid. We create a full MRO lifecycle project plan AND a business plan, which gives them the metrics to measure and identify where the improvements are coming from, with hard dollar savings to their budget. We call them hard dollar savings because these are true savings that go to the bottom line,” Gilbert said. “When we do a project with a company, usually the return exceeds 30%, and is accretive to their EPS.”

Net Results Group currently has approximately 40 subject matter experts and contractors located in the U.S. and Canada. All are highly experienced, certified in many areas, and goal driven.

In addition to an extremely busy routine, Net Result Group is looking to start a program to establish an MRO engineering program with a local university. Gilbert believes the next generation of programmers must be more versatile, understanding business as well as technology.

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