There's a pattern that plays out across almost every industry in Australia. An organisation invests heavily in its core supply chain — the products it sells, the services it delivers, the assets it builds. Procurement teams run competitive tenders. Warehouses are designed with precision. Inventory models are refined every quarter.
And then there's MRO.
Maintenance, repair and operations spend — the parts, consumables, tools, services and supplies that keep things running — is often treated as an afterthought. It sits in a grey zone between procurement, operations, maintenance, and facilities. Nobody truly owns it. Everyone touches it. And the costs, risks and inefficiencies quietly compound.
If you've spent any time in Australian mining, energy, utilities, transport, manufacturing, defence, healthcare or property, you'll recognise the symptoms: fragmented purchasing, bloated stores, emergency freight charges, duplicate parts under different names, contractors ordering whatever they want, and maintenance teams who have stopped trusting the system and started hoarding.
The scale of the problem is significant. Australia's MRO market was valued at approximately AUD 13.6 billion in 2025 and is projected to keep growing as infrastructure ages, asset fleets expand, and operating complexity increases. For many organisations, MRO accounts for 5–15% of total operating expenditure — yet it receives a fraction of the strategic attention given to direct materials or services.
This article is about changing that. Not with theory, but with practical levers that Australian organisations can pull to improve cost, availability and control across their MRO supply chains.
What actually makes MRO supply chains so difficult?
MRO isn't just "stuff you buy that isn't for resale." It behaves fundamentally differently from direct procurement and finished goods supply chains, and those differences are what make it hard to manage well.
Demand is unpredictable. Unlike production materials where demand is driven by a forecast or sales plan, MRO demand is driven by asset failure, condition, usage and maintenance schedules. Some demand is plannable (preventative maintenance creates known requirements), but a significant proportion is reactive. That makes traditional forecasting methods less effective and inventory planning more nuanced.
The SKU count is enormous. A single manufacturing site can carry thousands of MRO line items — from bearings, seals and filters through to electrical components, lubricants, safety gear, and specialist tools. Multiply that across a multi-site operation and the catalogue grows rapidly, often with poor standardisation and rampant duplication.
Criticality varies wildly. A $3 gasket can shut down a $20 million production line. A $50,000 spare motor might sit on a shelf for years and never be needed — but if it is needed and it isn't there, the cost of downtime dwarfs the holding cost. MRO inventory decisions are fundamentally about risk, not just dollars.
Procurement is fragmented. MRO purchases often happen through a mix of channels: blanket purchase orders, catalogue buys, spot purchases, maintenance credit cards, contractor-managed procurement, and the occasional "just grab it from the hardware store" approach. Spend visibility is poor, and leverage is wasted across dozens of suppliers who could be consolidated.
Data is messy. This might be the single biggest barrier. MRO catalogues are notorious for inconsistent naming, duplicate entries, missing specifications, and mismatched units of measure. When the data is unreliable, everything downstream — from inventory planning to procurement analytics — is compromised.
These challenges aren't unique to any one sector. They show up in mining and heavy industry, in healthcare and aged care, in property and hospitality, and across manufacturing and FMCG. The specifics change, but the structural problems are remarkably consistent.
The hidden cost of getting MRO wrong
Most organisations dramatically underestimate the total cost of a poorly managed MRO supply chain. The line items on the P&L only tell part of the story.
The obvious costs are purchase prices and freight. The less obvious — and often larger — costs include emergency and expedited shipping (which can run at three to five times normal freight rates), unplanned downtime caused by stockouts of critical spares, excess and obsolete inventory tying up working capital, duplicated purchases because nobody could find what was already in the store, maverick buying that bypasses negotiated agreements, contractor mark-ups on materials procured outside the organisation's supply chain, and write-offs on parts that were never needed or can no longer be identified.
One of the most telling indicators is the ratio of emergency purchases to planned purchases. In well-managed MRO environments, emergency buys might represent less than 5% of total MRO transactions. In organisations where the supply chain hasn't been deliberately designed, that number can easily sit above 20–30%. Each emergency buy isn't just expensive in freight terms — it's a signal of a planning, inventory or data failure upstream.
The other hidden cost is people's time. When maintenance planners spend hours searching for parts, chasing suppliers, or working around a system they don't trust, the real cost isn't just their salary — it's the maintenance work that doesn't get done, the scheduled jobs that slip, and the knock-on effect on asset reliability.
Five areas where Australian organisations should focus
There's no single fix for MRO supply chains. Improvement requires working across several interconnected areas simultaneously. But based on what we see working with Australian organisations across sectors, these are the five areas that consistently deliver the most value.
1. Get the catalogue and master data right
This is unglamorous work, and it's exactly why most organisations avoid it. But it's foundational. You cannot optimise what you cannot see clearly.
A fit-for-purpose MRO catalogue means every item has a unique, standardised description that allows maintenance teams to find what they need quickly. It means duplicates are identified and merged. It means units of measure are consistent. It means items are linked to the assets they serve through bills of materials. And it means there are clear rules for creating new items — so the catalogue doesn't immediately start degrading again.
The payoff is significant. Clean data unlocks better inventory planning, more effective procurement, faster issue resolution in stores, and more meaningful reporting. It also makes technology investments — like predictive analytics or automated replenishment — actually viable.
This isn't a one-off project. It's a governance discipline that needs to be embedded in operating rhythms. Trace works with organisations to build catalogue governance frameworks that are practical enough for frontline teams to follow — not just theoretically correct. You can read more about our approach to technology enablement and data-led supply chain improvement.
2. Segment inventory by criticality, not just cost
Most MRO inventory systems default to ABC classification — sorting items by annual spend. It's a useful starting point for counting priorities, but it's a terrible proxy for operational risk.
A $12 seal that protects a critical pump from failure is infinitely more important than a $5,000 fitting that sits on a redundant line. If you manage both with the same service-level target, you'll either over-invest in low-risk items or under-invest in high-risk ones.
A better approach is criticality-based segmentation. This considers safety impact, asset availability risk, lead time and supply vulnerability, substitution options, and the consequence of not having the part when it's needed. The output is a tiered model: critical spares get near-perfect availability targets and tight governance; routine consumables get simple min-max replenishment; and everything in between gets a policy proportionate to its risk profile.
This is where MRO inventory strategy intersects with maintenance strategy. Preventative maintenance creates plannable demand that can be kitted and staged in advance. Predictive maintenance gives early warning signals that allow procurement lead times to be built in. Corrective maintenance generates the most unpredictable demand — and that's exactly where critical spares buffers earn their keep.
The goal is availability without tying up unnecessary cash. Done well, organisations can often reduce total MRO inventory value while simultaneously improving stockout performance on the items that matter most.
3. Design the stores network deliberately
Even with the right inventory policies, availability suffers when parts are in the wrong place. And in Australia, geography makes this problem worse.
Many organisations inherit stores networks that grew organically — a cage here, a container there, a "temporary" store that became permanent, and satellite locations that exist because teams didn't trust transfers from the central store. The result is duplicated stock, poor utilisation of space, inconsistent management practices, and significant effort spent moving parts between locations.
A deliberate stores network design considers the maintenance footprint (where work happens), asset criticality by location, travel times and transport reliability, outage and shutdown schedules, after-hours access requirements, and the balance between centralised control and decentralised responsiveness.
Common models include a central store with regional satellite depots for fast-moving items, hub-and-spoke arrangements for distributed asset fleets, vendor-managed inventory for high-volume consumables, and dedicated staging areas for planned outages or shutdowns.
There's no universal answer — but there is a universal principle: inventory location is a design decision, not an accident. For organisations reviewing their physical network, Trace's warehousing and distribution and strategy and network design teams can model options and quantify the trade-offs.
4. Build a proper MRO procurement strategy
MRO procurement is frequently under-managed. Spend is spread across hundreds of suppliers and thousands of transactions, making it harder to aggregate, harder to negotiate, and harder to govern than direct categories.
The starting point is visibility. You need to know what you're spending, with whom, for what, and at what price — and then you need to be honest about how much of that spend is managed versus unmanaged.
From there, MRO procurement strategy typically involves category segmentation (grouping spend into manageable categories like bearings, electrical, lubrication, PPE, tools, services, and so on), supplier rationalisation (consolidating volume with fewer, better suppliers where it makes sense — while maintaining dual sourcing for critical categories), framework agreements (establishing pre-negotiated pricing, service levels and ordering pathways that make compliant purchasing faster than non-compliant purchasing), performance-based contracting for services like facilities maintenance, fleet, and inspection where outcomes matter more than hourly rates, and governance that tracks maverick buying, emergency purchasing and contract compliance as leading indicators.
The trap to avoid is optimising purely for unit price. In MRO, total cost of ownership includes freight, lead time risk, quality consistency, supplier responsiveness, returns handling, and the administrative cost of managing the transaction. A supplier who is 5% cheaper but unreliable on delivery can cost far more in downtime and expediting.
Trace's procurement team brings structured category management disciplines to MRO — including for adjacent categories like property and facilities management, fleet, and plant and equipment that often sit outside traditional procurement scope.
5. Fix the governance — but make it practical
The best MRO supply chains don't feel heavily governed from the frontline. Parts are available when needed. Ordering is quick. The catalogue is trusted. Stores are accurate. It just works.
That feeling of simplicity is actually the product of deliberate design: clear roles between maintenance planning, stores, procurement and engineering authority; standard processes for kitting, issuing, receiving and returns; a fast exception pathway for genuine urgencies; cycle counting that builds accuracy over time; and performance reporting that drives improvement, not blame.
The biggest governance risk in MRO is drift. A system that's well-designed at implementation gradually degrades as people leave, workarounds accumulate, and discipline relaxes. The antidote is embedding governance into regular operating rhythms — weekly stores reviews, monthly procurement performance reporting, quarterly inventory health checks — rather than relying on annual audits to catch problems after they've compounded.
This is where organisational design and project and change management become relevant. Getting the structure, accountability and change approach right from the outset dramatically improves the chances that improvements stick.
The technology question
It would be easy to suggest that technology is the answer to MRO supply chain challenges. And there's no doubt that better systems — inventory management platforms, e-procurement tools, IoT-enabled condition monitoring, and predictive analytics — can make a real difference.
But technology deployed on top of messy data, undefined processes, and unclear accountability tends to automate the chaos rather than fix it. The organisations that get the most from MRO technology investments are the ones that sort out the fundamentals first: clean the catalogue, define the inventory policies, clarify the procurement rules, and then use technology to enforce and enhance what's already working.
That said, there are areas where technology is genuinely transformative for MRO. Predictive maintenance tools that link asset condition data to parts demand are moving from pilot to practice across Australian mining, energy and manufacturing. E-procurement platforms that make compliant purchasing easier than non-compliant purchasing are reducing maverick spend. And visibility dashboards that surface stockouts, emergency buys and aged inventory in real time are giving supply chain and maintenance leaders the information they need to act, rather than react.
Trace's technology team works alongside our supply chain and procurement specialists to ensure technology decisions are grounded in operational reality — fit-for-purpose, not over-engineered.
Why this matters now
Several forces are converging to make MRO supply chain performance more important for Australian organisations than it has been in the past.
Infrastructure is ageing. Roads, bridges, rail, water treatment plants, power stations, hospitals, schools — much of Australia's public and private infrastructure was built decades ago and is now entering the part of its lifecycle where maintenance intensity increases. That means more MRO spend, more spares demand, and more risk if the supply chain isn't fit for purpose.
The energy transition is adding complexity. New asset types — solar farms, wind turbines, battery storage systems, grid-scale infrastructure — are expanding the range of parts and services that operators need to manage. At the same time, legacy assets must continue operating reliably during the transition. The organisations navigating this successfully are treating MRO as a strategic enabler, not a procurement afterthought.
Labour markets remain tight. Skilled maintenance technicians, planners and stores personnel are in short supply across Australia. When you can't simply throw more people at the problem, the supply chain around maintenance has to be more efficient — fewer wasted trips, fewer stockouts, less time searching for parts, more wrench time.
And supply chains globally remain less predictable than they were pre-pandemic. Lead times for specialist components have improved from their worst but haven't returned to historical norms. Geopolitical disruption, shipping volatility and concentrated manufacturing bases all add risk that needs to be actively managed through buffer strategies, supplier diversification and better demand planning.
For organisations looking to build supply chain resilience into their MRO operations, the time to act is before the next disruption — not during it.
How Trace Consultants can help
At Trace Consultants, we work with Australian organisations to design, optimise and implement MRO supply chain strategies that deliver measurable improvements in cost, availability and control.
Our approach is practical, data-led and grounded in operational reality. We don't deliver theoretical frameworks and walk away — we work alongside your teams to build solutions that stick.
MRO inventory strategy and optimisation. We help organisations segment inventory by criticality, set defensible service levels, design replenishment policies, and reduce excess and obsolete stock — delivering higher availability with lower working capital. Our approach connects inventory decisions directly to maintenance strategy and asset criticality.
Stores network and warehouse design. From central stores through to regional depots and field replenishment models, we design physical networks that put the right parts in the right place. This includes stores layout, workflow design, receiving and issuing processes, and accuracy improvement programs. Learn more about our warehousing and distribution capabilities.
MRO procurement and category strategy. We bring structured category management to MRO spend — including supplier rationalisation, framework agreement design, performance-based contracting, and governance that reduces maverick purchasing. Our procurement team also covers adjacent categories like facilities management, fleet, and plant and equipment.
Catalogue and master data governance. We help organisations clean, standardise and govern MRO catalogues — building the data foundation that everything else depends on. This includes duplicate identification, naming conventions, BOM linkage, and ongoing governance frameworks.
Technology enablement. We support organisations to select and implement fit-for-purpose technology for MRO inventory management, e-procurement and performance reporting — always grounded in clear processes and clean data.
Operating model and organisational design. When the challenge isn't just the supply chain but the structure around it, we help design operating models that clarify accountability, streamline decision-making and align maintenance, procurement and stores functions.
Program delivery and change management. MRO improvement programs touch multiple teams and change established ways of working. Our project and change management capability ensures that improvements are adopted, embedded and sustained.
We work across sectors — from government and defence through to FMCG and manufacturing, health and aged care, and property, hospitality and services — bringing cross-sector insight to challenges that are remarkably similar beneath the surface.
The bottom line
MRO supply chains rarely make the boardroom agenda. They don't have the visibility of a major capital project or a customer-facing logistics network. But for organisations that depend on asset reliability — and in Australia, that's most of them — MRO is one of the highest-leverage areas to improve.
The organisations that get this right don't just spend less on parts. They have fewer unplanned outages, faster maintenance turnaround, more productive technicians, better supplier relationships, and more confident capital planning. They've moved MRO from a cost centre that nobody wants to own into a capability that genuinely supports operational performance.
It doesn't require a massive technology transformation or a multi-year program. It starts with visibility, discipline and a deliberate strategy — applied consistently across the fundamentals of data, inventory, procurement, stores and governance.
If you'd like to pressure-test your current MRO supply chain or explore where the biggest opportunities sit, get in touch with our team. We'd welcome the conversation.
