Creating an SOP for MRO capital

by Dr. Robert A. Kemp

In the first article of this Coach series, we defined five steps to create a standard operating procedure (SOP) for acquiring MRO capital equipment:
1) Identify the organizational elements involved.
2) Identify leaders with approval authority.
3) Delineate responsibilities.
4) Map the process. And,
5) Gain approval, publish and educate the users.

This article maps the process for creating and publishing your SOP.

We defined an SOP as an approved process for a step-by-step or systematic way of handling regular events. My conversations with MRO Today readers show that procedures to guide acquisition of MRO capital equipment (MROCE) vary from formal published documents, to documents that are part of other acquisition SOPs, to unpublished policy, to no established policy. We know that clarity of policy and clearly defined procedures are beneficial to good managerial processes. I suggest many of our organizations could benefit from a good SOP.

Some supply managers tell me they need a published SOP for MROCE and want one, but that time constraints preclude getting it created and published. Unfortunately this means we don’t know if current processes are truly the most cost-effective. One supply manager explained his company has a very strong unpublished process for MROCE. Tight control makes this policy work. Even so, can we be sure that our policy is uniformly learned and applied as people and organizations change over time?

My map above outlines a broad process. It is generic because it is impossible to draw a map that fits every industry or firm. This difficulty suggests that each organization with MROCE acquisition programs must apply creativity to make the steps identified in the map fit its needs and processes. The map shows the process of creating and approving the SOP for acquiring MROCE. Initially, the SOP team leads the preparation and coordination of the SOP to gain approval and publication. Once published, the team’s responsibilities change to oversight and coordination as needed.

Clearly, the supply management process must be responsible for all buying processes and leading interaction with suppliers. Companies with large R&D operations may want to make exceptions to this supply management responsibility. Even so, I recommend that exceptions be carefully weighed against the advantages of good, broad-based supply management processes.

Responsibilities are assigned in the map using these identity codes:
U: The using department/agency
S: Supply management process and its elements: buyer, commodity teams, etc.
O: Others such as engineering, cost accounting, finance, legal, etc.
T: Top managers

When sequencing identity codes in the map, the order of responsibility and leadership is read from left to right. Thus, the assignment code USO for initiating an MROCE request means the user is responsible for starting the action and must coordinate the initiating process with supply management and others.

Given this map and the forms and processes already in place in most organizations, we can easily write a working SOP to acquire MROCE. We must identify our users, gain top management support, and put the flesh of policy and procedure on the bones. Approval and testing should be quick and we can begin to reap the benefits of an improved process.

Earlier, we said that our SOP is a “before-the-fact control” to guide procedures or activities that are measurable and transferrable. Hence, a sound SOP eliminates the costs of false starts and mistakes, and helps us increase productivity from our hard-pressed staff. Such activities have the potential to create profit or increase competitiveness.

To be most effective, you should publish, distribute, learn and, above all else, use the SOP. Possessing a map in uncharted territory is important, but knowing how to orient it, read it and use it are more important.

My next article will discuss the organizational responsibilities for teaching, learning, distributing and utilizing our SOP.

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