How much stock of MRO parts should I hold in inventory?
Answered July 19 2019
The amount of stock that you should hold in your maintenance, repair, and overhaul (MRO) inventory will be a level that will balance the risk and cost of running out of parts against the resources needed to store and manage additional parts. Many different equations and processes can help you identify the right level of MRO inventory for your particular business. Here are a few for you to consider.
Top quartile facilities with sophisticated maintenance systems typically calculate their MRO inventory value as a percent of replacement asset value (RAV). They aim to keep this number at to 1.5 percent or lower. Why so low? These world-class facilities keep their MRO inventory low because they can anticipate their needs for materials extremely well. They have strong purchasing processes that predict the usage of MRO supplies and save the facility time, labor, money and stress in both managing and restocking their MRO inventory.
If you hold too much MRO inventory, you buy items you do not need immediately and incur extra costs from labor to manage that inventory. According to Supplychain247, if you don’t hold enough MRO inventory, maintenance emergencies can be difficult or impossible to address. This may lead to additional downtime or high overnight shipping costs to source emergency supplies.
Remember that the maturity of your maintenance and reliability systems must be taken into account before setting and working toward specific MRO inventory reduction goals. Like all metrics, this is not a stand-alone measure of world-class reliability. It is, on the other hand, one way to help you compare your facility to others, indicate progress in inventory management, and then set the next benchmark for overall improvement.
Related Maintenance Articles
- What are MRO Storeroom Best Practices?Seven Ways to Avoid Costly Procurement Mistakes in Maintenance and Facility ManagementWhat are the best ways to organize your warehouse?What is the true cost of poorly optimized inventory management?What are some inventory management myths?What metrics are most important for inventory management?