Understanding spare-parts inventory health is both simple and complex.

It’s simple because the actions required to establish an effective spare-parts management system are well documented.

It’s complex because there are many moving parts (pardon the pun) and that means many things that can have a major impact on your result can go wrong.

By failing to understand this, companies will experience one or more of the nine symptoms of poor spare parts inventory health:

• Excess spare-parts inventory;
• difficulty in determining what to stock and quantity;
• stock that just doesn’t move;
• high levels of obsolete spare parts;
• downtime and lost production because of being out of stock;
• low levels of inventory accuracy;
• difficulty identifying critical spares;
• trouble controlling repairable spares;
• and uncertainty about end-of-life spare-parts management.

Individually, any one of these will cost you money. In combination, they result in companies wasting a fortune in spare-parts inventory costs.

To ensure your financial and operation outcomes are the best they can be, you need to be aware of the issues that arise during each phase of the spare parts management life cycle.

The create-and-stock phase

The two most important decisions in spare-parts inventory management are whether to stock an item and how many to stock. These decisions determine whether you have stock you need and how much money you spend on your inventory. It is in this phase of the life cycle that a company has the greatest influence on its spare-parts inventory. Getting the answers wrong makes everything else that follows that much harder.

The operations phase

After the create-and-stock phase, the longest part of the spare parts life cycle is the operations phase. The decision to stock an item in your inventory may be made in minutes, but the item can then be part of your inventory for years or even decades. During this time, for most spare parts, the item (and the storeroom team) will be involved in a wide range of activities that have an impact your ongoing and future results

The obsolescence and disposal phase


No matter how an item was first created or how long it is part of an inventory, it is almost inevitable that at some point it will become obsolete. It will therefore require removal and disposal. Companies must address this final phase of the life cycle through end-of-life management, conscious consideration of the last-time buy, the management of obsolescence and understanding the options for spare parts disposal. 


Unfortunately, the default position for most companies is to work it out as they go along. This costs them a fortune in excess inventory, poor availability and extended downtime.

By understanding the complexity of spare-parts inventory management and all its moving parts you can recognize and avoid the nine symptoms of poor spare-parts inventory health. This will then help you to achieve your spare-parts inventory goals. NP