We have found that most of our clients carry excess MRO inventory; in fact, many carry twice as much as the optimal level.
Other research has shown:
Non-moving MRO inventory typically grows at an annual rate of 6.7%
Nearly 68% of all SKUs purchased on an annual basis will never be used
On average, 58% of MRO inventory investment does not move in any three-year period
Only 6% of parts account for 90% of the MRO inventory expenditures on an annualized basis
On average, only 17% of new MRO items added to inventory will be used within the first month, with the second used nearly 8 months later
For initial MRO inventory orders > 2, on average 69% are not issued within the first 3 years
2007 estimates of U.S. industry purchases suggest that in excess of $136 billion in MRO material stock still sits in end-user operations
MacInnes, R. (2011, August/September). MRO Inventory: The Expert's Monument to Failure. Uptime Magazine, 33.
We offer a streamlined, proprietary version of our consulting approach to identify and optimize MRO inventory (See diagram above).
Reliability Optima management has targeted the optimization of Spare Parts (or MRO) Inventory sourcing, and procurement, as a “game changer” in heavy industry. It is clear that excess inventory ties up working capital, decreasing Return on Capital Employed (ROCE). It may not be as clear that required inventory that is not in the right condition at the right place at the right time can cause non-value added maintenance spend and lead to lost profit opportunity.
Spare Parts Excellence