Most maintenance managers and other professionals responsible for keeping machinery running are not likely to agree with accountants on the quantity of spare parts needed in stock. Accountants try to limit inventory of parts on hand, which in some cases sit around for months before being used. The accountants recognize that stocking large quantities of spare parts ties up company’s money in inventory and decreases the company’s profitability.
On the other hand, maintenance professionals often need to have a large quantity of parts on hand in order to keep the machinery running and down-time to a minimum. Since they have no way of knowing which machine will break down next, and which parts will be needed to fix it, inventory reduction is not high on their list of improvements. Machinery sitting idle while waiting for a replacement part can also kill profits in a hurry.
Both the accountants and the maintenance staff have a point. The challenge for MRO organizations is finding the right balance of stocking enough parts to not run out without tying up too much cash in the inventory.Read More