Spare Parts: The Hidden Cost of Maintaining Equipment

September 26, 2017 8:00 am || || Categorized in:


If you own or manage any equipment, you maintain an inventory of spare parts. How have you determined what to keep in your warehouse?


Many organizations trust the vendor’s recommendations for spares because they feel it is a good starting point. Most vendors recommend stocking some critical items and a few wear parts for maintenance; however, sometimes you may have stock of unnecessary items that are expensive and may never break. Since operations has a stake in spare parts for equipment availability, it is usually desired to have two of every part so there will never be any downtime.

Inventory is an expense. Improper inventory methods and processes can be very detrimental to a company’s budget.

The industry standard for annual carrying costs is 20-30% of the inventory value. As such, if you have $1,000,000 worth of inventory, you can expect to pay up to $300,000 or more each year in carrying costs. If your organization is maintaining too many spare parts, you are paying for it in storage and potential obsolescence costs. If you are stocking too few parts, you are running the risk of extended downtime from equipment failure. What is the best process of identifying correct inventory levels? Should you stock items for maintenance? Should you stock two of everything?

Instead of going in blind, use the system engineers, technicians, and reliability engineers to perform an Asset Criticality Assessment and perform the corrective maintenance analysis method for each category of criticality of equipment. These experts and tools will allow you to determine which equipment needs the most attention and what types of failures you can expect or anticipate. Another approach is to gather data from your Computerized Maintenance Management System (CMMS) and analyze the history of common failures and frequently used parts. Determining proper inventory is important, but it can be time consuming if the organization is unfamiliar with inventory management best practices.

If your organization does not have specific inventory management procedures, has excessive downtime due to unavailable parts, or desire guidance on inventory control and management processes, let Commissioning Agents, Inc. (CAI) help. Our Validation and Reliability Engineers have the expertise and tools necessary to develop the right processes and put the proper practices in place. With your budget and plant availability in mind, our engineers will assist you in determining the correct spares as well as the minimum and maximum quantities. After performing these methods and processes with our team, your engineers will be provided the tools and knowledge to accurately determine new and existing equipment spare parts inventory, thus saving time and money that can be better spent elsewhere.

Contact Assest Management and Reliabilty Businesss Area Lead, Dan Miller, at to discuss your inventory management needs.