Most storerooms carry excess dead stock and still run out of critical spares at the same time. Here's the ABC-criticality matrix that fixes both, common MRO inventory mistakes, and where to actually start.
Most plants have both problems at once: a storeroom full of spares nobody’s
touched in years, and a stockout on the one part that just took a line
down. That’s not really a “not enough inventory” or “too much inventory”
problem — it’s a classification problem. Not every part deserves the same
stocking strategy, and treating them all the same is what produces both
symptoms simultaneously.
MRO stands for Maintenance, Repair, and Operations — the spare parts,
consumables, and supplies that keep equipment running, as distinct from
the raw materials and components that go into what you sell. A common
reference point: a world-class benchmark, per the Society for Maintenance
& Reliability Professionals, keeps total MRO inventory value at 1.5% of
a plant’s Replacement Asset Value or less. That’s not a hard rule — asset
criticality and supplier lead time matter more than hitting a specific
ratio — but a plant running well above it is usually carrying dead stock,
not real protection against downtime.
The pattern shows up almost everywhere: a large share of MRO inventory
in a typical storeroom is excess, obsolete, or hasn’t moved in two years
or more, while critical spares still run out at the worst possible time.
That’s not a coincidence — it’s what happens when parts get stocked based
on habit or “just in case” instinct instead of an actual criticality
assessment. Nobody deliberately overstocks a gasket and understocks a
drive spare; it happens because both decisions get made the same way,
without distinguishing which part actually matters.
The practical fix is a two-factor classification: annual usage value
(A, B, or C — how much the part costs you across a year) crossed with
operational criticality (how much downtime or safety risk it causes if
it’s not available when needed). A cheap part that stops the whole line
gets stocked differently than an expensive part with three backup
machines that don’t need it.
| Criticality | High usage value | Low usage value |
|---|---|---|
| Critical (stops production) | Stock on-site, track tightly, review often | Stock on-site — cheap insurance against downtime |
| Non-critical | Consider vendor-managed or just-in-time sourcing | Minimal stock, or order on demand |
This is the same underlying discipline as criticality analysis in
reliability-centered maintenance — the question “how bad is it if this
fails and we don’t have the part” is identical whether you’re deciding a
maintenance strategy or a stocking level. Plants that have already done
criticality analysis for RCM usually have most of the data needed for
this matrix already sitting in a spreadsheet somewhere.
Vendor-managed inventory is worth considering specifically for the
low-criticality, high-value quadrant — parts that are expensive enough to
hurt if you overstock them, but not critical enough to justify owning the
carrying cost yourself. Letting a supplier hold that inventory and
guarantee a delivery window shifts the carrying cost off your books
without materially increasing your downtime risk.
| Mistake | Fix |
|---|---|
| Stocking everything “just in case” | Classify by criticality first — non-critical, low-value parts don’t need on-site stock |
| Duplicate or inconsistent part naming | Standardize part descriptions and numbering before trying to fix stock levels |
| No reorder point discipline | Set min/max levels based on lead time and criticality, not gut feel |
| Safety stock set from demand forecasts | Base spare-parts safety stock on failure likelihood and lead time — parts fail, they don’t “sell” |
A full storeroom reclassification sounds daunting, and that’s usually
why it never starts. A more realistic first pass: pull your downtime log
and identify the parts actually involved in your worst recent outages —
that’s your critical list, built from real history instead of guesswork.
Cross-check it against what’s currently on the shelf. Parts on the
critical list that aren’t stocked are your real exposure; parts on the
shelf that aren’t on any critical list and haven’t moved in two years are
your real excess.
That single exercise, done for even the top 20 or 30 parts, usually
surfaces both problems in one pass — real gaps and real dead stock — long
before a full ABC-criticality classification of the entire storeroom is
finished. Fix the two ends first, then work inward toward a complete
system.
Part naming and numbering discipline is worth fixing early too, even
though it feels like housekeeping rather than strategy. A storeroom with
three different part numbers for the same actual bearing makes every
count, every reorder point, and every criticality assessment less
reliable than it looks on paper — the classification work is only as good
as the data underneath it.
MRO inventory isn’t a standalone course in SCMEP’s current catalog —
it sits at the intersection of two areas we do cover:
CONNEX supply chain sessions
for the procurement and sourcing side, and
Reliability Engineering
Excellence for the criticality analysis that should be driving your
stocking decisions in the first place. As a
NIST Manufacturing Extension Partnership affiliate
serving South Carolina manufacturers since 1989, we can help connect
the two rather than treating them as separate problems.
If your storeroom has both overstock and stockouts at the same time,
you can browse the Supply Chain
and Sustainability training catalog or email the training team.
For the criticality framework this matrix depends on, see our related
article on Reliability
Centered Maintenance, including the seven questions RCM asks about
every piece of equipment.
Maintenance, Repair, and Operations — the spare parts, consumables, and supplies that keep equipment running, as distinct from raw materials and components that go into the products you sell.
A world-class benchmark from the Society for Maintenance & Reliability Professionals keeps total MRO inventory value at 1.5% of a plant’s Replacement Asset Value or less. It’s not a hard rule — asset criticality and lead time matter more — but running well above it is a common sign of excess or obsolete stock rather than genuine downtime protection.
Because parts usually get stocked by habit or “just in case” instinct rather than by an actual criticality assessment. Without classifying which parts are truly critical, low-value non-critical parts get overstocked while genuinely critical spares still run short.
A framework that crosses annual usage value (A, B, or C) with operational criticality (how much downtime or risk results if a part isn’t available) to assign each part a stocking strategy, instead of treating all parts the same way.
Regular inventory safety stock is usually based on demand forecasting. Spare parts don’t have demand in that sense — they fail. Safety stock for MRO parts should be based on failure likelihood and replacement lead time, not a sales-style forecast.
