What Is Spare Parts Inventory Management?

Inputting, storing and tracking the inventory of spare parts that are necessary to maintain a business’ key assets is a vital, detail-driven task — and is, of course, the main focus of spare parts inventory management.

There are numerous companies and facilities in which a reliable parts inventory system is crucial — one top example is within the maintenance department of an automotive manufacturer. Such a system involves not only keeping stock of all the standard parts needed on hand — such as bearings, gears, chains, sprockets and timing belts — but also tracking purchase orders. 

While parts inventory management might seem simple on the surface, there are many facets and layers to it that must be taken into account in order to maintain an organized parts workflow that upholds customer satisfaction and company success. In this article, we’ll provide an overview of parts inventory management, its many benefits and some effective resources that can help make your parts inventory system more seamless and free of human error than ever before.

What Is Inventory?

Inventory is essentially the process of accounting for objects, component parts and materials that a company sells or uses in production. Inventory management is critical, as it ensures a business has sufficient stock on hand and pinpoints when there’s a shortage in inventory levels.

Inventory as a verb indicates counting or listing items that are in stock. A company’s “inventory” refers to the current assets they have in stock; it is most commonly divided into four main types: 

• Raw materials: Natural, unprocessed substances that we use to create goods. Examples of raw materials could include oil, minerals and wood. These items are the basic building blocks used to create the essential elements of daily life, from vehicles to lodging. 
• Work-in-progress (WIP) inventory: WIP inventory describes goods in the midst of the production process that are not yet fully completed. An overabundance of WIP inventory can sometimes indicate an inefficient production system. 
• Maintenance, repair and operations (MRO) inventory: MRO inventory refers to the materials, equipment and supplies needed to conduct maintenance, repair and operations. While they’re vital to a production process they are not used as part of the actual materials incorporated into the product. MRO items could range from safety gear like helmets and goggles to office supplies like pens and paper.
• Finished goods: Finished goods refers to completed products ready for sale. They are basically the end-product of a process that begins with raw materials, proceeds to work-in-progress items and ends with finished goods.

Key Components of Spare Parts Inventory Management

There are four main areas of parts inventory management that are key in maintaining steadfast optimal inventory levels.

• Inventory planning: This is the strategic approach of looking ahead to anticipate your needs — and includes analyzing sales trends, forecasting demand, creating reorder points and calculating levels of safety stock.
• Procurement: Procurement is the actual obtaining of goods from vendors and includes selecting suppliers, negotiating prices and terms, placing purchase orders, and receiving and scrutinizing deliveries.
• Storage and organization: This includes the actual physical handling and placement of inventory items, usually within a warehouse, and has such elements as warehouse layout design, inventory identification and barcode scanning, smart stock rotation (FIFO/LIFO) and maintaining ideal storage conditions.
• Inventory control: This involves having continual accurate and efficient inventory counts and monitoring stock levels. It also includes inventory tracking, identifying discrepancies, cycle counting and implementing inventory management systems (barcode scanners, RFID, etc.). 

Ways to Improve Spare Parts Inventory Management

There are numerous inventory management best practices to ensure that your business is properly managing inventory and focusing on smart and strategic frameworks to ensure inventory accuracy and optimization.

Classifying parts carefully based on usage and criticality will ensure you prioritize the right ones and have them handy when you really need them. This will also help your maintenance team avoid wasting space and money on parts that aren’t at the same level of importance.

Creating inventory records and updating them regularly is vital and helps you stay ahead of the game rather than finding yourself behind the proverbial 8-ball when suddenly short on supply or even completely out of a critical replacement part. 

Establishing a reliable inventory control system effectively involves tracking and overseeing the status of every part, its location and quantity. Technology such as bar code scanners and inventory management software have taken this once very manual system to a much more seamless automatic one.

Developing clear collaboration and communication between procurement, maintenance and inventory management departments helps ensure the timely acquisition and oversight of necessary parts and makes sure all departments are on the same page with what’s in stock already — and what’s on the way and its arrival time.

Performing routine reviews and audits — a systematic process of cross-verifying your physical inventory with the records maintained in your parts inventory management system and financial statements — verifies the thorough accuracy of your stock levels and assists in reducing operational inefficiencies, optimizing costs and ensuring financial compliance.

Fostering strong relationships with suppliers not only improves forecasting accuracy but can lead to reduced costs, increased order flexibility and greater fulfillment reliability.

Benefits of Spare Parts Inventory Management

Smart parts inventory management has more upsides to it than could even be listed here, so for the sake of space we will focus here on only the most significant positives.

• A quality parts inventory management system creates one centralized place to store and review information on all the parts needed for a company to properly run operations, which saves time and money and avoids a tremendous amount of unnecessary chaos.
• It minimizes unplanned downtime by keeping ahead of the game and making sure all the vital parts are in stock when machinery needs repairs or troubleshooting.
• Proper management decreases maintenance and inventory costs by ensuring that your business is not overspending and overestimating what parts will be needed moving ahead. “Going with your gut” when you order parts will never be as effective as making data-driven decisions based on past inventory needs and previous maintenance conducted.
• Effective parts inventory management also improves compliance by ensuring that the necessary components are in stock when needed for repairs and maintenance. This also helps ensure that equipment will operate within regulatory standards and avoid possible safety hazards created by faulty or outdated parts; this has the end result of leading to adherence to industry regulations and best practices.
• Increasing equipment uptime and lifespan is yet another benefit. Knowing that the necessary spare parts are readily handy for urgent repairs and preventive maintenance stops minor issues from escalating into serious problems that could greatly shorten equipment lifecycles.

Using Coast for Spare Parts Inventory Management

Fortunately, there are resources available that make parts inventory tracking, organizing, ordering and storing easier than ever, and none have proven more effective than Coast’s cost-effective computerized maintenance management system (CMMS). From one single app, it’s now possible to: 

• Store parts information in a single, cloud-based software that’s easily accessible via your mobile device.
• Track inventory in numerous ways, including the ability to automate notifications when inventory levels get low, which helps avoid delays caused due to an inventory shortage but also prevents overspending on unnecessary surplus.
• Improve maintenance workflows with the ability to schedule meter- or time-based preventive maintenance tasks, attach files/pictures/videos to a work order to help staff get started faster and the ability to update work orders and assets while on the go.
• Easily obtain a wealth of reporting and analytics, from downtime timers that track equipment performance to real-time dashboards revealing insightful trends that can reduce labor and maintenance costs. 

And for those watching their bottom line — who isn’t these days? — Coast allows you to get started for free, offers numerous no-cost features and includes various pricing levels for its premium features that can fit any budget. Sign up today!