Too much inventory. Still missing the right spare?

Read an excerpt · Chapter 4

Critical-Spare Decision Logic

From MRO Supply Chain Excellence, Professional Edition, pages 40–41.

A critical-spare decision should answer five questions. First, what happens if the item is unavailable? Second, what alternatives exist - installed redundancy, repair, substitution, cannibalization, rental, or supplier emergency support? Third, how long will replenishment or repair take? Fourth, how likely is demand during that exposure window? Fifth, what does it cost to hold the protection?

This logic prevents two common mistakes: stocking every expensive OEM recommendation and eliminating every low-use item. The first creates trapped capital; the second creates operational fragility. Critical-spares policy is an economic insurance decision informed by reliability and supply-chain data.

Illustrative critical-spare example

Consider a specialized drive module costing $18,000 with a 20-week replenishment lead time. The production line it supports has no redundant drive and generates an estimated $75,000 of contribution margin per day. Historical failure frequency is low, but a failure without a spare could create a multi-week outage. In this situation, low usage and low inventory turns are not arguments against stocking. The consequence and recovery time dominate the decision.

Now consider a $45,000 motor that is installed in one application but has an equivalent unit already held for three other assets and can be moved within hours. Here, the apparent value and criticality of the equipment do not automatically justify another spare. Commonality and recoverability change the economics.

Use the book and Companion Toolkit to bring maintenance, procurement, and materials into the same decision.