It’s also essential to examine performance indicators that will insure proper management of the stores and procurement functions for maintenance. One such KPI is Inactive Stock Showing No Movement in the last 12 Months.
This indicator is used to find spare parts that are no longer needed. These items may have been purchased as spare parts for equipment that is no longer in the plant. Occasionally items were purchased in large quantities on a one-time basis, possibly for construction or a project, but were not used and have no further use at the plant or facility. Eliminating these items reduces the inventory value and the subsequent holding cost the company must pay.
Inactive Stock Line Items / Total Stock Line Items
As seen by the formula, this indicator measures the number of line items that are inactive divided by the total number of line items carried in the inventory. The percentage shows the opportunity for improvement by eliminating line items from the store inventory.
In conclusion — MRO spare parts account for an average of 50% of the maintenance budget. It is the second most important function in maintenance (first being preventive maintenance) management.