MRO Inventory Optimization: How to Cut Costs Without Risking Downtime

There is a silent budget killer in almost every manufacturing plant: "The Squirrel Syndrome."

Maintenance managers, terrified of downtime, hoard spare parts. They tuck motors, bearings, and sensors into every corner of the workshop "just in case." While this feels safe, it is financially disastrous. In modern manufacturing, MRO (Maintenance, Repair, and Operations) inventory often accounts for 40-50% of the total maintenance budget.

Even worse, when a breakdown finally occurs, you often find that the belt you stored for five years has dry-rotted, or the motor has seized from inactivity.

Inventory Optimization is not about having less. It is about having the right parts, in the right quantity, at the right time.

This guide uses Reliability-Centered Maintenance (RCM) principles to help you trim the fat from your inventory without exposing your plant to risk, using a modern CMMS like Fabrico to automate the math.

The "Strategic Leader" (Paula) knows that inventory is not an asset; it is a liability until it is used. Financial experts estimate the Carrying Cost of inventory to be 20% to 30% of the inventory's value per year.

If you have €1,000,000 in spare parts sitting on shelves, you are spending €250,000 per year just to keep them there. This includes:

• Storage Space: Rent, lighting, HVAC for the warehouse.

• Obsolescence: Parts for machines you no longer own.

• Degradation: Rubber seals and batteries dying on the shelf.

• Opportunity Cost: Cash tied up in motors that could be used for R&D.

The Fabrico Approach: Use your CMMS to move from "Just-in-Case" to "Just-in-Time" for non-critical assets.

According to RCM methodology (specifically Smith & Hinchcliffe), not all failures are equal. Therefore, not all spare parts should be treated equally.

You should not blindly follow the Original Equipment Manufacturer (OEM) recommendation list. The OEM wants to sell you parts. You need to make stocking decisions based on Criticality.

Use this RCM Logic Flow for every expensive part:

1. Is the failure Hidden or Evident?

   • If it is hidden (e.g., a standby pump), you must have the part on hand, because you won't know it's broken until you need it.

2. Does the failure affect Safety or Environment?

   • Yes: Stock the part immediately (Must Have).

   • No: Go to the next question.

3. Does the failure stop production (Economic Impact)?

   • Yes: Compare the Cost of Downtime vs. the Cost of Stocking. If the lead time is 2 weeks, and downtime costs €10k/hour, you must stock it.

   • No (Run-to-Failure): If the machine is non-critical (e.g., a backup exhaust fan), do not stock the part. Order it when the machine breaks.

How Fabrico Helps: In Fabrico, you can flag assets by Criticality. This allows you to run a report: "Show me all expensive spare parts linked to Non-Critical Assets." These are your prime candidates for destocking.

Most factories use Min/Max levels based on a "gut feeling." They order a new motor every 6 months because "that feels right."

This is inefficient. If production slows down, you end up overstocked. If production creates a record-breaking month, you run out of parts.

The solution is Usage-Based Reordering.
By integrating Fabrico OEE (Production Data) with Fabrico CMMS (Inventory), you can dynamically adjust your safety stock.

• The Scenario: You know a cutting blade lasts for 10,000 cycles.

• The Old Way: Order a blade every month.

• The Fabrico Way: The OEE module counts the cycles. When the blade hits 9,000 cycles, Fabrico automatically triggers a "Reorder" notification or sends a Purchase Request to your ERP.

• The Result: You buy the part exactly when you need it, not when the calendar says so.

A major issue in legacy plants is "Ghost Inventory"—parts that exist in the CMMS but not on the shelf (or vice versa). This happens when technicians take a fuse without logging it because the software is too hard to use.

The cure is Mobility.
If "Tom" (the technician) has to walk back to a desktop computer to log a part, he won't do it. With Fabrico’s Mobile App, Tom scans the QR code on the part bin as he takes it. The inventory count is updated instantly.

Pro Tip: Conduct a "Cycle Count" using the mobile app. Have your team audit 5% of your inventory every week. By the end of the year, you have verified the entire warehouse without shutting down for a full physical inventory.

Use this matrix to decide what to keep in your warehouse.

Inventory optimization fails if the data stays in the maintenance department.
"Paula" (CFO) needs to see the financial impact.

Fabrico acts as the bridge. It pushes inventory consumption data to your ERP system (SAP, Microsoft Dynamics, Oracle).

1. Technician uses a €500 motor in Fabrico.

2. Fabrico decrements stock and sends a signal to the ERP.

3. Finance sees the expense immediately and Purchasing gets a signal to replenish if it hits the minimum level.

This prevents the "Double Purchasing" error, where Maintenance buys a part on a credit card because they don't trust the Purchasing department's system.

You cannot optimize what you do not trust. If your inventory data is inaccurate, you will always overstock out of fear.

1. Digitize: Put every part into Fabrico.

2. Prioritize: Use RCM logic to tag parts as "Critical" or "Run-to-Failure."

3. Automate: Connect OEE cycles to inventory usage for predictive ordering.

What is the difference between MRO and Raw Material inventory?
Raw Material inventory consists of the goods you turn into product (e.g., plastic pellets, steel sheets). MRO (Maintenance, Repair, Operations) inventory consists of the parts needed to keep the machines running (e.g., bearings, lubricants, gloves). MRO is often harder to track because usage is unpredictable.

What is a "Safety Stock" level?
Safety stock is the buffer inventory you keep to protect against supply chain delays or sudden spikes in usage. In Fabrico, you can set dynamic safety stock levels that adjust based on the lead time of the vendor.

How does RCM reduce inventory costs?
Reliability-Centered Maintenance (RCM) identifies which failures actually matter. If an RCM analysis shows that a specific machine has no safety or production impact if it fails, you can eliminate the expensive spare parts for that machine and simply order them after the failure occurs.

Can Fabrico handle multi-site inventory?
Yes. If you have three factories, Fabrico allows you to see stock levels across all locations. If Plant A needs a motor and Plant B has one sitting idle, you can transfer the part instead of buying a new one, saving the company thousands.

Is your warehouse full of "Just-in-Case" money?

Stop guessing. Start optimizing.

[Get a Fabrico Demo] and turn your inventory from a liability into a reliability engine.