FREE: Introduction to Uptime Elements Reliability Framework and Asset Management System

Those of us in the business of supporting maintenance with spare parts have an obligation to maintain accurate inventory balances in our storerooms. We do this because an accurate inventory is helps reduce inventory investment without sacrificing service (part availability). If inventory balances are accurate, there is confidence that material will be available when needed and that "just in case" inventory is not needed. However, within our work groups there is often a lack of consensus on what constitutes accurate inventory. It is not unusual for finance to believe accuracy is better than ninety-nine percent while the maintenance department believes that same inventory has an accuracy of fifty percent, but both groups are correct. The purpose of this tip is to help your organization achieve consensus on what constitutes accurate maintenance spare parts inventory.

Oliver Wight1 told us forty years ago that our inventory balances should be as accurate as "a bank clerk's cash drawer." The question is: How do you define accuracy? Is it the total balance of all cash in the drawer or is it the exact number of quarters, dimes and nickels? To support maintenance it is important that the exact number of nickels and dimes be accurately stated.

The first step to improved accuracy is consensus on the definition of what constitutes an accurate inventory. We believe the best measure is based on a part item count. If a part item in inventory indicates one hundred pieces in stock and we count ninety-nine this is an error. The next table is an illustration that shows how this should work when more than one part item is considered.

ABB Table 1 Image

In our example, the asset value of the storeroom inventory for shareholder reporting is over ninety-nine percent. However, this same data suggests the accuracy is only ten percent for supporting users in the field.

We believe accuracy levels of ninety-nine percent based on Item Count are a realistic expectation for most companies.3 Where do you stack up?

So as with any metric it is important to understand the intent and the behavior it drives. In the end you have to take the time to define what it is and how it is calculated for your company and concentrate on driving improvement for your site.

1Oliver Wight was a noted expert and author in the field of Production and Inventory Control

2Most inventory accuracy measures require that parts be in the correct location in addition to having an accurate quantity. For purposes of simplicity in the example we have omitted this measure.

3Some storeroom items will have a plus or minus accuracy margin for individual part numbers. These usually include weigh count parts, wire, rope, etc.

Tip provided by: Shon Isenhour, Business Consultant
Tel: +1 843-810-4446
ABB Logo

Upcoming Events

August 8 - August 10, 2023

Maximo World 2023

View all Events
80% of newsletter subscribers report finding something used to improve their jobs on a regular basis.
Subscribers get exclusive content. Just released...MRO Best Practices Special Report - a $399 value!
IMC-2022 Who's Who: The World's Best Run Companies

The International Maintenance Conference (IMC) provides a fresh, positive community-based curated experience to gain knowledge and a positive perspective for advancing reliability and asset management through people, their managers, the strategy, the processes, the data and the technology.

Uptime Elements Root Cause Analysis

Root Cause Analysis is a problem solving method. Professionals who are competent in Root Cause Analysis for problem solving are in high demand.

Reliability Risk Meter

The asset is not concerned with the management decision. The asset responds to physics

Why Reliability Leadership?

If you do not manage reliability culture, it manages you, and you may not even be aware of the extent to which this is happening!

Asset Condition Management versus Asset Health Index

Confusion abounds in language. Have you thought through the constraints of using the language of Asset Health?

Seven Chakras of Asset Management by Terrence O'Hanlon

The seven major asset management chakras run cross-functionally from the specification and design of assets through the asset lifecycle to the decommissioning and disposal of the asset connected through technology

Reliability Leader Fluid Cleanliness Pledge

Fluid Cleanliness is a Reliability Achievement Strategy as well as an asset life extension strategy

MaximoWorld 2022 Conference Austin Texas

Connect with leading maintenance professionals, reliability leaders and asset managers from the world's best-run companies who are driving digital reinvention.

“Steel-ing” Reliability in Alabama

A joint venture between two of the world’s largest steel companies inspired innovative approaches to maintenance reliability that incorporate the tools, technology and techniques of today. This article takes you on their journey.

Three Things You Need to Know About Capital Project Prioritization

“Why do you think these two projects rank so much higher in this method than the first method?” the facilitator asked the director of reliability.