The real cost of "just-in-case" spare parts and why manufacturers keep paying for it

For decades, manufacturing organizations have treated spare parts as insurance. Once the part is on the shelf, the thinking goes, the risk is covered. Downtime is avoided. The problem is solved.

But that assumption is quietly draining capital across the industry.

In practice, spare parts don’t stop costing money once they’re stocked. They continue to consume cash, space, attention, and operational capacity year after year, often without ever delivering value. Recent industry data shows that this “just-in-case” mindset doesn’t actually reduce risk. It merely shifts it from operational downtime to long-term financial and organizational drag.

This article breaks down:

• why spare parts continue to generate cost long after purchase,
• how the insurance mindset became embedded in MRO strategy,
• and what leading manufacturers are doing differently to protect uptime without locking away capital.

The myth: spare parts stop costing money once they’re on the shelf

A persistent belief in manufacturing is that spare parts represent a one-time expense. Once purchased and stored, they’re considered “covered.”

As Martin Weber, CEO of SPARETECH, has repeatedly pointed out in his field observations, that belief ignores how inventory actually behaves over time.

Every spare motor, bearing, or gearbox sitting in a storeroom generates ongoing cost, including:

• Cost of capital tied up in inventory that cannot be used elsewhere
• Insurance and taxes applied annually to inventory value
• Storage and handling costs, including labor, utilities, and space
• Maintenance and preservation efforts to keep parts usable over time

Industry finance teams typically estimate that these elements together account for roughly 20% of inventory value per year. That means a $5,000 spare motor can cost over $1,000 annually just to sit on the shelf, never to be installed.

This cost compounds quietly. It rarely appears as a single line item, which is why it’s often underestimated or ignored entirely.

The data confirms this pattern. According to the MRO strategy gap report, spare parts spending has increased by an average of 10% year-over-year over the past five years across surveyed manufacturers, yet availability problems persist. More inventory has not translated into better outcomes.

Insurance thinking: how fear shapes spare parts decisions

Why does this pattern persist if the economics are so unfavorable?

Because spare parts decisions are rarely driven solely by financial logic. They are shaped by fear.

Downtime is visible. It’s painful. It comes with missed production targets, escalations, and accountability. Excess inventory, by contrast, is quiet. Its costs are spread out and rarely trigger immediate consequences.

This asymmetry has trained organizations to treat spare parts like insurance policies: buy more than you need to avoid the worst-case scenario.

Martin Weber describes this as the “buy it all, just in case” reflex. One that historically made sense when information was scarce, lead times were opaque, and systems couldn’t reliably tell teams what already existed elsewhere in the organization.

But the industry context has changed.

Despite continued overstocking, 32% of operations leaders still report stockouts of critical spare parts, according to The MRO strategy gap report. At the same time, 32% report high capital tied up in excess stock. These two numbers appearing side by side reveal a deeper issue: inventory quantity does not equal inventory quality.

Manufacturers are paying for insurance, but they are not actually reducing risk.

The scale of the problem: inventory that never gets used

One of the most striking findings from the industry data is how much spare parts inventory never delivers value at all.

On average, 22% of MRO inventory remains unused for more than five years. In other words, one in five spare parts purchased today will likely never be installed before it becomes obsolete, redundant, or forgotten.

This has direct financial consequences. Over the past five years, the value of capital tied up in unused MRO inventory has increased by an average of 12%, putting growing pressure on working capital and storage capacity.

I’m walking factory floors and seeing pallets of spare parts still wrapped in plastic, shipped in 2022, never opened.

Martin Weber
CEO | SPARETECH

At that point, the inventory is no longer “safety stock.” It’s stranded capital.

The problem is not that manufacturers reacted to uncertainty. The problem is that, in many cases, they never unwound those decisions once conditions changed.

Why panic stock becomes permanent

The COVID period exposed how fragile global supply chains could be. Suppliers warned customers that parts might not be available at all. In response, manufacturers did what they felt they had to do: they bought everything they could.

That reaction was understandable.

What’s more concerning is what happened afterward.

Without structured inventory reviews, cross-site transparency, or clear ownership of spare parts decisions, panic stock quietly turned into baseline stock. Parts ordered under emergency assumptions were absorbed into everyday inventory, even when the original risk had passed.

The MRO strategy gap report explains why this happens. Most manufacturers still manage spare parts with limited system support:

• 66% of manufacturers do not use dedicated MRO software
• Many rely on spreadsheets, ERP workarounds, or local processes
• Inventory data is fragmented across sites and functions

In this environment, no one has a full picture of what should be reduced, shared, or eliminated. Excess inventory becomes invisible, not because it isn’t there, but because no one is explicitly responsible for challenging it.

The hidden trade-off: capital locked away vs. capital deployed

The financial impact of this approach extends beyond inventory metrics.

Every dollar tied up in excess spare parts is a dollar that cannot be used for:

• modernization initiatives,
• workforce development,
• energy efficiency,
• or resilience investments elsewhere in the operation.

The irony is that many of these investments would do more to protect uptime and competitiveness than additional spare parts ever could.

Industry leaders increasingly recognize this. In fact, 75% of manufacturing executives said that MRO optimization leads to margin improvement, with an average reported uplift of around 2%. In manufacturing, a two-point margin shift is anything but trivial.

Yet only 34% treat MRO as a strategic priority.

This gap between awareness and action helps explain why spare parts inventories continue to grow even when their value contribution does not.

What leading manufacturers are doing differently

The most advanced organizations are not eliminating spare parts risk. They are redefining how risk is managed.

Rather than defaulting to overstocking, they focus on four structural shifts:

1. Regular inventory reviews instead of one-time cleanups

Leading manufacturers treat spare parts inventory as a living system. They review usage, criticality, and redundancy on a recurring basis, not just during cost-cutting initiatives.

2. Systematic elimination of obsolete and slow-moving parts

Parts that no longer support active assets are actively identified and removed from inventory, rather than allowed to linger indefinitely.

3. Preventive care for truly critical spare parts

Not all spare parts are equal. Critical spares receive targeted preservation and tracking to ensure they will actually work when needed.

4. Cross-site visibility to reduce duplication

Instead of every plant holding its own “insurance,” inventory is viewed at the network level. Parts that already exist elsewhere can be reused, transferred, or shared.

Industry data support the effectiveness of this approach. Among manufacturers that have adopted more structured MRO practices and dedicated tools, 96% report reductions in spare parts inventory, and 78% report lower spare parts procurement spend without sacrificing availability.

The common thread is not aggressive cost-cutting. It’s visibility, governance, and discipline.

From insurance mindset to operational confidence

The core issue with “just-in-case” spare parts strategies is not that they are cautious. It’s that they are static.

They assume that risk can be solved once, at the point of purchase.

In reality, risk changes continuously. Machines age. Product mixes shift. Suppliers stabilize or disappear. Without visibility and process, spare parts inventories drift further away from what operations actually need.

This is a mindset shift: when data and process come together, storerooms stop being cost centers and start becoming value drivers.

Martin Weber
CEO | SPARETECH

That doesn’t mean holding fewer spare parts at all costs. It means holding the right spare parts, in the right places, for the right reasons.

What to do next

For manufacturing leaders evaluating their spare parts strategy, a few questions are worth asking:

• How much of our spare parts inventory has not moved in five years?
• Do we know which parts are truly critical, and which are simply inherited?
• Can we see spare parts availability across sites, or only locally?
• When conditions change, do we have a mechanism to unwind past decisions?

Answering these questions doesn’t require ripping out systems or launching a massive transformation. But it does require acknowledging that “just-in-case” inventory is not neutral - it has a cost, and that cost compounds every year.

If spare parts inventories continue to grow while availability issues persist, the problem isn’t effort - it’s structure. Start by making the invisible costs visible. From there, better decisions tend to follow.