Spare parts are seen as an asset, but are they your most significant liability?

In modern manufacturing, efficiency is everything. Margins are tight, global competition is fierce, and resources, whether financial, human, or material, must be used wisely. Yet in many plants, a quiet but costly inefficiency persists: spare parts that sit unused for years, occupying shelf space, tying up working capital, and quietly draining value from the business.

Spare parts are the lifeblood of maintenance, repair, and operations (MRO). Without them, production stops. But the need for readiness often drives organizations to overcompensate. Stocking “just in case” parts without accurate forecasting or visibility can result in large inventories that are rarely, if ever, used. Over time, these parts can become obsolete as equipment is upgraded or phased out, yet they continue to consume budget, space, and attention.

These inefficiencies rarely draw the same urgency as production delays or supplier disruptions. They grow in the background, accumulating year after year, until the cost becomes too large to ignore.

The scale of the problem

Recent data from The MRO strategy gap: The overlooked lever for margin growth has confirmed what many manufacturing leaders already suspect: a significant portion of MRO inventory is not delivering value. On average, 22% of MRO inventory remains unused for more than five years. This stagnant stock has contributed to a 12% increase in tied-up capital over the same period. At the same time, annual spend on spare parts is rising by 10% year over year.

Figure 1. The rising cost of MRO inaction

The financial impact is far greater than the purchase price of the unused parts. Industry estimates put annual inventory carrying costs, including storage, insurance, labor, and depreciation, at between 20% and 30% of the inventory’s value¹. When a fifth of that inventory is not moving, the drain on working capital is significant.

The truth behind growing inefficiency: Why parts go unused

Several common factors contribute to this growing inefficiency:

1. Poor visibility and data quality: Without an accurate, centralized, and standardized inventory record, teams may not know what they already have in stock. As a result, they buy duplicates or overlook parts already on hand.
2. Reactive purchasing practices: In the absence of accurate demand forecasting, organizations often buy parts “just in case,” especially during periods of supply chain uncertainty.
3. Equipment upgrades and obsolescence: As new machinery is introduced, parts for older models become obsolete. These are often left in storage rather than removed from the system.
4. Lack of inventory rationalization: Without regular clean-ups of unused or slow-moving stock, storerooms become congested, making it harder to find critical parts when they are needed.

The ripple effect of idle inventory

Unused spare parts are not just a financial problem; they create operational and organizational friction.

Firstly, they result in reduced agility. Storerooms cluttered with low-value or obsolete parts make it harder for maintenance teams to quickly locate the right component, increasing repair times and risking extended downtime. Secondly, capital locked in idle stock cannot be redirected toward productivity-enhancing initiatives, such as new equipment, automation, or employee training. This means businesses are losing investment opportunities. Finally, this is also a sustainability issue. Holding parts that will never be used increases waste. Without a plan for resale, recycling, or repurposing, these components often end up as scrap.

Zooming out to see the industry-wide challenge

The problem is not limited to any single manufacturing sector. In fact, studies in asset-intensive industries suggest that 20–30% of spare parts inventories are obsolete or unused². The complexity of MRO supply chains, large SKU counts, variable demand, and high uptime requirements makes them particularly susceptible to overstocking.

“Carrying costs for unused spare parts are far more than the purchase price,” Martin Weber, Cofounder, SPARETECH, said. “When you factor in salaries, facilities, utilities, insurance, and administration, the annual cost of keeping a part in inventory can reach 20% of its value, and that’s every single year. It means a $5,000 motor sitting on a storeroom shelf could cost another $1,000 annually to keep it there. Over time, it is easy to double the total cost of ownership without ever even using the part. And if that part is not maintained while in storage, it may fail to perform as expected or have a shortened lifespan when it is eventually put into service.”

Even companies with mature procurement and maintenance processes struggle. As organizations expand globally, inventories become distributed across multiple sites, often with inconsistent tracking systems. This fragmentation magnifies the difficulty of managing parts efficiently at scale.

Turning inefficiency into opportunity

The good news is that idle inventory represents a solvable problem and an opportunity to unlock measurable savings. Addressing it requires three core actions:

Integrate data from all sites into a single, accurate inventory view. This allows procurement and maintenance teams to see what is already available before placing new orders. Our recent report shows just how limited current visibility really is.

Apply consistent naming conventions and classifications, and verify parts against manufacturer data. This eliminates duplicates and ensures everyone is working from the same information. It also reduces reliance on time-consuming and error-prone manual tasks. Our research shows that many companies still manage spare parts without dedicated MRO software, making it difficult to achieve accurate, consistent master data.

Top tip: To be effective, a one-time data cleansing project is not enough. Instead, organizations need to establish continuous lifecycle data management processes to ensure data remains high-quality.

Regularly review inventory to identify slow-moving or obsolete items. Dispose of them responsibly, resell them if possible, or redeploy them to sites where they are still needed. Check out the report for more information on the one-fifth of spare parts that sit unused for five years or more.

These three steps not only free up working capital but also streamline maintenance operations, reduce procurement lead times, and improve decision-making.

The opportunity in spare parts management is now

Unused spare parts may seem like a minor problem compared to production downtime or missed delivery deadlines, but their cumulative effect is profound. They represent locked capital, unnecessary carrying costs, and lost operational agility.

The solution lies in better visibility, disciplined data management, and continuous rationalization. With these in place, manufacturers can transform idle inventory from a hidden liability into a source of strategic advantage.

Our recent report explores this challenge in greater depth, along with other inefficiencies in MRO management. Download it to see:

• How manufacturers are tackling partial standardization,
• The role of digital tools in improving visibility, and
• The real-world results achieved by those who have already embraced smarter MRO practices.

Sources

¹ Oracle Netsuite, Inventory Carrying Costs: What It Is & How to Calculate It, 2020
² Reliable Plant, Wally Wilson, What’s the Real Cost of Spare Parts Inventory?