Part Management: An Essential Part of Business Success

By Nikolina Cveticanin

June 19, 2023

Inventory control is the main goal of part management. Any company that works with physical assets needs to stay organized to function properly, and part management is followed by additional costs.

As such, in order to run a successful manufacturing or service/repair operation, it’s necessary to have the right amount of resources at the right time, and that’s where an organized spare part management system comes in.

Effective Spare Parts Management

An effective parts management system will allow you to:

  • Know what parts and components are required for each product or service
  • Track where each part or component is located
  • Determine how many of each part or component you need
  • Control inventory levels for each part or component
  • Minimize waste and inventory costs

As you can see, spare parts management can reduce downtime, as it can eliminate any inefficiencies in your daily operations. It can also increase customer satisfaction by helping you provide fast service and reduce your overhead costs. 

Best Practices for Spare Parts Management

There are many benefits to integrating an effective parts management system in your business, and that’s why we’ll explore some of the ways to optimize it further for your organization.

Identifying Critical Components

Any operation wanting to implement successful parts management needs to identify what components are essential for their business to run without interruption. 

You can do this by looking at factors such as downtime costs, frequency of failures, lead times, and conducting an ABC analysis. By knowing which parts are critical, you can ensure they’re always in stock and available in the event of an emergency.

Once you’ve identified the critical components, you can focus on your efforts to improve the availability of those components. This may involve stocking more inventory, developing better supplier relationships, or implementing just-in-time delivery. 

ABC analysis is a method of categorizing items according to their consumption value, which represents the value of the item over a specified period of time. 

Items that are considered essential for the operation and have the highest consumption value are classified as “A” items, while those that are less critical are classified as “B” or “C” items. 

This type of analysis can be particularly helpful in spare parts management, as it allows managers to focus on keeping a stock of essential items while minimizing the cost of less important ones. 

Applying such practice to your part inventory management system does come with additional costs, but it can provide peace of mind and safeguard against unexpected disruptions. 

Inventory Volume and Sawtooth Diagrams

You can graphically contextualize when you need to order new parts by using sawtooth diagrams. In the example below, you have inventory levels of a certain part represented on a y-axis and time on an x-axis. 

Each peak is the maximum inventory capacity for that part, and the distance between them is the time between each shipment. However, the lead time determines when you need to reorder the part before it’s gone from your inventory. This approach is easily implemented in your business operations, but before applying it, you’ll need to determine the maximum and minimum inventory levels needed for each part in the inventory. 

Maintain a Bill of Materials

Efficient spare parts management greatly depends on having an up-to-date bill of materials by providing a clear and concise list of all the parts you need. 

This can help reduce the time needed to find and order the correct parts, as well as prevent ordering unnecessary parts.

Economic Order Quantity

The economic order quantity is a mathematical formula that helps businesses determine how much of a product to order at a time in order to minimize the costs of inventory. 

The EOQ takes into account the costs of ordering, holding, and spoilage of inventory. Determining the EOQ is the perfect way for businesses to find the ideal amount of spare parts to order, and it can also be applied to any kind of product.

Work Order Process Standardization 

Standardizing work order processes within your organization is a great way to improve your parts inventory management. Once implemented, the process needs to be precise and easy to follow. 

Before implementing your own work order process, consider the following: 

  • How difficult is it to obtain parts without a work order?
  • How do you identify employees that don’t follow procedure and lead to imprecise inventory tracking?
  • Is your work order flexible enough so that high-priority work orders can be focused on?
  • Can you process work and purchase orders on time to avoid waiting for delivery?

You should have a system where each spare part is associated with a work order. Other departments need to have an overview of all work orders for the sake of efficient spare parts planning.

Inventory Control – Employee Training

Maintaining an accurate overview of your inventory will depend on how well you train your employees in regard to spare parts management procedures. That’s why it’s important to invest enough time in proper inventory management for employees who handle spare parts.

There are plenty of resources online, including seminars and training programs. It’s up to you as a business owner to choose one that covers the basic procedures and software solutions you wish to implement. 

Taking Stock Of Lead Time

An essential part of spare part management is to know your suppliers’ lead times. This is essential for inventory managers, as it allows them to plan out what parts they need to stock and in what volume. 

We’ve already mentioned the importance of keeping stock of critical spare parts, as not having them stocked can have a significant financial impact on your business. You also don’t have to keep non-critical parts in reserve, as having too much inventory stock can incur additional costs.

Managing inventory effectively includes avoiding expensive shipping options and establishing regular order times based on part expenditure. 

Sometimes, managing your spare parts inventory will require you to order parts and components from other manufacturers, as your main supplier might not be able to make the shipment. Therefore, keeping a list of substitute suppliers is necessary to reduce wait time for the manufacturing and maintenance departments. 

Risk Calculation

Equipment malfunctions and machine overhauls are unavoidable, and that’s why the parts warehouse inventory needs to account for the risk of downtime.

An effective part management system can help reduce downtime by ensuring the correct parts are available when needed. However, it’s easy to overcompensate and create unwarranted expenses. 

As such, it’s necessary to maintain inventory adequately while also minimizing the amount of money tied up in it. This can be difficult for small businesses to budget correctly, and it’s important to take into account the amount of risk associated with each item in stock.

For example, a business might have a critical piece of equipment that needs a particular set of parts to function. If those parts aren’t readily available, the company could be at risk of losing money or, worse, shutting down entirely.

The parts management plan should account for this, and in this case, it would be important to have a large inventory of spare parts for the critical piece of equipment.

However, if the business is able to order the parts as needed, it would be less important to maintain a large inventory of spares, especially non-critical ones. 

Investing in a Spare Parts Management Software

A computerized maintenance management system – CMMS – can help enforce some of the best spare parts management practices. For example, a CMMS can ensure that parts are ordered and received in a timely manner, that they’re properly stocked and tracked, and that they’re properly used and maintained. 

Additionally, a CMMS can help identify potential problems with spare parts management and address them before they become larger issues.

One handy practice for parts management is known as “just in time,” or JIT. This strategy calls for having only the necessary parts on hand and not keeping any more inventory than necessary. This can be difficult to do without a computerized system.

A CMMS can help managers see which parts are being used and predict when they’ll need to be replaced. This allows them to order just enough parts to meet the demand, rather than making approximations and ordering too many or too few.

Overall, efficient inventory management software can help maintain inventory accuracy, confirm stock locations, maintain stock levels, and ensure effective management processes.

Limiting Access – Inventory Control System

In order to maintain an efficient spare parts management process and avoid inventory inaccuracies, make sure that only parts department employees have access to the inventory.

Consider the following practices to implement better security measures: 

  • Having parts inventories limited to authorized employees
  • Implementing physical security measures
  • Installing security camera systems
  • Instructing employees on the proper procedures and conducting regular reviews of essential spare parts

Fortunately, smart security systems are becoming quite popular and affordable. These security measures can help deter theft, protect inventory from damage, and ensure that only authorized personnel has access to parts. 

Closing Thoughts

Spare parts inventory management can be a complex and time-consuming task. However, it’s a crucial part of keeping a business running smoothly and avoiding costly downtime. 

By following the tips and best practices outlined in this article, you can ensure that your spare parts are managed effectively and efficiently.


What is the objective of spare parts management?

The objective of spare parts management for maintenance and production is to ensure that spare parts are organized, stored, and kept track of in an efficient and effective manner. This can help avoid costly downtime and keep a business running smoothly.

What do you mean by spare parts management?

Spare parts management is the process of organizing, storing, and keeping track of spare parts. This can be done manually or with the help of computer software.

What is a part inventory?

A part inventory is a list of all the spare parts that a company has on hand. This can include information such as the part number, description, quantity, and location.

How do you manage inventory parts?

There are several ways to implement effective part management. One of the most popular options today is to use a computerized maintenance management system, or CMMS.

This can help enforce some of the best practices of spare parts management, such as ordering and receiving parts in a timely manner, tracking inventory accurately, and using and maintaining parts properly.

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