Spare Parts Optimization
Right-sizing spare parts inventory — criticality-based stocking policy, lead time management, and working capital optimization.
The Business Case
A typical refinery carries $50-200M in spare parts inventory. Studies show 30-50% is either over-stocked (slow-moving items that will never be used in the plant's lifetime) or under-stocked (critical items whose absence causes extended production downtime). Optimization is primarily about ensuring the right part is available at the right time.
Criticality-Based Stocking Policy
Stocking policy from three factors:
- Equipment Criticality: Production/safety impact if parent equipment fails
- Lead Time: Days, weeks, or months to source and receive
- Failure Rate: How frequently does this part fail?
Tier A Critical + long lead time: Hold insurance spares on-site. Tier B: Regional warehouse or vendor-held with rapid delivery. Tier C/D non-critical: Order on demand.
Key Takeaways
30-50% of typical industrial spare parts inventory is mis-stocked — optimization generates major working capital benefit
Stocking policy must be based on criticality x lead time x failure rate — not historical practice
Capital and insurance spares for critical long-lead items are justified even at high unit cost
Slow-moving and non-moving stock should be reviewed annually and purged where no longer relevant
Apply this knowledge to your assets
Use the Astrext platform to model RUL, compare strategies, and forecast lifecycle costs — free.
Launch Platform Free →