5 Things to Consider When Doing Spare Parts Inventory Management

Some people forget the importance of inventory; they think that only assets are important, but they are wrong! Inventory is equally important as an asset; in fact, for some sectors such as retail, manufacturing, healthcare, IT, Media, etc., inventory is even more crucial than an asset, which is why inventory tracking is also important! There is a lot of inventory that is kept for future production, which is known as spare part inventory. Sometimes, by mistake, inventory miscalculation also leads to this type of scenario. So, you have to keep spare part inventory tracking also. Thus, in this blog, we will discuss a few things related to spare parts inventory management.

What Is Inventory Management?

It is a systematic approach to managing, monitoring, storing, and selling inventory. Inventory can be raw material or a finished product. There should neither be an excessive amount of stock nor too little; if you are doing this, then it is effective inventory management.

What Are the Important Things to Consider While Doing Spare Part Inventory Management?

Below, we have mentioned some crucial points for spare part inventory management:

Points For Spare Parts Inventory Management:

1. Tag Your Precious Inventory

Inventory can be as costly as assets. Sometimes it is also referred to as stock. Almost all stock has a validity; they should be utilized before they are not valid. You would not want to find some inventory in your warehouse that has expired a long time before. This type of incident kills your business silently. But we know warehouses are so big one cannot remember manually. Therefore, inventory batch tracking shall be done. It means all the inventory belonging to the same category should be packed in a batch, and they should be labeled so that one can always find where inventory is stored. So that anyone can find inventory no matter how big your warehouse is or where you store inventory!

2. Follow Official Work Order Procedure

For the asset maintenance industry, a work order must be used even for small jobs. Through this process, you will know each work order & its history and inventory used in the process. If employees use inventory parts without keeping proper records, then you will not be able to keep track of inventory. In short, inaccuracy will be there in your spare parts inventory management. Therefore, for effective spare parts inventory management, organizations should emphasize formal work order procedures, and no work order shall be done without proper paperwork. Make employees accountable to follow the formal process.

3. Perform Audit Regularly

Specific grouping of inventory can be done to make sure that inventory is accurate. Inventory can be divided into 3 categories A, B, and C, in which category A will contain that inventory which is costly. Category B can contain semi-costly inventory, and Category C can contain inventory that is not costly. Inventory can be very important to your business or maybe not, depending on the nature of your business. When you keep auditing your inventory regularly, you will know which inventory is expiring soon, so you can finish that stock.

4. Keep Inventory Restricted

Inventory is one of the major areas where security is a must. According to the PR News Wire, “Inventory shrinkage cost retailers $100 billion in 2017 alone, or 1.82% of all sales globally, with $42 billion of that figure tied to losses for U.S. retailers.” The inventory shall be kept in secured areas so that no miscalculation happens. Inventory security is also important because theft is a big issue. Hence, only a limited number of people should have access to the inventory warehouse. These people should be reliable and accountable for inventory. For other people, this area should be off-limits. This will be the first step toward securing your inventory. Because you will use spare parts when you have if someone steals it or the spare part expires then it will not be useful. Moreover, it will be good for the company's bottom line.

5. Invest in Inventory Management Software

Utilizing inventory management software can be an icebreaker for your business. As it provides alerts and notifications on different events. You can optimize your inventory better. It has the feature of re-ordering which can be very beneficial as it frees you from managing inventory manually. Whenever the inventory goes below the defined level, it will alert the inventory team for refilling stock. It will also provide crucial data regarding inventory which can assist you in the business decision process. Moreover, it can give you an idea about how much inventory you are using! Inventory tracking software can make your process automated and it will reduce the chances of error. You will be able to manage your inventory more effectively and reduce the expenses of inventory by avoiding the wastage of inventory. Furthermore, with this software in place, there will be a perfect balance in your inventory; it will neither be overstocked nor low stock.

Conclusion

Spare part inventory management is very important as they are the responsibility of the organization. If not utilized effectively, it will only become excess baggage rather than becoming a source of revenue generation. For efficient spare part inventory management, all the above-mentioned points can be helpful. Most importantly, an organization should invest in an automated inventory or asset management software that can be utilized. It can provide several advantages to an organization.

Frequently Asked Questions (FAQs)

What is Inventory tracking?

Inventory tracking monitors your inventory such as where it is kept, how much quantity is there, and the status of inventory such as damaged, ready to use, return, etc. These inventories are also tracked with tracking methods such as barcode, QR Code (Quick Response code), RFID (Radio-frequency identification), NFC (Near field communication), etc.

What is Inventory shrinkage?

Inventory shrinkage is a term related to inventory management. It suggests the loss of inventory. For example, in your register numbers do not match with a physical calculation which is known as inventory shrinkage. Inventory shrinkage affects the business balance sheet.

Why is spare parts management important?

Spare parts management is important because, without it, downtime risk is increased, quality of work is not delivered, work can be delayed, and it can be expensive because, in emergencies, you may not have the time to look for other alternatives.