What’s up with your obsolete MRO spare parts?

Posted by admin on November 7, 2019  / 
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obsolete mro spare parts

When the product is at the end of life cycle, it becomes obsolete.  Or it applies to products that weren’t used for a long period of time, which can also be termed as ‘unused spares’.

Obsolescence of spare parts is a major concern for industries that affect most of the equipment..

The industry is facing obsolescence of raw materials due to the following factors:

  • Incorrect stocks information,
  • Failure to manage inventory levels effectively,
  • Competitors selling the same quality materials at low prices (so products lie in warehouse longer)
  • New competitors,
  •  Innovation / disruption that make the product useless/irrelevant,
  •  Decline in overall product demand (market specific).

Why Obsolete?

Employees need to know about the stocks going obsolete and if awareness can be brought in through systems, inventory levels can be lowered as additional materials would not be procured in excess.

Poor handling of materials, inadequate codification and poor production practices often contribute to obsolete, excess and /or surplus products. It is crucial to evaluate how often products need to be purchased and stocked up, that can minimize the inventory risk. Advanced analytics generates results to identify and eliminate obsolete inventory immediately.

How to Eliminate?

Having proper administrative knowledge in inventory is important  for reducing the risk and investigation of errors or slippages.

Right identification and sourcing of products must be based on demand forecasts which can reduce surplus stocks. Use of forecasts and analytical models will be ideal for a wide range of spares, that can include slow moving, non-moving products, etc.  90% of the MRO inventory can be found to be either a slow or non-moving part. It is therefore critical that demand forecasts are also taken into account and considering the lead time and erratic patterns of use as well.

Extreme impulses to remove obsolete inventories are

  • Sometimes the scrap of some industry becomes another’s raw material. In such cases, a company can sell directly to another company which requires that.
  • Instead of disposing, the goods may need some remodelling or refurbishmentwhich can evolve new scrap products.
  • Another better approach would be to look at website/portals that connects buyers and sellers for unused MRO inventory stocks. Several online sites are interested in buying excess inventory from companies at negotiated prices. By picking the right company you can achieve maximum value for your obsolete inventory MRO stocks. .

Benefits from the disposal of obsolete inventory:-

  • Free up the warehouse space,
  • Lower the cost of holding stock

To avoid excess inventory it is advisable to have good systems, streamlined communication and collaboration between production, purchase and marketing departments, and also manage the warehousing effectively. With effective tools and optimized workflow it is possible to achieve greater efficiency and cost savings for the organization.

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