Slow-moving parts are an unfortunate reality when dealing with asset lifecycle management, and they are a critical issue to control when ongoing maintenance and reliability are your primary concerns.

Identifying slow-moving spare parts in your inventory requires insight into a given part, including knowing how long you’ve owned it, how long it’s been waiting to be used, and how often it’s used in the first place. Fortunately, a robust computerized maintenance management system (CMMS) can easily track all that data.

Identifying, managing, and preventing the growth of slow-moving parts in your inventory is not always straightforward. But this article will get you started with the basics, ultimately helping you better meet your organization’s maintenance needs.

What Are Slow-Moving Parts?

Not everything in your organization’s inventory will have the same demand. Slow-moving parts are items that have been in your inventory for an extended period of time with little to no usage.

How long is too long for a part to be sitting in storage, or how low demand has to fall for it to be a concern, will vary from business to business. But getting ahead of a growing inventory of slow-moving parts is essential to preventing them from becoming obsolete.

Obsolete parts are items in your inventory that are no longer sold or used due to changes to your product lineup, the assets you’re maintaining, or your customers’ interests. Not all obsolete parts necessarily start as slow-moving parts. But if you hold onto a spare part for long enough, it could become outdated, making the need to eliminate it from your inventory much greater.

What Are the Costs of Slow-Moving Parts?

A growing inventory of slow-moving parts can lead to a cascade of increased costs across your entire business. Because they are not used as frequently as other spare parts, slow-moving parts are simply capital that’s been spent but isn’t being used. And that ongoing deficit only grows if changes aren’t made to ensure slow-moving parts don’t continue to accrue.

Managing the cost of slow-moving parts extends beyond the individual part itself, too. Spare parts can take up physical inventory space, which could mean extra rent for storing the parts or paying more to maintain the building in which they’re stored. Choosing to hold onto slow-moving parts rather than items that are more in demand also means you may lose out on additional sales or the ability to meet maintenance requests quickly.

Another existential cost of slow-moving parts is the potential for those underused parts to become obsolete as your organization changes around them. There are ways to manage your slow-moving parts, but an obsolete spare part is more challenging to get rid of and will ultimately cost you more than just the sticker price in the long run.

However, removing slow-moving parts alleviates these costs, freeing up space in warehouses, eliminating the possibility of parts becoming obsolete, allowing capital to be reallocated towards purchases with more of an immediate impact, and ideally improving your organization’s revenue over time.

How to Manage Slow-Moving Parts Effectively

The first step to managing the number of slow-moving parts in your inventory is identifying them. A regular inventory reporting process should be carried out to create records highlighting orders, restocks, preventative maintenance, and other information you need to identify slow-moving parts in your inventory. Or, if your organization already uses a CMMS, you will be able to call up that information on demand.

Here are some metrics that can help you track slow-moving parts:

  • Comparison to past demand: One big-picture way to find slow-moving parts is by comparing current demand against demand during a chosen range of previous years. Maybe you’re looking to see if you’re selling less than 60% of a given product this year compared to the past three years. Or you might want to see how often a particular spare part has left your inventory this month compared to five months ago. The units will vary, but the point is you should also have a historical record to refer back to.
  • Time in inventory: Looking at your current inventory and determining which items or parts have been in stock the longest is also a good indicator of potential slow-moving parts. You’ll need to determine how long is too long for a part to be in stock, but you should be able to identify a trend by referring to past records or your organization’s CMMS.
  • Replacement orders: In cases where you automatically order new replacement parts when you’ve run out, looking at which items haven’t been replenished recently is another sure way to identify and catalog slow-moving parts.

Once you’ve identified slow-moving parts in your inventory, the next task is eliminating them. In some cases, outright removing the parts might be the best course of action, especially if more involved solutions would be more costly. If removing the slow-moving part from your inventory is not the best course of action, there are a few other strategies you could deploy:

  • Promotions: For a product you explicitly sell to customers or clients, adding some bonus to the purchase of that item, like bundling it with similar or adjacent products, could incentivize sales.
  • Sales & price cuts: Another way to generate interest in a slow-moving part is by temporarily putting it on sale or permanently cutting its price. Your organization might not earn back all of the capital it spent on the part, but you at least won’t lose those parts with nothing to show for it.
  • Tax-deductible donations: As an alternative to selling the slow-moving part, your organization could donate it for a tax write-off. The returns aren’t the same as selling the part outright or finding a new use internally, but it’s still better than nothing.

Calculating Slow-Moving Parts Percentage and Obsolete Parts Percentage

Once you’ve identified slow-moving parts in your inventory and started considering methods to remove them, you might want a simple statistic you can point to that shows the current amount of slow-moving parts you have on hand. The slow-moving parts percentage is the go-to statistic to use.

By taking the number of slow-moving parts in your inventory, dividing it by the total number of parts in your inventory, and multiplying that total by 100, you’ll get a percentage you can refer to at a glance.

Number of Slow Moving Parts in Inventory / Total Number of Parts in Inventory x 100 = Slow Moving Parts Percentage

If you are curious about the percentage of obsolete parts in your inventory, you could go about the calculation in a similar way. Take the number of obsolete parts divided by the total number of parts in your inventory times 100 to get the percentage.

Number of Obsolete Parts in Inventory / Total Number of Parts in Inventory x 100 = Obsolete Parts Percentage

Because obsolete parts often start as slow-moving parts, these percentages can have an inverse relationship where the percentage of slow-moving parts decreases as the percentage of obsolete parts increases. The specific definitions of both may vary depending on your business or organization, but these percentages are still something to look out for while doing inventory management.

Strategies to Reduce Slow-Moving Parts in Inventory

As is often the case with inventory issues, eliminating the current problem is only half the solution. And in the case of managing slow-moving parts, prevention is your best strategy. With maintenance in mind, preventing more slow-moving spare parts from piling up in your inventory can be handled in several ways.

  • Regularly schedule maintenance: Scheduling maintenance in advance based on asset use and time between repairs can help you predict when you’ll need a given replacement part. This eliminates the need to keep a constant supply of them on hand. And as a bonus, a set maintenance schedule could also help you lower the number of emergency repairs.
  • Annually review inventory: The best way to understand what you have on hand is to track how often it’s used and how often you order more. Understanding the demand for a given part, in turn, lets you set things like the maximum number of that part you should keep in your inventory, cutting down the possibility of slow-moving parts collecting.
  • Set up a warning system: Once you’ve identified slow-moving parts, you have a set of standards to judge the rest of your current and future inventory. Building a warning system using your inventory management or CMMS software can then alert you when values fall below a predefined threshold, signaling that you should start pulling levers to prevent more of your inventory from becoming slow-moving parts.

The Balancing Act of Inventory Management

Dealing with slow-moving parts is a natural part of conducting inventory management for any business, and in many cases, across multiple sites of a business. The task can be complex. But with the correct information about the inventory you have on hand and how often you’re using each part, minimizing slow-moving parts is far from an insurmountable problem.

With good record-keeping enabled by capable software, managing slow-moving parts is not only an issue you can solve in the short term; it’s an issue you can prevent in the long term.