Unless you’re keeping a constant eye on what you need and where it is,  inventory costs can quickly eat into your bottom line. Without careful inventory management, problems can quickly pile up, from wasting time waiting on critical parts to wasting money watching materials degrade or disappear.  

But tracking inventory doesn’t have to be complicated or confusing. And it doesn’t need to be a lot of work on your end, either. With the right solutions, you can have exactly what you need right when you need it, and all for the right price.  

But before we look at how to improve inventory management, it’s important to look at what it is and why it’s critical. 

What is inventory management? 

Ideally, inventory management is the collection of processes and procedures you have in place to ensure you have the parts and materials you need, when you need them, at the lowest possible cost. 

Depending on your industry, this can mean a lot of different things, from controlling the flow of raw materials into and across production lines to tracking the movement of finished products from warehouses to retail locations. For facility and maintenance managers, inventory control is often closely connected to maintenance, repairs, and operations (MRO) inventory management. 

That’s the theoretically. But in practice, when it comes to inventory, many organizations, and this is true across industries, fall into the trap of trying to have a lot of everything on hand, hoping they always have what they need when they need it. The problem is that every type of inventory you have comes with its own set of costs separate from and in addition to what you paid for it. So, if you have a lot of inventory, you also have a lot of costs. 

For example, because rubber degrades over time, you need to store gaskets in a climate-controlled area, out of both direct sunlight and intense artificial light, and away from anything that produces ozone. And because of their resale value, you need to store motors and electrical components in secure areas where you can limit access. 

Inventory management is how you control inventory so that you have only what you need, right when you need it.  

What are the types of inventory management? 

Just like there’s no one perfect maintenance strategy, different industries need different types of inventory control. There are also times when the size of the company dictates the best type of inventory management.  

ABC analysis 

Here, you break your inventory into three broad categories, A, B, and C, according to cost, with A holding your most expensive parts and materials. For each category, you then set up specific processes and procedures for tracking. For your A inventory, you might keep everything under lock and key, with a close count of what you have and who has used what. But with the C inventory, for example something like disposable ear plugs, you might keep those open and accessible on a shelf, only checking every so often how many boxes you have. 

FSN tracking 

Instead of looking at cost, here you’re focusing on how often different types of inventories are used, and then categorizing them as fast, slow, or non-moving. The advantage is that you get a clear picture of what you need to stay on top of for purchase orders and what you need to stop stocking altogether. Once you know your non-moving inventory, you know what you don’t need. 

For a maintenance manager, there are different reasons inventory can become non-moving. For example, you might have been stocking a specific fan belt because the team needed it to maintain one of the forklifts. But once you’ve retired and replaced that model, all the remaining belts just sit in the supply closet. 

JIT inventory 

Some auto manufacturers love this one, because it promises to push the carrying costs for inventory back onto the supplies. Instead of ordering a lot of inventory you have to look after as you wait to use it, with the Just in Time method, you schedule inventory to arrive just before you need it. 

For maintenance teams, this can be risky because although they can predict when they need parts and materials for scheduled preventive maintenance, there are always unexpected failures. And when they don’t have the parts they need to get assets and equipment back online, costs run up quickly.  

What are the benefits of inventory management? 

Good inventory management can save you 10-30% a year on your inventory costs, so proper inventory management is critical. No matter the size or type of company, efficiently managing your inventory has a large impact on your bottom line. 

When you have control over inventory for maintenance, repairs, and operations, you can finally: 

  • Reduce unscheduled downtime 
  • Improve overall productivity 
  • Improve safety for techs and operators 
  • Meet regulatory compliance 

Reduce unscheduled downtime 

Downtime is a fact of life, but you can minimize it with a good preventive maintenance strategy. A proper inventory management system is also vital to reducing your downtime. If you order the right parts at the right time for your preventive maintenance work and keep only your most critical inventory on hand, your technicians always have what they need to get work done and keep your assets running. 

Increase overall productivity 

Some estimates say that technicians spend as much as 25% of their time trying to find the right parts to do their job. That’s a lot of time they could be repairing your assets, not to mention the money it’s costing you every minute assets are offline. By adopting mobile-friendly inventory management software, you can track parts, automatically assign them to work orders, and easily reorder them before they run out, so you don’t lose any productivity. 

Improve safety for techs and operators 

Keeping your team safe is a top priority. Every injury in the workplace can lead to compensation, OSHA fines, and even litigation. Keeping your inventory properly stocked with PPE is a big part of keeping your team safe. But having the right parts for every job is also important. Instead of techs falling back on make-do fixes and jury-rigged solutions, having the right inventory means the team does their work properly, up to code, and in the safest ways possible. 

Meet regulatory compliance 

Every industry has regulations they must adhere to, including ones connected to inventory. When parts are out of place or mismanaged, and assets are offline, and especially if you’re lacking proper safety equipment, you can quickly fall out of compliance, costing you money you didn’t need to spend. 

Why are you spending too much on inventory? 

One way to talk about cutting costs is by looking at where you’re currently spending too much. Everyone can make their own mistakes, but there is a collection of classic traps that many people manage to fall into, including:  

  • Too much inventory ready on hand 
  • Inefficient maintenance scheduling 
  • Too little inventory ready on hand 
  • Inefficient inventory purchase orders 
  • Outdated and inefficient tracking procedures 

Inventory is often one of a business’s largest expenses, and it’s for good reason: if you don’t have it, you can’t sell it. Your company may not sell finished products, but if you don’t have the proper parts to repair your production equipment or maintain your facility, you can’t produce the widgets your company sells or keep your facility running efficiently. 

Let’s look a little closer at how the costs of these inefficient inventory practices add up. 

Too much inventory ready on hand  

It’s not uncommon to order parts from a supplier in bulk in order to negotiate a better deal. However, it all may end up costing you more in the long run than what you first paid for the parts. Most companies only use about 8-10% of their stored inventory on an annual basis.  

When you hold inventory, you accrue carrying costs for things like rent and insurance on the facility, utilities, labor to keep the parts on the shelves and even to organize them. 

Carrying extra stock of everything also inevitably leads to loss as parts spoil, degrade, or become obsolete. In fact, somewhere between 90% of inventory is never used during the year according to Wally Wilson, an industry expert with over 30 years of experience in supply chain management. 

Inefficient maintenance scheduling 

Planning and scheduling regular maintenance ahead of time gives you much more control over your inventory. When you know when you’ll need parts, you don’t have to hold onto them in case you might use them. You already know exactly how many you’ll need and when, so you can order appropriately. 

Using a good inventory tracking software platform can also help you because you can set it up to automatically assign parts to planned maintenance work and notify you when you’re running low based on custom min/max levels you determine. If inventory tracking is part of a larger enterprise asset management (EAM) software, you can create templates for your work orders that include the parts used for recurring maintenance work, and automatically generate and assign work orders when it’s time for preventive maintenance work. 

Too little stock ready on hand 

How many times has critical maintenance work been delayed because you don’t have the necessary parts in stock? According to the Aberdeen research group, 50% of all unplanned equipment downtime can be traced back to a lack of parts. 

Not only does a lack of inventory lead to more downtime, but you’re also spending money on technicians who don’t have anything to do because they’re waiting on parts. Using robust inventory management software can help you ensure you always have the right parts, in the right place, at the right time. 

Inefficient inventory purchase orders 

It’s easy to forget that purchase orders cost money. For every purchase order you create and send, you’re paying for someone to take time to do it, shipping costs to get the parts to you, and any other overhead expenses. If your purchasing manager is generating and sending a PO for every part you need, you’re wasting time and money. 

If you’ve correctly identified the appropriate maintenance strategy for your assets, and you have an efficient preventive maintenance program in place, you can combine your purchase orders and only order when you need to. 

Outdated and inefficient tracking procedures   

The fact is quite a few companies still rely on paper charts or spreadsheets to track inventory. Using these outdated and inefficient methods inevitably leads to miscommunication and delayed maintenance work. 

You may have a part in stock, but if your technician doesn’t know that the maintenance manager has already assigned it to a more critical work order, then the team can’t complete the more important maintenance, which could be disastrous. 

How can you cut inventory costs? 

So, now that we know what can cause the problems, let’s look at some of the solutions.  

There are a few basic guidelines you can follow to begin managing your inventory more effectively. Best of all, there are some great tools that can help. But before you can reach the goal of an efficiently managed inventory, you need to start with some basic steps. 

Figure out what you have 

Manually identifying your inventory can be time-consuming, but it’s a vital first step. If you don’t already know what you have, you don’t know what you need. The good news is that any good inventory management software provider can help or even take on this job for you. The best ones can send a professional to your sites and perform a complete audit of your inventory and assets so you can stay focused on your job. 

An important part of this process is identifying the critical inventory vital to your production. Critical parts are items that either have a long lead time, are extremely specific or proprietary, or have an immediate impact on production. These items are generally large and expensive and are only needed every so often, but you do need them, you need them immediately. Any delay in having this item on hand can have devastating consequences. 

These high-risk items, meaning if you had zero on hand your company would be at high risk, can be easily managed with your inventory management software so you don’t ever have to worry about not having them when you absolutely need them. 

Figure out where it is 

Next, you need to know where your inventory is located. During this step, you might find out you had inventory in places you didn’t even know you had it. You might also discover ways you could make more efficient use of your storage space. If you have multiple facilities, you might notice discrepancies or inefficiencies in where you are storing your inventory across your sites. 

Figure out how to organize it 

This step is key to being able to stay on top of your inventory, but you can’t do it properly until after you’ve identified what you have and where you have it. Once you know that information, you can figure out the best way to organize your inventory. 

The most common way to organize inventory is by numbered isles and bins. This is generally the most effective way to organize inventory, and it makes it consistent for everyone in the facility. 

Create communication channels 

Humans have been trying to figure out better ways to communicate with each other for as long as we’ve been around, and we still haven’t totally mastered it yet. Miscommunication is one of the most common causes of inventory and maintenance mistakes, so anything you can do to improve it benefits your company. 

That’s where good inventory management software comes in, because one of its main strengths is how it makes it easier to reliably share information across the team. Thanks to cloud technology, your inventory management software can instantly communicate accurate inventory levels to your technicians and continuously keep your database up to date. 

Is inventory management software the solution? 

Technology has come quite a long way in the past several years, so much so that we are experiencing a new industrial revolution. The advent of cloud-based technology has enabled us to manage parts and inventory in ways never before possible. 

There are a few key features you want to look for when searching for an inventory management software solution: 

  • Inventory tracking with barcodes 
  • Work order management
  • Cost analysis reports 

Once you’ve audited and uploaded everything into the software, you’ll want to use barcodes and scanners to instantly update and keep track of your inventory. The source of truth is updated in real time to reflect any changes, so the purchasing manager can be instantly notified when it’s time to place an order. 

You also want to look for a software solution that manages your work orders and can automatically assign parts to work orders based on your preventive maintenance program. That way your technicians can know that even if there may be a part in the bin, it’s already assigned somewhere else, and your maintenance work isn’t interrupted. 

Lastly, make sure your software solution can generate cost reports for you so you can see where your money is being spent on inventory. Once you’ve begun tracking your inventory within the software, you should be able to quickly see where you’re losing money and where your money could be better spent. 


Inventory management is the combination of processes and procedures that help ensure you have the parts and materials you need, when you need them, at the right price. Because different industries have different types of inventories, inventory management can range from controlling raw materials across production lines to moving finished products from warehouses to retail locations.

So, there are different types of inventory control. For example, ABC analysis, where you categorize inventory based on price. With JIT inventory, you try to have everything delivered just before you need it, pushing carrying costs back to suppliers. Regardless of the industry or method, the benefits are generally the same.

With careful inventory control, you can ensure you have what you need when you need it, cutting downtime and other costs. For PPE, inventory control helps you keep people safe and avoid costly OSHA violations.

To cut inventory costs, you need accurate, up-to-date data on what you have and where it is. Because manual methods always lead to human error, it’s always more efficient to implement inventory management software. For facility and maintenance managers, a feature-rich EAM platform with a strong inventory module makes tracking inventory intuitive and efficient. 

About the author

Jonathan Davis

Jonathan has been covering asset management, maintenance software, and SaaS solutions since joining Hippo CMMS. Prior to that, he wrote for textbooks and video games.
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