What is Stock/Inventory Turnover Ratio?

Quit Hoarding Parts! A Maintenance Manager's Guide to Inventory Turnover

Let's face it - nobody gets excited about spare parts inventory. Trust me, I've spent way too many hours of my life counting bearings and gaskets in dimly lit storerooms. Those shelves packed with expensive components that haven't moved since Obama was president? That's literally cash gathering dust. And it might be killing your maintenance department's performance.

WTF is Stock Turnover? (And Why Should You Care?)

So your storeroom's jam-packed with stuff. Great. But two questions: Got the right stuff? And is any of it actually moving? Enter the stock turnover ratio – the metric most maintenance managers ignore until the finance folks start asking uncomfortable questions.

Stock turnover (inventory turnover if you wanna sound fancy in meetings) tells you how many times you're cycling through your entire inventory each year. The math isn't rocket science:

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How efficiently you're managing inventory

=

Take what you've used
÷
what you're storing

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For us maintenance folks, that breaks down to:

Annual $ value of parts you actually used ÷ Average $ value of everything sitting on your shelves

Example from my last gig: We burned through about $120K in parts while keeping roughly $60K in stock. That's a turnover of 2 – meaning we replaced everything twice during the year. Sounds decent until you realize industry standard is double that...

Why I Started Giving a Damn (And Maybe You Should Too)

Yeah yeah, I get it. You've got equipment screaming for attention and three techs out with COVID (yeah! those sad times when the world lost its collective mind). Who's got time for inventory metrics? But stick with me for a sec:

That Parts Room is a Money Pit

Every single gasket and circuit board collecting dust represents actual cash your company could've spent elsewhere. My old boss used to say, "Parts don't appreciate like real estate, Mike." He was right. That $5,000 specialized pump part isn't an investment – it's a liability.

Your Storage Costs Are Killing You Softly

The bigger your hoard, the more you're spending on:

• Rent for that space (calculate the square footage cost sometime – it'll make you sick)

• Those fancy organizational systems and software

• That poor parts clerk who hates his life

Stuff Expires, Dude

True story: My second year as maintenance supervisor, I discovered a cabinet full of electronic control modules that had been sitting so long the capacitors had dried out. Price tag? $43,000 down the toilet. My explanation to the plant manager was... uncomfortable.

Finding Your Goldilocks Zone: Not Too Much, Not Too Little

Like that perfect beer temperature or tool torque setting, there's a sweet spot with inventory:

Your turnover's too damn low (under 1.5) if:

• Your parts room looks like an episode of Hoarders

• Your finance director winces when they see your inventory value

• You're finding parts with actual dust or rust on them

• You discover stuff you forgot you even had

Your turnover's too damn high (over 7) if:

• Your techs are constantly bitching about missing parts

• Amazon Prime and FedEx drivers know you by name

• You're regularly paying rush shipping fees that make you queasy

• Production keeps calling because they're down waiting for parts

At my old plant, we eventually settled on 4.2 as our magic number. Automotive manufacturing might need 5-6, while power generation might be happy with 2-3. Know your operation's heartbeat before you start chopping inventory.

Fixing Your Mess Without Losing Your Mind

Alright, so your turnover sucks. Mine did too. Here's how I fixed it without driving myself (or my team) crazy:

1. Marie Kondo That Crap

I held up each slow-moving part and asked "does this spark joy?" Just kidding. But seriously, we flagged anything that hadn't moved in 2+ years and made tough calls. That $2,000 specialized bearing for the west conveyor? Sold it to another plant in our network for $1,200. Better than the big fat zero it was earning us on the shelf.

When someone inevitably whined "but what if we need it?!", I showed them the math on carrying costs vs. overnight shipping. Math doesn't care about your feelings, Dave.

2. Quit With the Random Min/Max BS

Your min/max levels shouldn't come from your gut or "what we've always done." Mine were garbage until I:

• Pulled 18 months of actual usage data (painful but worth it)

• Factored in real lead times (not what the sales rep promised)

• Considered how badly we'd be screwed if we ran out

3. Make Your Vendors Do the Heavy Lifting

My bearing supplier now keeps $30K of our most critical bearings IN THEIR WAREHOUSE. We only pay when we use them. They do the counting, tracking, and stocking. I do the saving money and looking like a hero.

4. Document Every "We Ain't Got It" Moment

Created a simple form (later an app) where techs logged every time they needed something we didn't have. These stockout reports became my roadmap for where I needed better inventory control.

5. All Parts Aren't Created Equal

I color-coded our inventory database:

• Red: Critical stuff that would shut us down. Accept lower turnover.

• Yellow: Important but replaceable within 24 hours. Moderate turnover.

• Green: Common stuff available locally. Push for high turnover.

That system alone boosted our turnover by 0.8 points in six months.

Get Your Shit Together (A 90-Day Plan)

Don't try to fix everything tomorrow. Your team will revolt and you'll burn out. Here's my battle-tested approach:

First month: Just track your current ratio and identify your 50 most expensive parts. Analyze the hell out of those 50.

Month two: Implement min/max changes on those top 50 and identify your dead stock (the zombies of your storeroom).

Month three: Start selling/returning/scrapping dead stock and implement your critical/non-critical system.

When I took our turnover from 1.3 to 2.8 in a single year, I freed up nearly $200K in cash. You know what my plant manager let me do with some of that money? Buy the new vibration analysis system I'd been begging for for three years.

Look, nobody's getting a trophy for perfect inventory management. But nail this, and you'll have more budget flexibility, fewer emergency orders, and maybe - just maybe - fewer midnight calls about missing parts.