SMRP Best Practice Metrics Business & Management

1.4 Stocked MRO Inventory Value

as a Percent of Replacement Asset Value (RAV)

A. Definition:

The metric is the value of maintenance, repair and operating materials (MRO) and spare parts
stocked on site to support maintenance, divided by the Replacement Asset Value (RAV) of the
assets being maintained at the plant, expressed as a percentage.

B. Objectives:

This metric allows one to compare the value of stocked maintenance inventory on site with
other plants of varying size and value, as well as to benchmarks. The RAV as the denominator
is used to normalize the measurement given that different plants vary in size and value.

C. Formula:

Stocked MRO Inventory Value per RAV (%) = Stocked MRO Value ($) X 100
Replacement Asset Value ($)

D. Component Definitions

Stocked MRO Inventory Value
Current book value of maintenance, operating and
repair materials held in stock at the plant site (including
consignment and vendor-managed stores). Include
value of MRO materials in all stored locations,
including remote stock locations – whether or not that
material is officially accounted for in the inventory
asset accounts, or an allocated portion of pooled spares.
(Try to estimate value of “unofficial” stores in the plant
even if they are not under the control of the central or
formal storerooms and even if they are not “on the
books”). Include estimated value for stocked material
that may be officially held in stock at zero-value
because of various CMMS and/or accounting
idiosyncrasies, etc. DO NOT INCLUDE raw material
or finished goods inventories.

© 2006 SMRP Page 1 of 2 Rev 0

Prepared by: Robert DiStefano Date: June 10, 2006
SMRP Best Practice Metrics Business & Management

1.4 Stocked MRO Inventory Value

as a Percent of Replacement Asset Value (RAV)
Replacement Asset Value (RAV)
E. Qualification:
Also referred to as Estimated Replacement Value
(ERV). The dollar value that would be required to
replace the production capability of the present assets
in the plant. Include production/process equipment as
well as utilities, support and related assets. Do not use
the insured value or depreciated value of the assets.
Include replacement value of buildings and grounds if
these assets are maintained by the maintenance
expenditures. Do not include value of real estate – only
improvements.

1. Could be measured quarterly or annually.

2. This is a Lagging indicator
3. Typically used by corporate managers to compare plants, by plant managers,
maintenance managers, materials managers, procurement managers, operations
managers, reliability managers, vice presidents..
4. Can be used to determine standing of a plant in a four-quartile measurement system, as
best in class plants with high asset utilization and high equipment reliability in most
industries have less stocked inventory value because of a more predictable need for
materials
5. Cannot rely on this metric alone, since lower stocked inventory value does not
necessarily equate to best in class. Should balance this metric with stock-outs (which
should be low) and other indicators of the service level of the stocked inventory.

F. Sample Calculation:

If Stocked MRO Inventory Value is $3,000,000, and the Replacement Asset Value (RAV) is
$100,000,000, then the Stocked MRO Inventory Value as a Percent of RAV would be:

Stocked MRO Inventory Value per RAV (%) = Stocked MRO Value ($) X 100
Replacement Asset Value ($)

= [ $3,000,000/$100,000,000] x 100

= 3%

SMRP Metric 1.4 and its supporting definitions are similar or identical to the indicator
E7 in standard EN 15341

This document is recommended by EFNMS as a guideline/supporting document for the

calculation of the E7 indicator.

© 2006 SMRP Page 2 of 2 Rev 0

Prepared by: Robert DiStefano Date: June 10, 2006