BUSINESS & MANAGEMENT METRIC

1.4 STOCKED MAINTENANCE, REPAIR AND

OPERATING MATERIALS (MRO) INVENTORY VALUE
AS A PERCENT OF REPLACEMENT ASSET VALUE
(RAV)
Published on April 16, 2009
Revised on August 25, 2020

DEFINITION
This metric is the value of maintenance, repair and operating materials (MRO) and spare parts
stocked onsite and remotely to support maintenance and reliability, divided by the replacement
asset value (RAV) of the assets being maintained at the plant, expressed as a percentage.

OBJECTIVES
This metric enables comparisons of the value of stocked maintenance inventory with other
plants of varying size and value, as well as comparison to other benchmarks. The RAV is used in
the denominator to normalize the measurement, given that different plants vary in size and
value.

FORMULA
Stocked MRO Inventory Value per RAV (%) =
[Stocked MRO Value ($) × 100] / Replacement Asset Value ($)

COMPONENT DEFINITIONS
MRO (Maintenance, Repair and Operating Materials)
An acronym to describe maintenance, repair and operating materials (MRO) and spare parts.

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Replacement Asset Value (RAV)
Also referred to as estimated replacement value (ERV), it is the dollar value that would be
required to replace the production capability of the present assets in the plant. Includes
production/process equipment as well as utilities, facilities and related assets. Also includes the
replacement value of buildings and grounds if these assets are included in maintenance
expenditures. Does not include the insured value or depreciated value of the assets, nor does it
include the value of real estate, only improvements.

Stocked Maintenance, Repair and Operating Materials (MRO) Inventory Value

The current book value per audited financial records of maintenance, repair and operating
(MRO) supplies in stock, including consignment and vendor-managed inventory, to support
maintenance and reliability. Stocked MRO inventory value includes the value of MRO materials
in all storage locations including satellite and/or remote storeroom locations, whether or not
that material is included in inventory asset accounts or an allocated portion of pooled spares.
In addition, there may be a need to include estimates for the value of unofficial stores in the
plant, even if they are not under the control of the storeroom or are not on audited financial
records. This could include the estimated value for stocked material that may be in stock at zero
financial value because of various computerized maintenance management systems (CMMS)
and/or accounting idiosyncrasies, depreciation schedules, etc. These estimates should not
include manufacturing and/or production-related inventory, such as raw materials, finished
goods, packaging and related materials.

The monetary cost of an individual storeroom item is calculated as: Monetary Cost of Individual
Storeroom Item = Quantity on Hand × Individual Item Cost

The aggregated cost of all storeroom items is calculated as the sum of the cost of all storeroom
items.

QUALIFICATIONS
1. Time basis: Annually and/or quarterly
2. This metric is typically used by corporate managers to compare plants. It is also used by
plant managers, maintenance managers, materials managers, procurement managers,
operations managers, reliability managers and vice presidents.

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 3. It can be used to determine the standing of a plant in a four-quartile measurement
system, as in most industries. Best-in-class plants with high asset utilization and high
equipment reliability have less stocked inventory value because they have a more
predictable need for materials.
4. Do not rely on this metric alone, since lower stocked inventory value does not
necessarily equate to best-in-class. Instead, balance this metric with stock-outs (which
should be low) and other indicators of the service level of the stocked inventory.

SAMPLE CALCULATION
If stocked MRO inventory value (book value plus estimate, if relevant) is $1,500,000, 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 ($) × 100] / Replacement Asset Value ($)

Stocked MRO Inventory Value per RAV (%) =

($1,500,000 × 100) / $100,000,000

Stocked MRO Inventory Value per RAV (%) = 1.5%

BEST-IN-CLASS TARGET VALUE

Generally less than 1.5%; top quartile range is 0.3% to 1.5%, varying by industry

CAUTIONS
Top quartile target is reasonable only if maintenance practices are advanced and mature. The
target should be higher if maintenance practices are not advanced and not mature. For
example, a third quartile plant with third quartile practices will have to maintain a third quartile
inventory level (higher compliment of spare parts) to account for the uncertainty and
unpredictable need for materials. Reducing inventory levels in a less advanced and less mature
maintenance practice will result in severe stock-outs and consequential extended downtime.

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Regarding the variation by industry, an abundance of data suggests that lighter, less complex
industries (e.g., non-industrial facilities) tend to require less stocked inventory than heavier
industries (e.g., mining), although the differences are quite small in the top quartile. The range
shown above describes the lowest industry’s top-of-the-top quartile target (0.3%) and the
highest industry’s bottom-of-the-top quartile target (1.5%). Targeting 1.5% may or may not be
appropriate for a particular facility. Consultation with experts is advised to establish the
appropriate target for the facility.

HARMONIZATION
EN 15341 indicator A&S25 and SMRP metric 1.4 are similar.

Note 1: The SMRP term “Replacement Asset Value” is the same as the EN 15341 term “Asset
replacement value”

REFERENCES
A.T. Kearny. (n.d.) Published benchmarks for the chemical processing industry. Chicago, IL.

Brown, M. (2004). Managing maintenance storerooms. Hoboken, NJ: Wiley Publishing.

Hawkins, B. & Smith, R. (2004). Lean maintenance–reduce costs improve quality, and increase
market share. Philadelphia, PA: Butterworth Heinemann.

Management Resources Group, Inc. (2002). Proprietary benchmarks for 14 industries. Sandy
Hook, CT.

Mitchell, J. S. (2007). Physical asset management handbook (4th ed.). London, ON: Clarion
Publishing.

Moore, R. (2002). Making common sense common practice. Philadelphia, PA: Butterworth
Heinemann.

Solomon Associates. (n.d.). Benchmarks for the oil refining, petrochemical, chemical processing
and other industries. Dallas, TX.

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