MRO inventory is the spare parts, lubricants, tools and safety gear that keep machines running without becoming part of the product. Its value is small next to raw materials, but one missing part can stop production. So manage it by what a stoppage costs, not by what the part costs.
MRO stands for maintenance, repair and operations. This guide sorts MRO items by trade, then works out which spares a maize mill in Kenya should hold, in Kenyan shillings.
What is MRO inventory?
MRO inventory is what a business keeps to maintain, repair and run its equipment and premises. It is used up in the work, never sold and never built into what is sold.
That is what separates it from raw materials, which become the product, and from finished goods, which are sold. Flour is a bakery's raw material; the belt on its mixer is MRO.
Two neighbours overlap it. Supplies a shop uses up, such as till rolls and carrier bags, are covered in how to track consumables. The machines themselves are equipment, covered in equipment inventory management.
Whether each MRO item counts as inventory, equipment or an expense in the accounts is set out in types of inventory. This guide is about keeping the right items on the shelf.
MRO inventory examples
MRO falls into six groups, and every trade has its own version of each. The table gives examples from three kinds of business.
| Group | Maize mill | Bakery | Transport firm's own trucks |
|---|---|---|---|
| Spare parts | Hammers, sieve screens, bearings, V-belts, motor contactors | Oven elements, mixer belts, thermostats, door seals | Brake pads, filters, fan belts, bulbs |
| Lubricants and fluids | Bearing grease, gear oil | Food-grade grease for the mixer | Engine oil, brake fluid, coolant |
| Small tools and wear items | Spanners, grinding discs | Baking trays, scrapers | Spanners, jacks, cutting discs |
| Safety gear | Dust masks, ear defenders, gloves | Oven gloves, aprons, hairnets | Overalls, gloves, goggles, reflective vests |
| Cleaning and premises | Brooms, bulbs, sacks for sweepings | Detergent, sanitiser, bin liners | Degreaser, rags, spill absorbent |
| Power | Generator oil, filters and fuel | Generator oil and filters, gas regulator spares | Workshop generator and compressor spares |
Offices add paper and toner, and labs add beakers, syringes and test tubes. Computers and furniture, which some lists include, are equipment: they last for years.
The same brake pad changes group with its use. A garage that fits pads to customers' cars holds them as stock for its service, not as MRO.
Why MRO inventory is hard to manage
MRO is hard because its demand is lumpy, and the cost of running out has nothing to do with the price of the part. In the example below, a KES 7,500 contactor stops a mill that earns KES 60,000 a day.
- Failures nobody can forecast. A bearing lasts two years or two weeks, so past use says little about the next failure.
- Many small lines. Hundreds of cheap items, each bought now and then, so none gets attention until it is missing.
- Stock in many places. Spares sit in the mechanic's toolbox, the manager's drawer and the store, and none of them is on a list.
- Buying outside the records. A part bought for cash in a hurry never reaches the books, so the same part is bought again.
- Long, uneven lead times. A belt is in town today; an imported motor takes six weeks.
- Power cuts. In the World Bank's enterprise surveys, 80% of firms in Uganda and 75% in Kenya reported outages in the 2025 round. Where a generator takes over in each cut, its filters and oil become critical spares.
Rank MRO items by what a stoppage costs
Rank every MRO item by what happens when it runs out, then by how fast you can replace it. The two together decide how much care each item gets.
| Class | When it runs out | Replaced within a day | Takes a week or more |
|---|---|---|---|
| A: critical | Production stops, or work isn't safe | Hold a minimum | Hold a minimum; decide on an insurance spare |
| B: important | Work slows down | Buy when needed | Hold a small minimum |
| C: minor | Nothing stops | Buy when needed | Buy when needed |
Safety gear belongs in class A: a miller without a dust mask should stop work. Cost decides how closely you watch an item, but the class decides whether you hold it at all.
Class A items come in two kinds that need different rules. Wear parts are used up at a steady rate; insurance spares sit on the shelf until something breaks.
Wear parts: set a minimum and a maximum
Wear parts such as hammers, screens, belts and filters are used at a rate you can measure. Hold enough to cover use during the lead time plus a safety stock, and no more than one order above that.
Minimum = weekly use × lead time in weeks + safety stock, rounded up to whole units. Maximum = minimum + order quantity. Reorder when stock falls to the minimum.
For example, a maize mill in Eldoret runs two hammer mills and a standby generator. The figures are illustrative, not a real mill's.
| Part | Used a week | Lead time | Safety stock | Minimum | Order | Maximum |
|---|---|---|---|---|---|---|
| Hammer set | 0.5 | 1 week | 1 | 0.5 + 1 = 1.5, so 2 | 2 | 4 |
| Sieve screen | 1 | 1 week | 1 | 1 + 1 = 2 | 4 | 6 |
| V-belt set | 0.5 | Half a week | 1 | 0.25 + 1 = 1.25, so 2 | 2 | 4 |
| Generator oil filter | 0.125, one every 8 weeks | 1 week | 0 | 0.125, so 1 | 2 | 3 |
The full safety stock calculation is in the reorder point formula. For grease, rags and gloves, a weekly count as in how to track consumables does the same job.
Insurance spares: hold one only when downtime costs more
Insurance spares are parts that fail rarely, such as a motor or a main bearing. Hold one when a year's expected downtime cost without it is more than a year's cost of holding it.
Expected downtime cost a year = chance of failure in a year × days stopped while you replace it × cost of a day stopped. Holding cost a year = the spare's cost × your holding rate.
The mill loses about KES 60,000 of milling margin for each day one mill stands still. It uses a holding rate of 30% a year; work out your own as in inventory holding cost.
| Spare | Cost | Fastest way back to running | Days stopped | Chance of failure a year | Expected downtime cost a year | Holding cost a year | Hold one? |
|---|---|---|---|---|---|---|---|
| Motor contactor | 7,500 | Electrical shop in town | 2 | 50% | 60,000 | 2,250 | Yes |
| Main bearing set | 9,000 | Supplier in Nairobi | 4 | 30% | 72,000 | 2,700 | Yes |
| 15 kW motor, rewinder in town | 180,000 | Rewind the burnt motor | 4 | 10% | 24,000 | 54,000 | No |
| 15 kW motor, no rewinder | 180,000 | Import a new motor: six weeks | 36 | 10% | 216,000 | 54,000 | Yes |
The motor shows the rule that matters most: plan with the fastest route back to running, not the supplier's lead time. With a rewinder in town, the mill keeps the rewinder's phone number instead of a KES 180,000 motor.
Identical machines share spares. Two mills with the same motor need one spare between them, yet the risk of going without doubles. With an imported motor, that is KES 432,000 a year.
The chance of failure is a judgement, so take it from your repair records or the maker's figures. The answer is rarely close: with no rewinder, the motor is worth holding at any chance above 2.5% a year.
How to run an MRO store
One locked store, one storekeeper and one list beat spares scattered across toolboxes. Five habits keep it working.
- One store, one keeper. One person issues every part and receives every delivery.
- A labelled bin for every part. Each shelf and bin carries the part's code, so a count takes minutes and the right bearing is found at night.
- A spare parts list for each machine. List what each machine uses, with part numbers: a service bill of materials. When a part fails, the list says which spare fits.
- Issue against a machine. Record which machine each part went to. After a year, the issues show which machine eats spares.
- Review slow movers once a year. A spare for a machine you sold is dead stock; an insurance spare that never moves is doing its job.
Count class A items every month and the rest each quarter. A critical spare that the records show but the shelf doesn't is worse than none, because nobody orders it.
MRO metrics worth tracking
Four numbers show whether the MRO store works. Set your targets from your own first months of figures, and improve on them.
| Metric | How to measure it | What it tells you |
|---|---|---|
| Critical stockouts | Times a class A item was needed and not in the store, each month | Whether the minimums are high enough |
| Downtime waiting for parts | Hours a machine stood still waiting for a part, each month | What gaps in the store cost in lost output |
| Rush purchases | Rush purchases ÷ all MRO purchases | How often you pay extra for haste |
| MRO stock value | The store's value at cost, month to month | Whether the store grows without a reason |
How to manage MRO inventory in ArmPOS
ArmPOS keeps MRO items as products you count and adjust. It is not a maintenance system: it has no work orders and no repair log for each machine.
- Add each spare as a product in a category such as Spares, and set Hide From Online Store under Options (Add your first products).
- Make the minimum its Stock Alert. The spare then shows in Product Quantity Alerts. The bell, an email or a push to the storekeeper's phone can also say so (Get alerts on your phone).
- Give every bin a location. Create racks and shelves in Settings › Warehouse Locations and fill each spare's Internal Location (Rack/Shelf). The Internal Location Report lists parts by bin (Your warehouse and its locations).
- Receive spares with a purchase, so the stock and what you owe the supplier are both recorded (Record a purchase).
- Issue against a machine. Take each part off with a Subtraction adjustment and name the machine in the Note, such as "Mill 2, bearings replaced" (Count and adjust stock).
- Find slow movers. The Dead Stock Report and the Stock Aging Report show spares that haven't moved (Stock reports).
- Get service reminders for the machines. On plans with Assets, give each machine a Next Validation date. The people whose role includes Assets get an email and a notification when it is due (Company assets).
Accounting, on plans that include it, posts each purchase of spares to 1200-INV and nothing when a spare is used. The month-end entry in inventory accounting brings 1200-INV to Inventory Valuation at cost.
Frequently asked questions
What does MRO stand for?
Maintenance, repair and operations. MRO items keep equipment and premises working and never become part of the product.
What are examples of MRO inventory?
Spare parts, lubricants, small tools, safety gear, cleaning supplies and generator spares. A maize mill's hammers, sieve screens and bearing grease are typical.
Is MRO inventory an asset?
Partly. Lubricants and most spare parts are inventory, major spares are equipment, and office supplies are expenses, as types of inventory sets out.
What is the difference between MRO and raw materials?
Raw materials become the product, while MRO items keep the machines running. A mill's maize is a raw material; its sieve screens are MRO.
How many spare parts should I keep?
For wear parts, enough to cover use during the lead time plus a safety stock. For parts that rarely fail, one spare when a year's expected downtime cost beats its holding cost.
List your machines this week and, for each, the part whose failure would stop it longest. To keep those spares, their bins and their alerts in one place, create a free ArmPOS account.
