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In maintenance management, the purchase price of a spare part is merely the tip of the iceberg visible above the water. The true financial danger lies submerged beneath the surface, where massive operational expenses quietly accumulate over time.
Industry studies consistently show that organizations lose 20–30% of their inventory value annually to "Carrying Costs" such as storage, insurance, and obsolescence. This means a significant portion of your maintenance budget is evaporating every year without adding any value to your actual operations.
While spreadsheets can track quantity, stopping this financial bleed requires a robust system like Cryotos CMMS to accurately track cost performance and visibility. Maintenance managers must essentially stop asking "what do we have" and start using specific KPIs to answer, "how much is holding this costing us?"
Before you can reduce these costs, you have to identify them. While the purchase invoice is clear, carrying costs are often buried in general ledger overheads. Here is where the money goes:
It is usually the greatest part of carrying costs. It is dead capital when money that is tied in a backup motor on a shelf is left there three years. The same capital would have been used to invest in new technology, staff training, or energy efficient upgrades. When there is frozen cash in the inventory, then you miss the chance of expanding the business in other areas.
Every square foot of your warehouse has a price tag. This isn't just renting or mortgage payments; it includes climate control (electricity HVAC), lighting, and the physical racking systems required to house the inventory. The more you store, the more you pay to keep it comfortable.
Inventory requires protection and management. This category includes insurance premiums (which often rise with total inventory value) and the labor costs associated with physical security, manual cycle counting, and handling.
This is the most dangerous hidden cost. In the fast-moving world of manufacturing, machines get upgraded or retired. If you are holding parts for a machine, you no longer own; those parts become worthless assets. However, they still cost money to store and eventually cost even more to dispose of properly.
In revealing these hidden costs, you must use math and not intuition. These four KPIs give the data-driven approach that is required to control the value of inventory.
The Bottom Line: Monitoring these indicators on a regular basis will focus your attention on being reactive on stocking to being proactive about financial management. They serve as your early warning system, and they can spot the costly inefficiencies before they can empty your bottom line.
Tracking these KPIs manually is tedious, but Cryotos CMMS automates the entire process to turn raw data into intelligence.
Automating these key performance indicators, Cryotos can turn your inventory into a lean and strategic asset, rather than an all-disorganized cost center.
Reducing inventory carrying costs isn't about having zero stock—it's about having the right stock.
The goal is a strategic shift from "Just-in-Case" inventory (hoarding parts because you don't trust your data) to "Just-in-Time" inventory (lean management). This shift requires accurate data, automated tracking, and a disciplined approach to carrying costs.
Stop letting hidden costs eat into your maintenance budget.
Contact Cryotos today To see how our CMMS can clarify your inventory of KPIs, automate your stock management, and improve your bottom line.
