--- title: "Maximising Savings on Spare Parts Utilisation" description: "Optimising your spares isn't just about safety stock. See how engineering and asset management combine to maximise spare parts utilisation savings." image: https://www.pragmaworld.net/wp-content/uploads/AdobeStock_541828923-scaled.jpeg canonical: https://www.pragmaworld.net/maximising-savings-unleashing-the-power-of-engineering-and-asset-management-for-optimal-spares-utilisation/ url: https://pragma-world.getmd.ai/maximising-savings-unleashing-the-power-of-engineering-and-asset-management-for-optimal-spares-utilisation/.md last_converted: 2026-10-23T03:31:12.887Z --- # Maximising savings: Unleashing the power of engineering and asset management for optimal spare parts utilisation August 28, 2023 Author | Carina van der Merwe and André Jordaan - Partner Consultants, Pragma Professional Services “Optimise your spares,” they say – and to your credit, you immediately consider those spare parts that are just lying in the stores and have not moved for the last five to ten years. It’s a good start, but what about the rest of your inventory? What will the approach be for the vast majority of spare parts that your company holds? Do you employ a financial or logistics company? Or do you ask Pragma to use sound engineering and asset management principles to optimise the spare parts held in your stores? There is significant value in understanding the considerable impact that engineering and asset management principles can have on spare parts demand forecasting. In Model 1, we proposed stock levels to cater for the unpredictable demand (breakdowns), and not for the predictable demand (services, shutdowns, etc). This can and should be used to motivate getting your work management process in order and to mature the environment to predictive rather than breakdown maintenance. Model 2 considered the impact of the standardisation of equipment. The insights gained from these models demonstrated significant improvements in inventory optimisation. Refer to Appendix A for context on these two models. Traditionally, the solution for spare parts optimisation has revolved around categorising parts and determining demand based on historical data or complex mathematical models. While this approach has its merits, it fails to fully grasp the underlying factors that drive spare parts demand. Pragma’s interest in the subject of spare parts optimisation is threefold. Firstly, the opportunity presents itself during project execution as part of maintenance readiness. The reliability engineering function needs to specify stock levels for new equipment, and in the absence of historical data, a different approach is needed. Secondly, clients with poor-quality consumption data also need to be serviced in the spare parts optimisation field. Thirdly, you need to improve your understanding of the impact that employing engineering and asset management principles could have on the optimisation of spare parts. Demand forecasting can be approached by using one of three forecasting principles: - Engineering expectations - Planned maintenance - Historical data ## The value of planned maintenance in spare parts optimisation Planned maintenance plays an important role in spare parts demand. It refers to the proactive and systematic maintenance, repair and replacement of equipment components before they fail. Since it is proactive, you must question the reason for keeping these components as spare parts. Optimisation in this area means having stock levels that cater only for unpredicted demand, such as breakdowns, and excluding planned maintenance spare requirements from spare parts calculations. To this effect, Pragma has developed models and generated spare parts data for three different scenarios. The scenarios differentiated between high-cost (R100 000) and low-cost (R500), versus fast- and slow-moving spare parts, based on the following criteria: - Firstly, they considered, as a baseline, a spare parts inventory policy that stocks items solely for breakdowns. - Secondly, they considered a relatively immature organisation with 67% breakdowns and 33% planned maintenance. - Thirdly, they considered a more mature organisation with 67% of spare parts demand coming from the planned environment. The results looked promising: For slow-moving spare parts, the savings were inconsistent. Previously, there may have been one spare part in stock, but now, none is needed. Alternatively, the requirement may have been reduced from two spare parts to one, or it may remain unchanged at two. Therefore, savings are very dependent on the cost of the specific spare in question. Savings become more predictable when there is an increase in demand. High-cost spare parts with medium to high demand can achieve savings of approximately 10% relative to the baseline when 33% of planned replacements are excluded from the stocking requirement. These savings can increase to as much as 19% when 67% of planned replacements are excluded. Low-cost spare parts with medium to high demand can achieve savings in the range of 12 to 38%. This approach requires a mature work management process that prioritises predictive and preventive maintenance over reactive breakdown maintenance. By aligning with these principles, organisations can maintain lean yet effective inventory levels, ensuring the availability of the necessary components without keeping excess stock. **Pragma’s Work Planning and Control Process** ## The power of standardisation in spare parts management Standardisation of equipment is another key aspect that engineering principles can have a significant impact on. In many industrial settings, companies use various types of equipment from different manufacturers, leading to a wide range of spare parts in inventory. During operational readiness, decisions that are relevant to the standardisation of equipment need to be made. When considering replacement at the end of life, it is wise to consider the potential benefits that could be gained from the standardising of equipment. By adopting standardised components, you can streamline inventory management and reduce the number of spare parts needed. This leads to cost savings, since standardised parts are often more readily available in the market, resulting in faster procurement and reduced lead times during emergencies. The model generated for this case compared having six machines (or production lines) with the same spare parts versus having three machines with one type of spare and three machines with another type of spare. Once again, the models differentiated between high-cost (R100 000) and low-cost (R500), versus fast- and slow-moving spare parts. In this case, a saving of between 27 and 39% was realisable. **An overall spare parts holding cost saving of around 30% can be achieved simply by standardising on the spare parts/or assets.** ## Conclusion Optimising spare parts inventory requires a comprehensive approach that goes beyond addressing obsolete and non-moving stock. Integrating engineering and asset management principles into the optimisation process can lead to substantial cost savings of up to 38%, increased operational efficiency, and enhanced performance. By catering for planned demand through a mature work management process and standardising equipment, companies can achieve significant cost benefits of up to 33% and ensure a more sustainable and successful approach to spare parts optimisation. Embrace the power of engineering and asset management to unleash the true value of your spare parts inventory. ##### Subscribe to our newsletter ##### Tags Spare Parts Cost Reduction Spare Parts Optimisation spare parts Spare Parts Management ##### More content ##### You can’t digitise chaos: Building a smarter campus Author | Tertius Janse van Rensburg - Strategic Solutions Executive, Pragma A smart campus sounds like a technology project. In practice, it is an operating maturity... ##### Enterprise asset management begins with better decisions Author | Marco Aberkrom - Asset Management Consultant Asset management is the way organisations connect long-term objectives with decisions about the performance, risk... ##### AI in maintenance: from CMMS records to better decisions Author | Henk Wynjeterp - Regional Lead – Europe AI is giving maintenance teams new ways to extract, structure and interpret information. But the... ##### Asset Management Masterclass or Awareness Training? Start with the role, not the course Author | Karen Greyling - Business Development Manager, Pragma I get asked this question quite often: Should I do the Asset Management Masterclass, or... ##### The lonely learner problem: why self-paced learning still needs people Author | Karen Greyling - Business Development Manager, Pragma Self-paced learning has solved a very real problem for busy adults. It gives people more... ##### Pragma appoints Stephan Kornelius as Chief Executive Officer Author | Pragma Experienced Pragma executive takes the helm on 1 October as the business continues its next... ##### No time for training? Look at what is taking the time. Author | Karen Greyling - Business Development Manager, Pragma “Not now. The team is too busy.” It is one of the most understandable reasons... ##### When Finance and Operations agree on spares Author | Pragma MRO spares are often the source of a familiar business tension. Finance wants to reduce... ##### You don’t train for a marathon by running a marathon Author | Tim Beavon - Partner Consultant, Pragma Why shutdown readiness depends on applying lessons before the next major event A major shutdown... ##### Pragma announces leadership transition and continues strategic momentum Author | Pragma Pragma has announced an important leadership transition as the business continues to build on... ##### Are we solving the wrong training problem? Author | Karen Greyling - Academy Business Development Manager, Pragma When organisations say they need training, they may already be solving the wrong training problem:... ##### The art of balancing work order feedback with compliance, learning, and wrench time Author | Scheepers Schoeman - Senior Associate, Professional Services Most organisations don’t choose their work order feedback culture. They drift into it. A new... ##### Why a qualified maintenance planner changes more than maintenance Author | Karen Greyling - Academy Business Development Manager, Pragma In many plants, the same pattern repeats itself. Work arrives late. Materials are chased at... ##### Why MRO inventory is different from other inventory classes Author | Andre Jordaan - Partner Consultant, Pragma MRO inventory differs from other inventory classes because demand is irregular, the consequences of stockouts... ##### How failing water infrastructure is quietly reshaping South Africa’s cities Author | Nelson Broden – Business Lead Pragma Managed Services On the school run through... ##### From dead capital to operational certainty: Smarter spare parts management Author: André Jordaan, Partner Consultant, Pragma Most MRO stores aren’t short of parts; they’re short... ##### Asset Management Awareness Training that fits real work Author | Karen Greyling, Business Development Manager If you’ve ever thought, “We don’t need another... ##### Asset Management Masterclass: Strategic training for leaders driving performance, reliability and results Author | Karen Greyling – Business Development Manager In asset-intensive industries, leaders are under growing... ##### Beyond compliance: Why repeated maturity assessments define asset performance leadership Author | Stephan Kornelius – Pragma Professional Services Business Lead In asset-intensive industries, leaders face... ##### OEMs need a connected platform for services Author | Henk Wynjeterp – Regional Lead – Europe | Henk leads Pragma’s OEM after-sales... ##### When rivers cry out: How asset management can help heal South Africa’s waterways Author | Nelson Broden – Business Lead Pragma Managed Services The Hennops River, once part... ##### Ditch the buzzword: OEM after-sales leaders buy execution, not “servitization” Author | Henk Wynjeterp – Regional Lead – Europe | Henk leads Pragma’s OEM after-sales... ##### Beyond the software – embedding your EAMS into your organisation’s DNA for sustainable value The key to a successful EAMS (Enterprise Asset Management System) implementation lies in integrating the... ##### Pragma’s perspective on what the proposed South African budget means for infrastructure governance Author | Stephan Kornelius Author | Stephan Kornelius – Pragma Professional Services Business Lead Finance Minister Enoch Godongwana’s 2025... ##### Government infrastructure investments must go beyond bricks and mortar – A global perspective Author | Bani Kgosana Author | Bani Kgosana Across the globe, ageing infrastructure threatens economic stability. In the US,... ##### Pragma partners with Q36.5 Pro Cycling Team to power maintenance excellence Author | Liza Schroeder Pragma is proud to announce its support of the Q36.5 Pro... ##### Revitalising South Africa – a better path to infrastructure renewal Author | Bani Kgosana, Pragma CRO South Africa faces an extraordinary opportunity to transform its... ##### Transforming maintenance from a grudge purchase to a strategic investment Author | Scott Gibson, Pragma CEO  With South Africans enjoying a break from load shedding... ##### Pragma 2.0 – CEO of Pragma, Scott Gibson’s vision is to compete with international giants through engineering excellence At Pragma, our roots are deeply embedded in engineering consulting. We are proud to be... ##### Are you proactively shaping your focused improvement process or is it evolving organically? Author | André Jordaan, Pragma Partner Consultant Focused improvement (FI) is the overarching process used...