Parts inventory is a trade between capital tied up on a shelf and vehicles standing idle waiting for a delivery. Most fleet stores get this wrong in both directions simultaneously: too much slow-moving stock and stock-outs on the parts that actually matter.
The economics
The cost of holding a part is straightforward: capital, space, obsolescence risk, and the handling to manage it. The cost of not holding it is a vehicle out of service until the part arrives — and that cost is far larger than most stores managers assume.
`` Downtime cost per day = lost revenue or hire cost + driver cost if not redeployed + service failure cost ``
Once you have that figure, stocking decisions become arithmetic rather than opinion. A part costing a modest amount that prevents even one day of downtime a year is obviously worth stocking; a high-value component with a next-day supply and predictable failure is obviously not.
Agree a per-vehicle-per-day downtime cost with operations and finance before designing your stocking policy.
Classification
Segment the catalogue rather than applying one policy to everything.
By value and movement (ABC/XYZ):
| Class | Characteristic | Policy |
|---|---|---|
| A-X | High value, predictable demand | Tight control, low safety stock, frequent review |
| A-Z | High value, erratic demand | Consider not stocking; supplier agreement instead |
| C-X | Low value, predictable | Stock generously; the holding cost is trivial |
| C-Z | Low value, erratic | Stock a minimum; do not over-analyse |
By criticality: does the vehicle stop without it? A cheap sensor that immobilises a truck warrants more stock than an expensive interior trim panel that does not.
By lead time: a part available in two hours locally needs almost no stock; one imported with a four-week lead time needs planning.
The combination of criticality and lead time drives most of the decision. Value is secondary.
Setting reorder points
For predictable items:
`` Reorder point = (average demand per day × lead time in days) + safety stock Safety stock ≈ service factor × variability of demand during lead time ``
Choose the service factor from the fill rate you want on that class. Higher fill rates cost disproportionately more stock, so set high targets only for critical items.
For erratic, slow-moving items, statistical reorder points perform badly. Use judgement based on criticality and lead time, review annually, and accept that some will be wrong.
Fill rate: the metric that matters
Fill rate is the proportion of parts demands satisfied immediately from stock. Measure it separately for:
- Critical parts (target high)
- Routine consumables (target high, they are cheap)
- Non-critical parts (target lower deliberately)
A single blended fill rate hides the only distinction that matters. A store with a good overall figure that misses on critical parts is failing at its actual job.
Also track downtime attributable to parts wait. This is the outcome measure; fill rate is the input.
Reducing stock without increasing downtime
- Supplier arrangements. Consignment stock, guaranteed availability agreements, or a supplier holding the slow movers on your behalf. Frequently cheaper than owning them.
- Local sourcing for common items — a supplier 20 minutes away is functionally the same as stock for many parts.
- Standardise the fleet. Fewer makes and models means fewer part numbers, deeper stock on each, and better purchasing terms. This is the single largest structural lever available.
- Kit common jobs. A service kit picked as one item is faster and reduces partial stock-outs.
- Cross-depot visibility. Knowing another site has the part avoids both an order and a duplicate holding.
- Dispose of dead stock. Annually, identify parts with no movement in 24 months. Write them off, sell them, or return them. Carrying them costs money and hides the real inventory position.
Controls
- Every issue against a work order. Parts leaving stores without a work order reference destroy both cost attribution and inventory accuracy.
- Cycle counting, not annual stock takes. Count A items monthly, B quarterly, C annually.
- Restricted access. An open stores area is an unmanaged inventory.
- Core and warranty returns tracked — unreturned cores are a real and frequently forgotten cost.
- Obsolescence review when a vehicle class leaves the fleet. Parts for disposed vehicles are pure loss if not identified.
Frequently asked questions
What fill rate should we target?
Set different targets by criticality: high for parts that immobilise vehicles, deliberately lower for non-critical items where a day's wait costs nothing. A uniform target across the whole catalogue guarantees you are over-stocking some categories and under-stocking others.
Should a small fleet hold parts at all?
Hold consumables, filters, bulbs, and anything with a long lead time that would stop a vehicle. Everything else is usually better bought as needed from a local supplier, particularly where a dealer or factor is close by.
How do we handle parts for vehicles being phased out?
Reduce stock progressively as the class shrinks, and identify remaining stock at disposal for return or sale. Fleets routinely discover shelves of parts for vehicles sold two years earlier.
Is consignment stock worth it?
Where a supplier will hold stock on your premises and you pay on use, it removes capital tie-up and obsolescence risk while preserving availability. It suits high-value, slow-moving items particularly well. The trade is usually a slightly higher unit price.
How much does poor parts availability actually cost?
Measure it: downtime days attributable to parts wait, multiplied by your agreed downtime cost. In most fleets that have never measured it, the figure substantially exceeds the value of the additional stock that would prevent it.
