WORK MANAGEMENT

5.5.31 Stores Inventory Turns

 WORK MANAGEMENT

5.5.31 Stores Inventory Turns

A. DEFINITION
The metric is a measure of how quickly inventory is flowing through the storeroom
inventory system.

B. OBJECTIVES
This metric is used to measure the appropriateness of storeroom inventory levels.

C. FORMULA
Stores Inventory Turns =
Value of stock purchased ÷ Value of stock on hand
The unit of measure is inventory turns per unit of time.

D. COMPONENT DEFINITIONS
Value of Stock on Hand
The current value of the stock in inventory.

Value of Stock Purchased

The value of the inventory items purchased in the period for which the metric is being
calculated.

E. QUALIFICATIONS
1. Time Basis: Monthly
2. To be used by storeroom, purchasing and finance management.

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PAGE 1 of 5 Publication Date: August 1, 2009
Revised: August 1, 2012
3. Due to variation in the stock replenishment process, this metric should be measured
over a time period that allows anomalies in the purchasing cycle to be normalized.
4. This metric is best used with other indicators (e.g. 5.5.33 Stock Outs) that provide a
complete picture of storeroom inventory.
5. This metric should be trended in order to capture changes in storeroom inventory
management practices.
6. This metric can be used on subsets of the inventory to see the specific behavior of
different classes of inventory items (e.g. power transmission, electrical, operating
supplies, spare parts, etc.).
7. When used in conjunction with the metric 5.5.33 Stock Outs, a low stock out and
low turn ratio would suggest that inventory levels are too high. An effective
storeroom must manage risk at an acceptable level and balance this against
working capital. The optimum turn ratio will be different for different classes of parts
and will depend on the amount of risk a facility is willing to take. A high turn ratio on
spare parts could indicate a reliability issue and/or reactive maintenance culture.

F. SAMPLE CALCULATION
A given storeroom has current values and purchases over the previous twelve months
as follows:

Total storeroom inventory value is $7,241,296.

Total of all storeroom purchases during this period is $15,836,351.
Total spare parts inventory value is $3,456,789.
Total of all spare parts purchases during this period is $5,123,456.
Total operating supplies inventory value is $1,567,890.
Total of all operating supplies purchases during this period is $9,345,678.

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PAGE 2 of 5 Publication Date: August 1, 2009
Revised: August 1, 2012
 • Stores Inventory Turns = Value of stock purchased/Value of stock on hand
• Stores Inventory Turns (total inventory) = $15,836,351 ÷ $7,241,296
• Stores Inventory Turns (total inventory) = 2.19
• Stores Inventory Turns (spare parts) = $5,123,456 ÷ $3,456,789
• Stores Inventory Turns (spare parts) = 1.48
• Stores Inventory Turns (operating supplies) = $9,345,678 ÷ $1,567,890
• Stores Inventory Turns (operating supplies) = 5.96

G. BEST IN CLASS TARGET VALUE

Total inventory greater than (>) 1.0

Inventory without critical spares greater than (>) 3.0

H. CAUTIONS
Since Inventory can be divided in several categories including total inventory, insurance
spares, critical spares, consumables, A items, active/inactive, etc., categories must be
well defined and standardized between facilities to make comparisons accurate.

I. HARMONIZATION
This metric and its supporting definitions are similar or identical to EN 15341 indicator
E12.

Note 1. The EN 15341 indicator includes only the inventory turns of spare parts in the
calculation. The SMRP metric calculates the value of the spare parts + operating parts
(MRO). However the SMRP metric 5.5.31 offers the possibility to calcu-late spare parts
separately.

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PAGE 3 of 5 Publication Date: August 1, 2009
Revised: August 1, 2012
Note 2: If the SMRP 5.5.31 calculation is applied only to the spare parts in stock
excluding operating parts, then the metrics are identical.

This document is recommended by the European Federation of National Maintenance

Societies (EFNMS) as a guideline for calculating the E12 indicator.

Additional information is available in the document “Global Maintenance and Reliability

Indicators” available for purchase as a publication in the SMRP Library.

J. REFERENCES
Baldwin, R.C. (2006). Secrets of Effective Maintenance. Presented at the SMRP 14th
annual Convention. Birmingham, AL
Banerji, R. A (n,d,). World class approach to asset management; Parts 2 and 3
AMMJ. Vol 21 No 4.
Davis, J.W. (n.d.). Strategic planning for asset management – An overview.
Farmington, CT. Strategic Asset Management Inc.
DeWald, D. (2011). Key performance indicators for stores and MRO. Life Cycle
Engineering
Frazelle, E. H. (2005). TLI/WERC warehouse benchmarking survey. Retrieved from
http://www.ciltuk.org.uk/pages/downloadfile?d=C8518219-80B1-45CB-882C-
8D77129A5B7C&a=stream
Hedding, R. (n.d.) The operational reliability maturity continuum: Part 5: Materials
management: The hidden productivity barrier. Retrieved from
http://www.reliabilityweb.com/articles/sami_material_management_02.htm
Hedding,R. P.E. (2001). Want to hire a benchmarking consultant?. Itasca, IL. Plant
Services.

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PAGE 4 of 5 Publication Date: August 1, 2009
Revised: August 1, 2012
Humphries, J. B. (1998). Best-in-class maintenance benchmarks. Iron and Steel
Engineer, 1.
Marshall Institute, Inc. (2000) Effective planning and scheduling, ratios and easures;
Learner guide. Raleigh, N.C.
McFarland, R.P., Day, & Zimmermann. (2003). Metrics for managing maintenance.
Presented at 2003 SMRP Annual Conference.
Mitchell, J. (2002). Physical Asset Management Handbook (3rd Ed). Houston, TX.
Moore, R. (2002). Making common sense common practice – Models for manufacturing
excellence (2nd ed.). Burlington, NY: Elsevier Butterworth Heinemann.
Mollentze, F.J. (2005). Asset management auditing - The roadmap to asset
management excellence. Blackmoor, South Africa. University of Pretoria.
Rosaler, R.C. (1998). HVAC maintenance and operations handbook. New York, N.Y.
Mcgraw Hill.
The RM Group, Inc. (2004). 19th International maintenance conference. Knoxville, TN.
Transportation Research Board. (2000). Revised Inventory Management Desk Guide,
Transportation Cooperative Research Program. Washington, D. C.

Copyright © 2009 by SMRP. All rights reserved.

PAGE 5 of 5 Publication Date: August 1, 2009
Revised: August 1, 2012