How to Budget for Spare Parts Costs

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How to Budget for Spare Parts Costs

Here’s a simple yet field-proven method for estimating how much to budget for spare parts inventory for material handling equipment (MHE).

The manufacturer will recommend a list of critical MHE spare parts to keep in your maintenance inventory. For a typical $10 million distribution and fulfillment system, the initial spare parts list could cost $200,000. Use our chart to estimate future spare parts costs.

In the second year after system implementation, budget about 2% of the initial inventory cost. In our example, that’s $4,000 for spare parts.
As your MHE ages, anticipate that maintenance costs will grow.
By the sixth year after system implementation, budget about 25% of the initial spare parts inventory cost. In our example, that’s $50,000.

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