Q: I would like to take your opinion on the target for inventory turn over particularly for the industrial warehouse like ours, where around 80 to 85% of the materials stocked with us are maintenance spares /materials and many out of them are recommended by the OEM’s as 3-5 years or 5-10 years spares which are not expected to fail so often or expected to be consumed every year. Also due to our plant location (far from the European, American and Asian manufacturing zones) sometimes forces us to hold extra inventory than usual because of longer lead times and also because many of these non-standard / custom designed spares/materials may have longer production / lead time.
Will an inventory turn over > 1 be practical to our environment or not? If not then what do you suggest that inventory turn over target could be suitable for our type of industry after considering above points?
A: I know of a plant in Australia, similar to yours, that reports a spare parts stock turn of 1.5. If we assume that they also have a range of supply issues (being in relatively remote Australia) and similar technical issues then it might not be unreasonable to assume that you could also reach this benchmark over time.