What is Stockout Cost or Understocking Cost

In this chapter, considering the importance of spare parts inventory management in the equipment life cycle, the excellence models in spare parts supply chain management are reviewed, and MRO-MMM framework based on the MMM maintenance excellence model will be presented in eight steps. In this comprehensive framework, all necessary actions are considered in terms of maintenance excellence, improvement, and optimization spare parts management. The steps include compiling strategies, spare parts management policies, and related indicators; determining criticality, classification, and spare parts data management; data and procedure preparation for analysis of inventory management; optimization of inventory management system; supplier management; integrity of automation and information system; continuous improvement; and risk based and smarting inventory management. This framework has been used in various industries and proved that the implementation of the MRO-MMM framework will optimize and significantly improve spare parts management.