How to set MIN/MAX inventory for MRO spare parts

MIN/MAX inventory is a replenishment rule with two levels per spare part: when stock drops below MIN, the ERP orders enough to bring it back up to MAX. This guide shows how to set both levels, where they usually go wrong and why they break when the same part sits in several plants. It draws on MIN/MAX analyses we ran on ERP data from manufacturing companies.

What do MIN, MAX and safety stock mean?

Four values per material decide when you order and how much.

MIN (reorder point)

When stock drops below this level, the ERP creates a new order. In SAP it is the reorder point of MRP type VB.

MAX

The level the ERP orders up to. In SAP it is the maximum stock level with lot size HB: below the reorder point it orders MAX minus the stock on hand and on order, rounded up to the minimum lot size and rounding value.

Safety stock

The part of MIN that covers late deliveries and unusual usage. It is the stock you hope never to use.

Lead time

The time from placing an order to having the part on the shelf.

In the SAP material master, the four values sit in these fields:

How do you calculate MIN and MAX?

Two formulas cover most spare parts.

The order quantity is usually the largest of the supplier's minimum order quantity, the pack size and a few weeks of usage. Ordering more often costs purchase orders, ordering less often costs stock.

Worked example

Take a part used 2 times a week, with a 6-week lead time and 4 pieces of safety stock: MIN = 2 × 6 + 4 = 16. With an order quantity of 20, MAX = 16 + 20 = 36. When stock drops below 16, the ERP orders up to 36, about 20 pieces. Around 12 are used during the 6 weeks, so the delivery arrives with about 4 left and stock on hand goes back to 24. It never reaches MAX, because MAX also counts what is on order.

Why is average usage not enough for spare parts?

Many spare parts have intermittent demand: nothing moves for months, then several pieces are needed at once. A weekly average hides that risk.

The Syntetos–Boylan classification uses two values: the average interval between demands (ADI) and the variability of demand size (CV²). With ADI below 1.32 and CV² below 0.49, demand is smooth. A high ADI alone means intermittent demand, a high CV² alone erratic, and both high lumpy.

Use the formula above for smooth demand. For intermittent and lumpy parts, size MIN from demand over the whole lead time rather than a weekly average, and set critical parts by risk, as described below.

What data do you need to set MIN/MAX?

These are the inputs we ask for before calculating any level.

Material master

Plant, local material number, description, manufacturer, part number, unit of measure, and which records describe the same part in other plants.

Current stock and levels

Stock on hand, MIN, MAX, reorder point, safety stock, reservations and open orders.

Movement history

In SAP, transaction MB51. Separate real consumption from returns, corrections and transfers, and use a long enough period.

Purchase order history

Real lead times and how much they vary, lot sizes and how often the part is ordered.

Prices with price unit

Price, currency and price unit. A price per 100 pieces read as a price per piece multiplies the value of stock by 100.

Constraints

Criticality, required service level, minimum order quantity, pack size, repairability, planned shutdowns and available substitutes.

A part with no MIN/MAX has no policy to compare yet, which is different from a target of zero. A part with too little history should get no recommendation, with the reason written down.

AutomaMRO reads these values from one ERP export and shows where the levels do not add up across all your plants. Send your first ERP export

What are the most common MIN/MAX mistakes?

Most problems come from levels that nobody revisits, not from the formula itself.

Levels set once and never reviewed

Usage, lead times and equipment change, so levels from years ago describe a plant that no longer exists.

One rule for every part

A critical drive and a box of fuses need different safety stock: set levels by criticality, not by habit.

Lead times taken from the catalogue

Use the delivery times you actually get: a supplier that quotes 2 weeks and delivers in 8 empties your safety stock.

Different definitions in each plant

When one plant reads MIN as the reorder point and another as safety stock, the same number means two different things.

How do you set MIN/MAX for critical spares?

A critical spare may be used once in several years. The usage formula then gives a MIN of zero, and the part is missing exactly when a line stops.

Set these levels by risk instead. Decide how many spares must still be on the shelf while a replacement is on its way, often one. In SAP the order starts only when stock drops below the reorder point, so to keep one spare in hand, set the reorder point to 2. MAX is MIN plus one order. Decide part by part with maintenance, from the cost of downtime and the lead time.

When delivery times vary, plan safety stock for the longest lead time you see regularly, not the average. A part that arrives in 4 to 10 weeks needs cover for 10.

What do better MIN/MAX levels change?

Lower stock is one possible result, not the only one. The goal is the right stock at an acceptable risk and cost. The examples below are illustrative.

• Too much stock: stop buying for a while

  Lower MAX and let normal usage bring stock down before the next order. With 20 pieces on the shelf, a new MAX of 12 and a price of €100, stock value can fall by up to €800, but only as the parts are used, not on the day the level changes.

• Too many orders: order more, less often

  A part used 120 times a year and ordered in lots of 10 needs about 12 purchase orders. In lots of 30 it needs 4: eight fewer orders, receipts and invoices, paid for with a higher average stock.

• A critical part: a larger buffer

  Sometimes the right answer is more stock. A critical part with no substitute and an unstable lead time may need a full lot of 5, even when the calculation says 2.

Freed capital is a stock value, fewer orders is a yearly process saving. Report them separately, not as one number.

If the excess will never be used, sell it instead of waiting.

How do you change MIN/MAX levels safely?

1. Export current levels, stock and movement history from the ERP.
2. Compare variants: lower stock, fewer orders or a larger buffer.
3. Agree the changes and the exceptions with maintenance and purchasing.
4. Load the approved levels into the ERP and track the real effect separately from the potential.

Why does MIN/MAX break across plants?

When the same part is stored under different names, every record gets its own MIN and MAX. Each plant keeps safety stock for a part that already sits in the next plant.

Once the records are matched, plants can share a central stock and keep smaller local buffers. Plan for transport, response time and the chance that two plants need the part at the same time. Moving parts between warehouses does not by itself reduce the stock of the group.

Matching the records comes first: see how duplicate spare parts are found.

How AutomaMRO helps with MIN/MAX

AutomaMRO reads current stock, MAX and reorder point from your ERP export and compares them across all your plants.

Parts above MAX or below the reorder point

Filter every plant for overstock, parts to reorder and parts out of stock.

One record per part

Duplicates are merged into one master record, so safety stock is planned once, not three times.

See how AutomaMRO works

MIN/MAX questions