Sanjib Das: The Hidden Cost of “Just in Case” Inventory (Part 2)

(Part 2 of our series with reliability engineer Sanjib Das)

In Part 1, we explored how reliability engineer Sanjib Das replaced opinion-driven stocking with a transparent scoring model based on five factors: asset criticality, lead time, failure behaviour, part commonality and consequence. His core message was simple:

“My job as a reliability engineer is to stop the emotion and make the process in a mathematical way… When it is math, everybody understands.”

This structured approach reduces debate, removes emotion, and gives reliability teams a defensible way to prioritise their spares.

But even with the right list of parts, another question remains:
What does it actually cost to hold them?

Too many organisations treat spare parts as “free insurance”. Sanjib’s experience, across chemicals, oil & gas and manufacturing, shows the opposite: inventory silently drains both reliability and money, often for years.

This is what Part 2 is about.

Inventory isn’t free: it decays, demands care, and quietly degrades reliability

When Sanjib talks about inventory, he doesn’t start with finance. He starts with physics.

Three categories of parts are particularly dangerous to hold long-term:

1. Elastomers and electronics: real shelf-life limits

Rubber components (seals, O-rings, gaskets) and electronics degrade in storage:

“All the gasket, all the O-rings, all the electronics… it has a shelf life like 7 to 8 years or best 10. So after that, it is already in the fail state. You cannot use this.”

Stocking “just in case” quickly becomes stocking future failures.

2. Large motors: preservation is mandatory

During his time at ExxonMobil, Sanjib was responsible for the preservation of megawatt motors. Not storing them properly leads to permanent damage:

“If the motor remains stationary for too long, the static load causes brinelling, producing micro-dents on the bearing races that can trigger early failure once the motor is run.”

These motors had to be rotated 90 degrees every three months to prevent bearing damage. Someone must document it, schedule it, and be accountable for it. That is a cost and a risk.

3. Instruments and sensitive parts: controlled environments required

Sanjib recalls vessels and electronic components that must be nitrogen-blanketed or stored in dry rooms at a certain temperature:

“Many of the spare parts require their own maintenance tasks…
I will need someone to monitor the nitrogen… or keep my electronic in a place where the dryness factor is minus 40.”

These conditions cost money and are easy to get wrong.

What bad inventory practice really costs

Most organisations calculate spare parts value as purchase price only.
Sanjib learned firsthand that this masks the real picture.

Carrying cost

Industry benchmarks put the annual cost of holding inventory at 20–30% of its value.
This includes:

• Capital cost
• Insurance
• Warehousing
• Preservation labour
• Handling
• Obsolescence

Industry benchmarks place inventory carrying cost between 20–30% per year. (CAI; Reliable Plant). Based on that range, a EUR 1 million MRO store can cost EUR 200,000–300,000 annually just to hold before a single part is used.

Lost capital and wasted assets

In one organisation, Sanjib was tasked with reviewing:

“Around 30 million of stock never used in 10 years.”

Much of it could not be returned; warranties had expired; some parts had degraded in storage. Inventory was not an asset. It was a liability.

Hidden operational cost

Overstocking creates ripple effects across the plant:

• More stock means more warehouse space
• Which means more preservation
• Which means more labour
• Which means more risk

And the irony?

“Your warehouse is stocked with a lot of unnecessary things… but when something fails, you do not have the right spares.”

This is the paradox Sanjib saw repeatedly: plants drown in parts, but starve in emergencies.

The million-dollar turnaround delay

One of Sanjib’s most striking experiences concerns a turnaround where a small mismatch, “a couple of thou shortage” on a shaft, forced a two-week delay:

“It extended the turnaround by two weeks because of these little spares. And that is a lot of money for a refinery… around four or five million.”

This wasn’t due to bad maintenance. It was due to bad spares planning.

Meanwhile, the same organisation had tens of millions in excess inventory sitting unused outside the warehouse.

This is the cost of stocking emotionally instead of mathematically.

See what it means for your organisation

The lesson from Part 2 is simple: inventory is not neutral. Every extra part has a shelf-life risk, a preservation cost and a carrying cost that compounds silently year after year. Sanjib’s experience shows how easy it is for plants to accumulate millions in stock that will never be used and still miss the few critical items that prevent days or weeks of downtime.

Before we move into Part 3, where we look at planned vs unplanned failures and how the right stocking rules compress downtime (rather than try to eliminate it), it’s worth understanding the size of the opportunity in your own operation.

Try our Cost Saving Calculator

If your organisation suspects that too much capital is tied up in “just in case” stock or if you simply want to quantify the hidden cost of carrying inventory, our Spare Parts ROI Calculator can give you a first benchmark.

It translates industry carrying-cost ranges, your inventory value and your slow-moving ratio into a clear picture of what overstock is costing you each year.

Try the SPARROW Spare Parts ROI Calculator to estimate the financial impact of reducing overstock and improving stocking decisions.

Let's move on to Part 3

If Part 1 was about making stocking decisions objective,
Part 2 shows why making bad decisions is so expensive.

And in Part 3, we move to the next question:

What happens when failure is planned vs when it isn’t?

We’ll explore:

• the difference between planned and unplanned consequences
• reorder points that reflect lead time and risk
• vendor-managed inventory vs in-house expertise
• how to compress downtime rather than just prevent failure

Sanjib’s experience shows that stocking is not about preventing failure entirely. It’s about reducing the consequence window, often from weeks to days.

If you’re drowning in “just in case” inventory, but your plant still scrambles during breakdowns, Part 3 will show you exactly how to fix that.