Managing a Spare Parts Business Is a Big Deal for an Industrial OEM

Surya SK
April 21, 2022

For most industrial original equipment manufacturers, spare parts sales are the most significant contributor to their service revenue. Spare parts are an essential driver of revenues for companies like that because they're typically used every day and therefore directly impact how many products a business can sell. Therefore, this blog will get into details about managing a spare parts business for an industrial OEM. So let's get right into it!

Table of contents

Take advantage of inventory planning

Take advantage of inventory planning

Spare parts planning is quite different from product planning. In spare parts planning, demand is incalculable. Lead time is zero in spare parts planning. Orders are likely to be shipped within hours of placing your order. Customers and agents repeatedly realize that they possess excess stock and want to return it to the original equipment manufacturers. The question of how much restocking fee is to be collected also arises. 

Creating something out of a failed product

Creating something out of a failed product

Some original equipment manufacturers do not ask for the return of FRUs that have been eliminated from their products, and some ask for them back too. Instead, experts review the defective parts of the product to find out the initial cause of failure.  

When there is enough data that states that an item has the potential to be redesigned to avoid further fixes, the company generates a new part that is suitable for the old product. 

When this occurs, there are two possible outcomes:

  • The reliability of the product increases for the end-user, their waiting downtime decreases, and, if they do not intend to pay for a service contract, they save funds on purchasing spare parts.
  • The original equipment manufacturer's sales team can discuss the increased uptime and a solid continuous improvement course. This can bring about an increase in newer sales of equipment. In addition, if the OEM sells service contracts consisting of replacement parts, this can increase their overall profit margins. But if you intend to sell spare parts only when the customer requires one, then the OEM can lose sales. In the case of OEM, the right decision to take is to continually enhance their products and come up with ways to recoup the revenue lost from lesser spare parts sales. This is the differentiator between a partner and a vendor.

Why should you take advantage of a spares management plan in 2022?

Why should you take advantage of a spares management plan in 2022?

Spares management systems help you integrate your hardware with a software support tool that enables you to share your data regarding your operations and requirements. By combining the hardware and software, you will be able to curate a list of spare parts that you will require, and you will be able to understand where you're lacking and what needs attention. 

Here are certain benefits of spare parts management and how they can help you with your functionalities:

  • It gives you the space to maintain low levels of excess inventory. Help you to reduce carrying and storage costs by gaining access to spare parts as and when required. 
  • Spares management allows you to be consistent with your service. The more consistent you are, the longer your operations will be in service and the better you'll be able to provide and meet the demands of your customers with your excellent services and support. 
  • Spares management improves your visibility, so your supply chain can determine the need for a specific spare part and where the spare parts business is headed. 
  • With spares management, the equipment uptime has a visible enhancement as you cut down on the long period of equipment downtime and don't have the need to create revenue or find a new source to mend apart when it faces issues. 
  • Spare management assists with faster repairs and replacements for faulty parts and assists with large-scale faults. 

Sure, having an in-house monitoring system can help you bypass many of these issues and help you to reap these benefits, but remember that it also has its fair share of limitations as you will withhold your limited knowledge about the equipment

Whereas consulting with a third-party entity can provide you with the necessary data and information about the parts you deal with and can even suggest the industry's current trends. Take, for example, a third-party entity that can give you specific details about the life of a particular spare part and how long it can last while working efficiently. 

This will help you to accumulate a specific part before the expiration period. Third-party partners also possess a more comprehensive range of inventory as they cater to a wide array of customers. This gives you the benefit of an extensive warehouse with the best possible parts in the market at reasonable costs. Thus, with the help of a third-party spares entity, you can efficiently optimize and manage your business. 


The spare parts business is considered a big deal for an industrial OEM because it is directly tied to making sure that the overall production of your brand is working at an optimal level. Managing your spare parts and keeping them organized effectively ensures that you possess everything you require on hand when you need it most and that nothing gets destroyed due to a lack of proper storage. In addition, when you have a good enough system for tracking what you have available for purchase and for knowing which parts are still viable for use, you'll be better financially and emotionally equipped to deal with any trouble your business might find itself in. Good luck!