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Playbook · MRO Distribution

How to reduce excess and obsolete inventory in MRO Distribution (2026)

Last updated September 2026

The short answer

Clear the graveyard aisle and stop the write-offs. 4 steps, in order, for a mro distribution operation.

What you are working against in MRO

  • 15–25% of MRO stock excess or obsolete
  • Most POs are low-value, off-contract tail spend
  • Criticality and consumption buried in spreadsheets

Before you start: where MRO usually sits

MetricTypical for MROWhat good looks like
Excess & Obsolete (E&O) Reserve 15–25% Service buffers inflate E&O; active disposition pulls it down
Inventory Turnover Ratio 2–4 turns Criticality buffers lower turns; target the dead tail
Inventory Carrying Cost 25–35% / yr Obsolescence risk pushes MRO higher

Published ranges, not targets. Take your own baseline before step one.

The steps

  1. 1Surface slow-moving, excess, and obsolete SKUs across all branches in one view
  2. 2Redistribute stock to the branch that actually needs it before buying new
  3. 3Price and monetize true dead stock at fair market value
  4. 4Right-size reorder points so excess stops rebuilding

Why it pays off

~25% / year
Excess and obsolete inventory costs the typical distributor about 25% of its value every year in storage, shrinkage, and cost of capital.
Industrial Supply Magazine
20–30% / year
Inventory carrying cost typically runs 20–30% of inventory value per year (often 25–40% for wholesale distributors).
Institute for Supply Management (via NetSuite)
20–30%
AI-driven optimization can cut inventory 20–30% while holding service levels, and reduce forecasting error up to 50%.
Epicor / MDM

Frequently asked questions

How do you tell whether this is working in mro distribution?

Recompute the same way each period. Excess & Obsolete (E&O) Reserve: E&O Reserve = Σ (at-risk inventory value × age/consumption risk factor). Inventory Turnover Ratio: Inventory Turns = Cost of Goods Sold ÷ Average Inventory. Inventory Carrying Cost: Carrying Cost % = (Capital + Storage + Service + Risk costs) ÷ Average Inventory Value.

What does MRO start from?

Excess & Obsolete (E&O) Reserve of 15–25% is the published band for mro distribution — service buffers inflate E&O; active disposition pulls it down. The 4 steps above are the same in any sector; the band you start from is not.

See what your inventory is really costing you.

Tell us where the cash is trapped — excess stock, idle surplus, slow RFQs — and we'll show you the outcome Maintained can unlock.

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