In operations management there are many metrics that are used to measure operational performance.
One of the most popular is OEE – Overall Equipment Effectiveness.
OEE measures the productive operating capacity of plant and equipment, compared to the theoretical maximum capacity of that plant and equipment.
Spare parts require an investment of capital with the expectation that the investment will be used productively.
An indicator of the effectiveness of that spare parts investment is stock turns.
Stock turn tells us if we have over-invested in the inventory and can, in conjunction with other measures, indicate whether we have the right mix of inventory.
