Sometimes the most important parts in a manufacturing facility aren’t the ones being made. When a bearing, belt, filter or motor isn’t available when maintenance and repairs are needed, the production floor will feel the consequences quickly.

“You start a job and you don’t have a particular part and you didn’t realize it, you can only get so far and then you can’t do any more,” says Joel Levitt. “Now you have to throw a tarp over it and wait till you get the part.”

Levitt has seen that happen firsthand. The consultant, educator and author has spent decades helping manufacturers improve the way they maintain equipment and manage maintenance operations.

“If you don’t do MRO well, it gets useless really quickly,” he explains.

Case in point: Levitt recalls a mining fleet that tried to run its MRO inventory on a just-in-time basis, a strategy that aims to reduce inventory holding costs. Instead, technicians spent much of their time rescheduling jobs because at least one of the parts was missing.

The example gets at a fundamental challenge of MRO that involves more than the storeroom: The cost of keeping a part on the shelf must be weighed against the cost of not having it when needed.

What Is MRO, Exactly?

In manufacturing, MRO generally stands for maintenance, repair and operations. The term encompasses all the resources used to maintain equipment and facilities and keep an operation running, including parts, tools and safety equipment.

Levitt uses the acronym somewhat differently. He defines MRO as maintenance, repair and overhaul, explaining that those activities belong together because they all concern the care and restoration of equipment.

Whatever terminology you use, the underlying concept is tied to an asset’s life-cycle cost—the cost to buy the asset, design and install it, operate it and maintain it, Levitt says.

MRO comes into play in the cost of keeping equipment in good working condition, from routine care to repairs and major overhauls. Basic tasks such as properly lubricating equipment, keeping it clean and tightening bolts to the proper torque continue to be key, even with the advent of emerging technologies, he says.

Read more: 8 Total Cost of Ownership Questions for an MRO Supply Chain Expert

What MRO Isn’t: Ordinary Inventory

It can be tempting to see MRO inventory and supplies solely through a financial lens: How much does it cost to purchase and store, and how quickly does it turn over?

Levitt says that’s the wrong view. Traditional inventory metrics, he says, are largely borrowed from retail, where the idea is to move products through the business efficiently. MRO inventory serves a different purpose.

“In the MRO field, the cost of running the inventory is nothing compared to the cost of having machines that don’t work because I don’t have a part,” he says.

Levitt describes MRO inventory as “a portfolio of insurance policies.” The cost of the part and the expense of holding it are the premiums; the downtime of the equipment is the risk being insured against.

Read more: Solving Supply Chain Hassles: Seven Ways to Avoid Stockouts

The trick is to know which parts and supplies to carry in your MRO inventory. A relatively inexpensive part that can shut down a critical machine may deserve more attention than a costly part that can be readily sourced or substituted.

Even a high service level can be misleading. Levitt gives the example of a manufacturer with a 97 percent service ratio—that is, when the storeroom says a part is in stock, it’s almost always in stock. If a work order requires 15 different parts, however, the stellar individual ratios drop to about 60 percent overall.

“To make it even worse,” Levitt adds, “some people will go into the scrapyard to find something like the missing part and try to improvise it, which changes not only the reliability of the equipment, but the safety profile of the equipment.”

MRO Is Everyone’s Responsibility

MRO may sit under purchasing, finance, maintenance or an independent storeroom. But Levitt says MRO—and ultimately the equipment reliability that it supports—is affected by decisions throughout the organization and can’t be managed effectively in isolation.

“Reliability is a team sport,” he says.

For the people managing MRO day to day, that means keeping maintenance, purchasing, operations and the storeroom aligned around what a piece of equipment needs, and when.

Read more: How Improving Inventory Management Buoys Machine Shop Productivity—and Profit

Consider machine controls. If a facility primarily uses one manufacturer’s controls, introducing another manufacturer’s controls can mean a new set of spare parts and test equipment that can bloat inventories and holding costs.

“You may have to add 20, 30, 50 SKUs just because they put in a different kind of control,” Levitt says.

That’s why he advocates for cross-functional decision-making for both new equipment and assets already on the floor.

“I want decisions to be made that are good for the company—not good for the engineering department, or finance, or maintenance, or operations,” Levitt says. “The best decision for the company.”