Excess inventory ties up working capital twice: once in the cash spent to buy it, and again in the cost of keeping it on the shelf. The fix is a routine, not a one-off clearance: work out what is genuinely surplus and what it is worth on today’s market, then liquidate it on a schedule that matches how quickly the business needs the cash. When capital is needed fast, a single bulk sale clears the stock. When the business can wait, selling over time may return more, depending on demand and the costs involved.
The scale of the problem is larger than most finance teams assume. PwC’s Working Capital Study 25/26, which analyzed more than 17,000 listed companies, puts excess working capital at €1.84 trillion globally. Inventory remains a challenge: PwC reports that days inventory outstanding (DIO) has risen 19.3% in the EU since 2015, and by 24.2% (about 15 days) for mid-sized companies.
For industrial businesses, a large share of that trapped cash sits in one place operations leaders rarely review with a finance lens: the maintenance storeroom.
Why does MRO inventory turn into surplus so easily?
Maintenance, repair, and operations (MRO) stock behaves differently from finished goods. Demand is triggered by equipment failures and service intervals rather than customer orders, so buyers stock generously to avoid downtime. Spare parts also outlive the machines they were bought for. Retire or upgrade a line, and its spares stay on the shelf.
Tractian’s maintenance inventory guide estimates that mature storerooms carry 15 to 30% of items that have not moved in three or more years. Typical examples include Allen-Bradley and Siemens PLCs and drives from decommissioned lines, Square D and ABB breakers and panel components left over from an electrical upgrade, Honeywell instrumentation for retired process units, plus obsolete finished goods and excess raw materials bought ahead of demand that never arrived. Many of those OEM names also appear on lists of the largest electrical switchgear manufacturers.
A four-question surplus test
An item warrants a surplus review if any of these apply, provided it isn’t still needed as a critical spare:
- It has not been issued against a work order in 24 to 36 months.
- The asset it supports has been retired, replaced, or sold.
- On-hand quantity exceeds two or more years of realistic usage.
- The OEM has superseded the part with a newer model.
What does excess inventory actually cost to hold?
Holding costs compound every quarter the stock sits. The commonly used benchmark puts annual carrying cost at 20 to 30% of average inventory value. Tractian’s breakdown for maintenance stock is a useful planning model: capital cost of 8 to 15%, storage and handling of 4 to 8%, insurance of 1 to 3%, and obsolescence and shrinkage of 3 to 6%.
At a 25% carrying-cost rate, $500,000 of idle MRO stock represents roughly $125,000 in annual holding costs, including an allowance for obsolescence and shrinkage. At the national level, the 2026 State of Logistics Report from the Council of Supply Chain Management Professionals (CSCMP) and Kearney found that inventory carrying costs made up 30.4% of U.S. business logistics costs of $2.40 trillion in 2025, roughly $730 billion.
Surplus also distorts the metrics finance teams watch. Because days inventory outstanding is calculated as average inventory divided by cost of goods sold, multiplied by 365, slow-moving stock recorded as inventory can inflate DIO and lengthen the cash conversion cycle even when the rest of the operation runs well.
How does accounting treat inventory that is losing value?
Under U.S. GAAP, ASC 330 requires most inventory measured using FIFO or average cost to be carried at the lower of cost and net realizable value. That rule came from FASB’s ASU 2015-11 inventory measurement update. Net realizable value is the expected selling price minus reasonably predictable costs of completion, disposal, and transportation. When that figure falls below cost, the difference is recognized as a loss in the period it occurs.
The practical point for operations and finance leaders: an honest market valuation may trigger a write-down. Delaying the review can leave the company carrying an overstated asset while holding costs accumulate. Treatment of MRO spares varies (many companies expense maintenance items when issued and capitalize only high-value insurance spares), so confirm the approach with your auditor before acting.
How do you put a number on surplus before selling it?
Start with what the market pays now, not what the company originally paid. Four factors move the price most:
- Condition and packaging. New-in-box stock with original OEM packaging commands the highest prices; opened or used items are discounted.
- Production status. Parts still in active OEM production compete with new supply. Discontinued parts can hold value where legacy equipment is still running elsewhere.
- Quantity and lot structure. Large mixed lots attract bulk buyers at a discount; single high-value items can be sold individually.
- Comparable sales. Recent transaction prices for the same part number are the strongest evidence of value.
Valuation itself has shifted toward data. Surplus Network, an industrial surplus marketplace, offers companies a free AI-powered fair-market valuation of excess MRO and obsolete inventory, then connects them with vetted bulk buyers and resellers across manufacturing, energy, pharmaceuticals, and food processing. Its valuation compares an uploaded stock list against market data and similar asset sales, giving a baseline before any buyer conversation. The same principle drives broader data analytics for business decisions: decisions improve when they rest on current transaction data rather than book values.
Where does the recovered capital come from?
Recovering value from surplus is mostly a question of matching the exit to the stock. Platforms built for MRO asset recovery, industrial surplus inventory valuation and liquidation, such as Surplus Network, structure the choice as two paths. Its bulk purchase path aims for faster capital recovery in one transaction, while continuous liquidation offers the potential for a higher overall return through sales over time. The platform facilitates introductions between sellers and vetted buyers, and sellers agree payment terms directly with the buyer.
According to the company, sellers can recover up to 55% through its network. Treat that as its own upper-bound figure rather than a typical or guaranteed rate; actual recovery depends on condition, demand, and the exit chosen.
| Factor | Bulk Purchase | Continuous Liquidation |
| Speed to cash | Fast, single transaction | Gradual, over months |
| Expected total return | Lower per unit | Potentially higher overall |
| Internal effort | Low after the sale | Ongoing listing and buyer management |
| Best for | Cash urgency, site closures, space pressure | High-value or slow-moving specialty parts |
A simple test for choosing the exit
Score four factors: cash urgency, storage pressure, obsolescence risk, and volume. If two or more point toward speed (cash is needed this quarter, the space is needed for something else, the parts are losing value quickly, or the lot is too large to manage piecemeal), choose a bulk sale. If most point the other way, continuous liquidation may return more, though it takes longer and can require more effort. If the results are mixed, split the inventory.
A hypothetical: the decommissioned packaging line
Consider a hypothetical food plant that replaces an older packaging line with a new automated system, the kind of upgrade covered in this look at carton box packing machines. The storeroom still holds two years of spare drives, PLCs, and servo motors for the old line, carried at $400,000.
At a 25% carrying rate, that stock costs about $100,000 a year to keep. It may also lose market value as newer models replace it, increasing the risk of a write-down under the lower-of-cost-and-NRV rule. A sensible plan: sell the common, high-volume items in one bulk lot to recover cash quickly, then list the rarer legacy parts through continuous liquidation, where buyers still running similar equipment may pay more for them.
How do you stop surplus from building up again?
PwC’s study describes a shift from “just in time” to “just in case” to “just because” stocking, in which buffers grow without a clear reason. Three habits can help prevent that:
- Link spares to the asset register. When an asset is retired, flag its spares the same day.
- Review quarterly. Run the four-question surplus test every quarter rather than during year-end close.
- Track DIO for MRO separately. Blended inventory metrics hide storeroom drift.
Frequently asked questions
How do you figure out what surplus MRO inventory is worth before selling it?
Start with current market prices rather than original purchase cost. Condition, packaging, and whether the part is still in active OEM production all move the price. Some industrial surplus marketplaces offer a free AI-based fair-market valuation that compares a stock list against market data and comparable sales, which gives a baseline before any buyer conversation.
What does it typically cost to hold excess inventory?
A common benchmark is 20 to 30% of average inventory value per year, covering capital, storage, insurance, and obsolescence. At 25%, $500,000 of idle stock costs about $125,000 annually. Market value usually declines on top of that.
When should a company choose a bulk sale over continuous liquidation?
Choose a bulk sale when cash is needed quickly, storage space is under pressure, the parts are becoming obsolete, or the volume is too large to sell item by item. Continuous liquidation suits slower-moving, higher-value parts when the business can wait for the cash.
What happens on the books when surplus is sold below cost?
Under ASC 330, most inventory is carried at the lower of cost and net realizable value, so a decline below cost is recognized as a loss. Selling converts the remaining value to cash and stops carrying costs. Confirm the treatment of MRO spares with your auditor.
Who buys surplus industrial parts and equipment?
Buyers include bulk purchasers, resellers, and companies still running the same equipment. Some marketplaces vet buyers before making introductions, with payment terms agreed directly between seller and buyer.
How often should a storeroom be reviewed for surplus?
Quarterly is a practical cadence for most operations. Spares should also be reviewed whenever an asset is retired or a line is upgraded. Waiting until year-end close can allow carrying costs to build for months.
What types of surplus can be sold through an industrial surplus marketplace?
Typical categories include surplus MRO parts, obsolete inventory, excess raw materials, unsold finished goods, and industrial equipment. Sellers come from sectors ranging from manufacturing and energy to mining, warehousing, and telecom.
