MRO and Working Capital: The Balance-Sheet Cost Hiding in Indirect Spend

Your MRO inventory is a working-capital decision disguised as a purchasing one.

Maintenance, repair and operations spend is treated as the long tail: low-value, high-volume, not worth the finance team's attention. That classification is a mistake, and it is an expensive one. Indirect procurement costs the typical European manufacturer 5,618 hours and €224,640 a year to administer, according to the 2025 study by HTWK Leipzig University of Applied Sciences of 181 procurement leaders. The cash it locks up on the balance sheet is larger still.

For a CFO, MRO is not a purchasing category. It is inventory, payables and production risk sitting in one under-managed line.

This article makes the case for treating it that way, and shows where the working capital is recoverable.

The long-tail label is a balance-sheet blind spot

Direct procurement is mature. Raw materials and components are negotiated, integrated into the ERP and measured. Indirect procurement is not: the HTWK study found only 15% of manufacturers run fully digital, integrated indirect procurement, while more than 40% still rely on spreadsheets.

That gap has a financial cost most finance functions never quantify. When a CFO asks for the total cost of indirect procurement, the answer usually does not exist, because no one has ever calculated it.

The problem is not that MRO is small. It is that it is invisible.

And invisible spend cannot be optimised, financed efficiently, or defended to an audit committee.

Inventory: the cash sitting on the shelf

Every critical spare held "just in case" is working capital that could be somewhere else. Asset-intensive manufacturers carry MRO inventory precisely because a stockout stops a line, but fragmented, decentralised buying means the same part is often held redundantly across sites, bought at different prices in the same week by people unaware of each other's orders.

The result is a double cost: cash tied up in duplicated stock, and no visibility to release it safely. The RS & CIPS 2026 Indirect Procurement Report found the need to reduce inventory costs rose to 44% of organisations, and to 55% among discrete manufacturers, well above average. Working capital is back in focus, and MRO inventory is where it hides.

The lever is not holding less stock and hoping. It is holding less stock because you finally have the intelligence to know which spares genuinely protect uptime and which are dead cash.

Payables: hundreds of suppliers, hundreds of liabilities

A manufacturing company manages a pool of around 300 indirect suppliers, per the HTWK data, each with its own invoice format, payment terms, currency and tax treatment. For a multi-country operation, that is a reconciliation burden measured in headcount and a payables position measured in complexity.

Biotronik, the Berlin medical-device manufacturer, shows what unwinding it looks like. Before consolidating its indirect spend, Biotronik ran more than 200 active suppliers, a maverick-buying rate above 28%, and orders that took several hours to process. After consolidating onto a single route, process costs per order fell 72%, maverick buying dropped from over 28% to under 5%, and the supplier base collapsed from more than 200 to a single creditor.

That is a working-capital decision before it is a procurement one. Fewer creditors is not merely tidier. It is faster reconciliation, cleaner cash forecasting and a materially simpler audit.

Production risk: the line item finance never sees

In asset-intensive manufacturing, parts availability is the difference between a line running and a line stopped. That makes MRO a risk-management line, not a cost line, yet it rarely appears in the risk register.

The RS & CIPS data quantifies the stakes: 77% of discrete manufacturers and 79% of process manufacturers can place an emergency order within a day, because the alternative is downtime priced in tens of thousands of pounds per hour. The CFOs who understand MRO treat availability of mission-critical parts as a continuity provision, funded and governed accordingly.

The reframe is simple. A missing €40 component that idles a €40,000-an-hour line is not a procurement failure. It is an unmanaged financial risk.

Intelligence: the fragmentation premium you are already paying

Decentralised buying means nobody benchmarks, and unbenchmarked spend leaks. Unite's own transactional data quantifies it: in 24% of cases, the spot-market price beats the negotiated framework price by an average of 12%. In one client's data, 61% of transactions had a lower-priced equivalent available, representing €21,000 in recoverable savings at a 20.2% rate.

For a CFO, that is not a discount. It is a fragmentation premium being paid on the very parts the business can least afford to run out of. Intelligence on mission-critical spend, covering line-level price, availability and carbon data, turns that leakage into a managed number.

The honest concession: this is not a promise that every category moves. Some barely shift, and a well-run framework will already be competitive on many lines. The point is not a universal discount. It is that you finally have a number to act on, drawn from your own data, before the first conversation.

What treating MRO as working capital looks like

Leading finance and procurement functions are rebuilding these pressures into a repeatable model. Several moves stand out.

First, leading organisations put a number on indirect procurement before doing anything else. The cost of inaction cannot be argued to an audit committee without it, and most manufacturers still cannot state it.

Second, they consolidate the supplier base to simplify payables and release the cash duplicated across fragmented stock, consolidating on supplier performance, not price alone.

Third, they segment MRO by criticality: strict availability and dual-sourcing for the spares that protect uptime, aggressive consolidation for commodity consumables. Total cost of ownership, not unit price, governs the decision.

Fourth, they demand line-level intelligence, covering price, availability and Scope 3 carbon, so mission-critical spend is managed with the same rigour as direct materials and CSRD exposure is evidenced, not estimated.

Conclusion

MRO is not the long tail. It is inventory, payables and production risk in one line the finance function has been trained to ignore. The manufacturers pulling ahead have stopped treating indirect spend as a purchasing afterthought and started treating it as a working-capital lever, releasing cash from duplicated stock, simplifying payables through consolidation, and pricing parts availability as the continuity risk it is. The first move is the smallest: put a number on what indirect procurement actually costs. Without it, there is no business case. With it, the conversation changes.