What is the 80/20 rule in spare parts inventory?

The 80/20 rule, or Pareto principle, states that roughly 80% of inventory value sits in about 20% of references. In spare parts the concentration is usually sharper still, and it is the starting point of ABC classification: sort by annual consumption value, give the A class individually reviewed policies, and manage the long C tail with simpler rules.

The catch is that in spare parts the 80/20 rule alone will mislead you. Value tells you where the money is, not where the risk is. A €40 sensor that stops a production line matters more than an expensive part you can source in two days. That is why value-based classification has to be crossed with demand variability (XYZ) and operational criticality, meaning the cost of not having the part when it is needed.

Applied on its own, the rule pushes companies into overstocking cheap critical items and understocking expensive ones. Combined with criticality, it becomes a real prioritization tool.