Major Metropolitan Transit System Authority: Fleet & Spare Parts Management
The authority sought to modernize and improve the performance of its extensive investment in subway and bus spare parts through better inventory asset management, carrying, turn, and ownership practices.
CHALLENGE
After years of self-management, the authority made the decision to outsource the day-to-day operations and physical distribution of spare parts to its eleven maintenance depots from a newly designed central storage facility. The decision was part of an overall effort to gain better control over what had been a slowly increasing and infrequently used asset pool, making routine safety and regulatory maintenance increasingly more costly and time consuming. In making the decision to outsource, the authority realized it had little resident expertise in materials management—especially spare parts inventory level setting—and so sought to design and impart better strategies. The goal was to gain improved part availability with lower amounts of better targeted inventory.
A weighted scoring analysis showed that the largest percentage of existing inventory (90%+) could be removed from maintenance depots and/or reduced without affecting fleet availability.
SOLUTION
We crafted a four-step strategy to move the authority from their existing ad hoc and poorly performing inventory management strategy to scientifically calculated inventory stocking strategies based on critical characteristics. Optio Tempore guided the authority in analyzing actual maintenance practices, spare part usage patterns, and analyzing historical part usage. The Optio supply chain design strategist, with the help of authority staff, developed a scoring method for measuring criticality of parts along multiple dimensions including cost, frequency of use, interval between use, and others to identify the proper central or forward-placed stocking locations for material as well as strategies for reducing the central store supply. Analysis showed that over 90% of the material forward-placed could be either centrally located or reduced centrally without impacting existing maintenance schedules or asset availability.
Successfully investigated—then tied—available time for maintenance/repairs to time for delivering necessary parts.
BENEFITS
Analysis showed that local inventories could quickly be reduced by as much as 90% (from $700,000 in a maintenance location to <$65,000) with improved part availability to the local mechanics. Furthermore, overall inventory levels—including central stores—could be reduced from $60 million+ on hand to around $37 million ($23 million reduction or 38% reduction). Furthermore, the authority could improve mechanic efficiency by adopting better planning and kitting arrangements to reduce mechanic wait time, walk time, and part storage search time, eventually moving from less than 20% planned maintenance to more than 50% planned.
