MTA Metro North Railroad. Inventory Report Page 97

Transcription

1 MTA Metro North Railroad Inventory Report Page 97

2 Mission The Material Management and Storeroom Operations subgroup of the Procurement and Material Management Department, is tasked with the planning, storage, control and distribution of all material at MNR s storeroom locations. The material stored includes various railcar parts, equipment and support materials. The subgroup supports and promotes the corporate objective of providing an efficient and safe service to Metro-North s customers by providing appropriate levels of inventory to facilitate scheduled and unscheduled maintenance and repairs, and by working closely with both the Procurement groups and the Operations Division on projected needs and overseeing accurate efforts in forecasting Inventory. Page 98

3 Major Efforts and Initiatives (2010) Strategic Procurement and Planning Metro-North Railroad s goal is to institute leading practices for strategic procurement, spend analysis and sourcing to further lower the cost of the goods and services needed to deliver value to our customers. This can be accomplished through advanced procurement planning, standardization of specifications for commodities, cost benefit analysis and the newly implemented algorithmic forecasting system which will help further right-size inventory. In 2010, MNR s Procurement & Material Management Department worked closely with Internal Customers focusing on opportunities for overall inventory reduction, creation of Month-On-Hand metrics to pinpoint commodities for specific reduction and increased initiative of transferring inactive stock to active areas, and disposed of specific obsolete items to reduce stock levels and increase revenue. P&MM s intent is to work closely with McKinsey & Company, Inc. as it moves forward in its continued implementation of Strategic Procurement. Minimize Cash-Flow and Reduce Inventory In 2010, MNR assembled a Working Team from Material Management, Procurement and Operations that was tasked with minimizing cash-flow or spend and reducing inventory. The goal for minimizing cash-flow was set at reducing 2010 levels by $6M below The Team stakeholders met monthly to review current month and year-today spend. The Team was extremely successful and exceeded the MNR target by 65%, reducing cash-flow by $10.9M and inventory by $4M. This was achieved while simultaneously improving the service level to 97.0% Algorithmic Forecasting System for Strategic Inventory Forecasting Coinciding with and supplementing Strategic Procurement initiatives, MNR procured an Algorithmic Forecasting System which will be used to right-size inventory. This system will allow Material Management the capability to manage highly volatile items ensuring availability of critical parts and appropriate safety stock levels while minimizing overstocking. This product will also improve forecasting errors increasing service levels to internal operations customers. Joint Procurement Initiatives Joint Procurement opportunities are pursued and reviewed as part of the procurement standard operating procedures on a daily basis with peer agencies. The goal is to identify items that can be purchased in tandem throughout the MTA, while reducing redundancy and improving economies of scale. Success has been achieved with some common items such as air brake parts, M-7 wheels/axles, lighting parts, gloves, filters and garbage bags etc. to date. Total value of all joint/multi-agency procurements in 2010 was $250M; MNR s value was $82.1M. BSC PeopleSoft Conversion and Implementation On-going collaborative efforts have taken place throughout Significant resources were engaged in support of the rollout and implementation of a single PeopleSoft Enterprise System across all MTA Agencies. Metro-North Teams have worked on data cleansing, conversion, migration, training and testing of the new BSC product. From a material management perspective, over 40,000 MNR stock item numbers were mapped or converted to the new BSC commodity structure. This will allow for shared visibility and promote joint procurement efforts. Efforts continue in post implementation. Page 99

4 Inventory Service Level Year Service Level % % % % % % % % % % % The MNR Service Level goal is 97%. This is a performance measurement goal of the percent of time a part is available for use when requested by the internal customer. Page 100

5 Total Historical Inventory Trends (Constant 2010 $ s) In Millions $140 $120 $100 $80 $60 $54 $56 $58 $56 $64 $69 $81 $105 $98 $92 $88 $40 $20 $ Reduced inventory through aggressive, Spend Reduction Initiative, involving inventory replenishment decisions and combining disposal of obsolete material resulting from the retirement of the Fleet vehicles. Earlier than anticipated completion of the M-2CSR Program enabled MNR to transfer existing inventory from MNR s Project Storeroom to be utilized in the Running Repair efforts mitigating additional inventory replenishments. The on-going 2010 M-7 Five Year Program continues to consume inventory as part of the program drawdown plan. Page 101

6 Inventory By MTA Category (Constant 2010 $ s) $ In Millions $140 $120 $100 $80 $60 $40 $ $54 $56 $58 $ $ $ $ $ $ $92 $ $ M of E M of W Other MofE ($71.9 Million) Reduced MofE inventory through an aggressive, Spend Reduction Initiative, involving inventory replenishment decisions and combining disposal of obsolete material resulting from the retirement of the Fleet vehicles. Earlier than anticipated completion of the M-2CSR Program enabled MNR to transfer existing inventory from MNR s Project Storeroom to be utilized in the Running Repair efforts mitigating additional inventory replenishments. MofW ($14.1 Million) The inventory value has increased slightly as material is received in support of ongoing Planned Track Maintenance work. Other ($ Million) The Other category is comprised of the Commissary and GCT Uniform Storeroom; it shows a small increase this year and has fluctuated only slightly during the course of the past three years. Page 102

7 MofE Inventory Value vs # of Railcars (Constant 2010 $) in millions M o f E I n v e n t o r y V a l u e i n M i l l i o n s # o f R a ilc a r s Inventory Value # of Railcars The trend for MofE inventory shows that since 2007 inventory levels have declined by 16% during a 4-year period while fleet size has grown. This was accomplished simultaneously while improving service levels. In 2010, MofE inventory reduced through an aggressive, Spend Reduction Initiative, disposal of obsolete material, and the transfer of existing project inventory to Running Repair efforts thus mitigating additional inventory replenishments anticipates a slight inventory increase coinciding with the arrival of the new M-8 fleet as well as items associated with M-7 settlement agreement. Page 103