CTA Board Approves Inventory-Management Agreement

November 14, 2012
Modernized supply-chain system will reduce costs, increase efficiency, benefit customers
Continuing efforts to modernize the management of parts and supplies and reduce costs, the Chicago Transit Board today approved an agreement to join a City of Chicago contract for supply-chain management.
The contract with Genuine Parts Company will offer the CTA multiple benefits, from cost savings to shifting risks and expenses associated with maintaining an inventory of approximately 40,000 unique items at 20 CTA warehouse locations.
“This new supply-chain management system will help improve operations, avoid building up obsolete inventories in the future, and increase our ability to plan and forecast future needs,” said CTA President Forrest Claypool. “This is one of many reforms we’ve made under Mayor Emanuel’s leadership to modernize and reform how the CTA does business.”
Under the new agreement, the CTA will now purchase parts for routine vehicle maintenance and repairs from one contract as opposed to managing 1,200 separate parts contracts, Claypool said.
The City of Chicago awarded contracts to Genuine Parts Company in both 2001 and 2009 to provide a vendor-owned and managed inventory solution for maintenance and repairs of Department of Fleet Management vehicles. Cook County joined with the City contract earlier this year.
The improved supply-chain process will benefit CTA customers through improved maintenance activities that will result in a more reliable vehicle fleet, he added.
The agreement is the latest step by Claypool to improve the agency’s management of parts and materials—efforts designed to reduce costs, increase oversight and improve operations.
Earlier in 2012, Claypool spotlighted tens of millions of dollars’ worth of old parts and supplies that have sat unused for years at CTA’s central warehouse, and laid out plans both to recover maximum value for that surplus inventory and to more effectively manage the purchase of the thousands of different items needed to build, maintain and repair CTA buses, trains and facilities.
Several improvements have already been implemented to better manage the CTA’s $70 million of inventory, including more stringent reviews of large or non-routine orders.
Under the new agreement, Genuine Parts Company will upgrade warehousing technology to reduce, and in many cases eliminate, current manual, paper-driven inventory and tracking processes—saving money and increasing efficiency. CTA staff will remain involved in supply-chain activities, and will continue to handle and deliver materials.
The Genuine Parts Company ‘s contract will allow CTA to obtain favorable pricing afforded to all of the company’s 250 customers across the country.
Additionally, Genuine Parts Company will assist the CTA in addressing surplus and obsolete inventory currently stored in CTA warehouses to ensure CTA recovers the maximum possible value. Genuine Parts Company will use its supply-chain network to pursue opportunities for reselling or returning parts and materials, with proceeds going to the CTA.
Contract expenditures are estimated not to exceed $350 million over five years. Genuine Parts Company has committed to a Disadvantaged Business Enterprise (DBE) goal of 18 percent, rising to 26 percent in the contract’s fifth year. This represents an increase over CTA’s current 12 percent DBE participation in the purchase of materials and supplies.
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