08/01/01
At the monthly meeting of the Chicago Transit Board, CTA Vice President of Purchasing and Warehousing John Trotta announced the agency has opened a new storage facility and that three others are planned to open as part of a continuing effort to streamline the procurement process and implement warehousing efficiencies. Improved procurement practices and enhanced revenue from these initiatives has resulted in annual savings of $4.5 million, he said.
Chicago Transit Authority President Frank Kruesi said, "The CTA has achieved great savings through innovative strategies to improve the Purchasing and Warehousing operation. John and his department have worked to reduce the amount of inventory in stock. This had freed up money tied up in stockpiled supplies and prevents them from becoming obsolete."
The CTA's Warehouse Operations consist of rail and bus stockrooms, rail and bus unit exchanges where rebuilt parts are housed until needed and a facilities warehouse. A new South Shops Stockroom opened in April of this year to store bus parts needed for heavy maintenance and rehabilitation of buses. By making this storeroom available at South Shops, we are better able to maintain vehicles through better production planning. The CTA plans to open an additional three warehousing stockrooms within the next two years. These would be located at: Skokie Shops, West Shops and at the Beverly maintenance facility.
Inventory control improvements such as streamlining of the physical layout of the warehousing and stocking similar items and materials in one area have helped to significantly reduce the time it takes to fill orders.
Trotta added, "Through electronic parts retrieval for 11,000 items, the CTA has doubled the productivity of warehouse employees using this new technology."
Over a 12-month period, the CTA typically undergoes 1 million inventory transactions to issue a part or material. This represents a total transaction value of $67 million a year. CTA's external auditors have reported that at four stockrooms, test counts of inventory resulted in 100% accuracy. The Central Warehouse improved to 87.5% accuracy compared to about 65% percent more than a decade ago. This improvement has resulted in reduced material handling costs and greater supply chain efficiencies by having immediate access to parts and materials which keep the CTA system running.
Reverse Engineering and Second Sourcing have resulted in significant savings to the CTA. This process allows CTA engineers to redesign a part to the agency's specifications and have it manufactured at a lower cost. In cases where parts or items are purchased as a sole-source item from an exclusive manufacturer, reverse engineering allows the CTA the opportunity to procure the item competitively from multiple sources at a lower cost.
Reverse engineering brought the CTA a savings of $758,000 in 1998, $1.6 million in 1999, $2.3 million in 2000 and $2.7 million through July 2001.
Through second sourcing, multiple vendors are identified that can provide the required part, item or service at lower costs through increased competition. Since the implementation of stockless purchasing in January 1998, there have been 72 contracts totaling $9.9 million put in place.
Some examples where reverse engineering and second sourcing have increased the savings to the CTA include:
Item Description Old Price New PriceSpacer Clip $ 76.60 $ .40Fuel Filler Neck O-Ring 5.89 .64Contact Support 47.79 14.60 Rail Car Batteries 7,570.00 6,590.00
Chicago Transit Board Chairman Valerie B. Jarrett said, "It is important for the CTA to continually look for better ways to conduct business by carefully controlling costs. These combined efforts allow the CTA to direct its resources toward the improvement of services for our customers."
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