task order 1.2.2: ac transit on-call contract parts ... a... · task order 1.2.2: ac transit...

Task Order 1.2.2: AC Transit On-Call Contract – Parts Procurement and

Inventory Assessment – Final Report – October 31, 2012

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INTRODUCTION:

The objective of this assessment effort is to identify any deficiencies within the parts

procurement and inventory functions as they serve the bus maintenance department. The goal

was to identify means to refine the existing parts purchasing, inventory, and distribution

management system (procedures, staff duties, software usage, etc.) to provide a high level of

efficiency in providing for the needs of the maintenance department.

For this task a Senior Inventory Specialist from PB’s Fleet & Facilities Division (FFD) travelled to

AC Transit properties to analyze the parts purchasing, inventory, and distribution management

system.

FINDINGS:

The following information was obtained during on-site visits to four (4) AC Transit maintenance

facilities, D2 Emeryville, D4 Seminary, D6 Hayward and Central Maintenance Facility (CMF).

The information was gathered during interviews with Maintenance Superintendents,

Supervisor’s, Shop Foremen, Storeroom Supervisor, Stock Clerks, Inventory Clerk and

Materials Superintendent. Each study topic and relative findings and recommendations are

listed by priority that will have the quickest and most effective impact on Maintenance

operations:

1. Emergency purchases and tracking on parts for coaches out of service.

Findings:

All parts requests needed for repairing a bus are created by the maintenance

mechanic assigned to repair the bus in the Ellipse system as follows:

Create the work order for the repair selecting the proper repair code.

If a part is needed for the repair the mechanic has to find the part number by

utilizing the following:

o Enter the storeroom and walk up and down the aisles looking for the

part needed and once it is located write down the part number.

o Review the Master Parts Inventory report by description and try and

locate what is needed.

o Look up the part required in the appropriate parts manual.

o Go to the Internet website “ACINFO” and search for the part number.



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o Search for the part number utilizing the Ellipse MSO186 parts inquiry

screen.

Once a part number is located the mechanic can now create, under the open

work order a parts requisition and utilize three (3) special codes that were

created by Materials to determine urgency of the part needed for the repair.

These codes are:

o P1-Coach Down, Emergency, Bus is hard down, need immediate

o P2-Coach Down, part is needed but not hard down, can be run on

the street

o P3-Normal stock repair no emergency

When the requisition is finalized by the mechanic it will now print a hard copy

of the requisition on the printer in the storeroom only if there is stock on hand.

If there is zero (0) stock on hand or the storeroom does not have a stock

record of the part number being requested it will not print a hard copy of the

requisition in the storeroom. When this happens no one knows that a part is

needed as an emergency coach down or just normal stock repair other then

the mechanic that created the requisition.

Mechanic then returns to the storeroom and gets his part and notifies the

stock clerk, if one is on duty that he got his part. If there is zero stock

available, no stock record of the part number, no stock clerk on duty and a

hard copy of the requisition has not printed, the mechanic will leave a note for

the stock clerk of the bus number, work order number, requisition number

and part number and that he has a P1 coach down emergency parts

requirement.

Once a stock clerk becomes aware of the parts requirements for the coach

down they create a transfer request, through the Ellipse system, to the

Central Warehouse and fill out an in-house Excel form created specifically for

coach downs and fax this form to Inventory Control.

When Inventory Control receives this form it will be reviewed to verify: that

stock is not available at some other location; accuracy of the part number

being requested; if there are open orders for this item and if there is a need

for expediting before it is forwarded to Purchasing for procurement.



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Inventory Control has created a Microsoft Excel format internal summary

report by divisional priority, parts requests that have all emergency coach

down parts listed by Division. This manual report shows the part number,

date it was requested, vendor it was purchased from, purchase order number

and the expected delivery date. This report is updated daily and distributed

daily to all storeroom stock clerks, maintenance superintendents, supervisors

and foremen.

Purchasing will upon receipt of the emergency coach down parts request

purchase the item and create a purchase order utilizing a PeopleSoft

(Financial Management Solutions System that was acquisitioned by Oracle).

Upon receipt of the coach down part it is received in the PeopleSoft system

and then undergoes a holding time and is staged for the interface to occur

(time for interface can vary from 60 minutes or longer) that will update the

Ellipse system. At the time of receipt the only means of staff knowing this

part is an emergency coach down part is for the person receiving the part to

be familiar with the Excel priority parts report and review it during every

purchase order being received.

Once the coach down part has been received in Ellipse it electronically

matches with the original transfer request created by the stock clerk

requesting the part and it is then transfer to that location. Inventory Control is

also notified that the part is received so that the part can be removed from the

Excel priority parts request report.

Upon receipt the stock clerk will notify the maintenance superintendant that

the part is available and will then process the issue to remove it from the

store’s inventory.

Recommendations:

Create (1) one new position that will report to the Materials Department that will be

the main contact for maintenance staff when a coach down part is needed. This

position will be responsible for making sure that it is the correct part needed and it is

a coach down and then moving the proper documents thru Materials and Purchasing

as quick as possible if it is a non-stocking or out of stock item. Also this position will

pick up and deliver the part if it is available at another facility.



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Training is needed for all Maintenance staff and Materials staff on the proper use of

the established P1, P2, and P3 codes being utilized for bus parts needs and a SOP

created and posted at the storeroom parts window. During the interviewing process

with all AC Transit personnel it was very apparent that these codes are being abused

and their proper use is not fully understood. The current process for requesting a

coach down part is very complex (as indicated above) and takes too long from the

time the part is first requested to the actual receipt and repair of the coach.

All coach down parts request need to have a mechanic, supervisor, or foreman

signature on a printed copy of the open work order and hand delivered to the stock

clerk on duty. For times when a stock clerk is not on duty there needs to be a box in

the storeroom clearly marked “Emergency Coach Down Parts Request” and the work

order left there so that when a stock clerk comes on duty, action can be taken.

Stock clerk reviews the coach down request, verifies stock is not available and fills

out Excel AC Transit Coach Down Form noting that stock has been checked at all

storeroom locations and zero stock is available and fax to Inventory Control. Stock

clerk will then create a stock transfer request in the Ellipse system selecting the P1,

P2, P3 code and submit to Central Warehouse.

Inventory Control, upon receipt of the coach down form will review for open purchase

order’s, look at usage, review and adjust minimum/maximum levels, look for

alternate part numbers, create normal stock replenishment request if needed and

then submit a separate request to purchasing for an emergency coach down

procurement.

When the item is purchased, and the purchase order created in PeopleSoft, it

becomes very critical that it be identified within the purchase order that this is a

coach down emergency request so it will be easily identified at time of receipt.

Materials, at the time of receipt will attach a brightly colored adhesive sticker to the

part and transfer the part to the facility that requested the coach down part.

Storeroom stock clerk will notify maintenance that the part has been received and

will issue it to the work order relieving the inventory of stock.



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2. Material/Inventory/Stock Clerk Staffing

Findings:

Currently there are twelve (12) staff members in the Materials Department that

support the Central Maintenance Facility. Central Maintenance Facility works one

(1) shift and is closed on the weekends. The staff in the Materials Department is as

follows:

Material Superintendant

Working Part Foreman

Inventory Clerks (4)

Stock Clerks (6)

o Receiving/Dock (2)

o Parts Window (1)

o Truck Driver (1)

o Parts Pickers (2)

The storerooms located at the three (3) maintenance facilities are staffed with two (2)

stock clerks at each location and one (1) stores supervisor responsible for all three

(3) storerooms.

Maintenance operations have three (3) facilities that operate 24/7 and located in

each facility is a parts storeroom to support their operation. The parts storerooms

only operate six (6) days a week and only cover the day and swing shift and have no

coverage on the graveyard shift. For an abundance of time during the work week

store rooms are left with no clerk leaving the parts room unsecure. Also, with the

mechanic having to search and locate parts themselves critical time is taken away

from the repairing of buses.

Recommendations:

From conversations with AC Transit staff it appears that loss of inventory is an issue.

Consideration should be given to securing the store rooms and allowing access only

to authorized store room staff.

Staffing levels in the Materials Department at the Central Maintenance Facility is

adequate for the overall operation and support to Maintenance.



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Staffing levels in the storeroom at the three (3) Maintenance facilities operating 24/7

does not support the Maintenance operations as shown below:

(OPTION 1) To properly support a 24/7 Maintenance operation it would require a

minimum of six (6) to seven (7) stock clerks at each maintenance operation facility

for a total of twelve (12) additional stock clerks as shown below. This method will

allow for some level of relief in regard to staff days off such as vacation, personal,

sick, etc.:

X – New Positions

(OPTION 2) Hiring three (3) additional stock clerks and locating one (1) each on

third shift at each maintenance facility would improve support to maintenance by

50% but would still leave some open shifts for parts support as shown below:

X – New Position

Shift Mon. Tues. Wed. Thur. Fri. Sat. Sun.

First X X X X X

Second X X X X X

Third


First X X X X X

First X X X X X

Second X X X X X

Second X X X X X

Third X X X X X

Third X X X X X


First X X X X X

Second X X X X X

Third X X X X X



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More exposure is needed by the stores supervisor. This position needs to float from

shift to shift at all storeroom locations acting as support and training to the stock clerk

along with closer interfacing with maintenance staff as to their needs.

3. Warranties

Findings:

Warranty collection is very limited to labor and parts directly related to warranty

repair by maintenance utilizing a serialized warranty tag. The collection of this

information is not being tracked in the Ellipse system. During our discussions with

the AC Transit staff there was several mentions of high parts change outs on a bus

for the same part (DN50 Generators, Particulate Traps, and Brake Calipers). Staff

explained that such units are put in a shipping basket outside every storeroom where

they are bar code tagged by the stock clerk and transferred back to Central for

corrective action. Nowhere during our walk around at the maintenance facilities did I

see any such units tagged as described.

Recommendations:

All warranties need to be tracked electronically thru the Ellipse system, including the

following:

All parts related to new bus procurement

All Central Shop rebuild units

All outside vendor rebuilt components; exchange and new units

Maintenance labor and cost

Parts replacement and costs

Standard parts purchases (batteries, tires)

Create an SOP and provide training to all end users

4. IT system capabilities and available IT reports

Findings:

The current IT (Ellipse III) system is not being utilized to its fullest potential at the

storeroom level at all Maintenance Facility locations. The PB staff review of the



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Ellipse III system shows that it is driven by minimum and maximum stock levels. The

only Ellipse report PB staff was shown was called a “Recommended Warehouse

Transfer Report” that prints out after midnight each night on the storeroom printer.

During PB staff discussions with several stock clerks it was clear that they needed

training on the proper use of this report. PB staff was shown a Microsoft Excel

Master Inventory Record Report dated April, 2012 that was being provided by

Materials Department when requested by the stock clerk. This report was sorted in

part number sequence and alpha description and by storeroom facility locations.

Talking with the stock clerks it was very clear that the only training that has occurred

had been passed down by word of mouth.

Recommendations:

All storerooms should have the capabilities to print their own Master Inventory

Record report as needed. If this cannot be arranged then each month the Materials

Department should provide this report.

Training should be conducted on how to properly use the “Recommended

Warehouse Transfer Report”.

Reports should be generated each morning on all stock issues and transfer

transactions for audit checks on accuracy of previous day’s data input.

5. Normal stock replenishment at all maintenance divisions including the Central

Maintenance facility

Findings:

Normal stock replenishment in the Ellipse III system for the facility store rooms and

Central Warehouse is based on every part number having a minimum and maximum

stock level record established based on a (12) twelve month rolling usage history.

During the issuing process when stock levels at a facility store room reach the

minimum stock level assigned, a stock transfer request is electronically created for

the quantity needed to bring the stock levels back to the assigned maximum level.

This document is printed each night during system updates at the Central

Warehouse where the part is picked the next morning and transferred to the

requesting store room. The Central Warehouse replenishment of stock is also based



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on minimum and maximum levels assigned that looks at all demands for this part

(issues, transfers, stock returns, open purchase orders) and electronically creates

purchase requests which is then sent to purchasing for procurement.

Materials Department has no involvement during procurement of new buses and

equipment.

The Central Maintenance shop is considered as a vendor and issued purchase

orders for rebuilding of units to replenish stock inventory. If it is determined that a

unit cannot be built by them it is then purchased from an outside source.

Recommendations:

The Materials Department needs to be involved at the beginning of all bus

procurements. It is critical that Materials review Bus OEM parts recommendation list,

spare components and site visits when the bus is being built. Create a Master

Production Schedule (MPS) that can be used for budget planning, inventory stock,

and capacity planning for the Central Maintenance shop.

Stock clerks need to be more involved in establishing minimum and maximum levels

based on seasonal items which are sometimes obscured when reviewing the total

usage over a 12 month period.

Ellipse III should be reviewed by IT to see if it has the capabilities to adjust minimum

and maximum levels electronically based on seasonal demands.

Monthly meetings should be held between maintenance staff and storeroom

personnel to discuss any unusual parts needs, campaigns, and seasonal demands.

6. Stock delivery schedule to all maintenance facilities

Findings:

Truck deliveries of stock replenishment come from the Central Warehouse and

mostly happen once a day depending on how much stock has to be delivered. No

set schedule is established and sometimes due to personnel shortage (vacations,

days off, sick leave) the Warehouse has to pull people away from other jobs such as

receiving, pulling parts, putting up stock to make a truck delivery. This can cause

delays on moving parts to where they are needed.



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Chasing parts was a term used over and over by maintenance staff at all

maintenance facilities. It was described at each maintenance garage that mechanics

are quite regularly used to go to other AC Transit facilities to obtain parts. Such

action precludes the respective mechanic from performing their prescribed duties.

Mechanics should be in their place on the shop floor during their respective shifts to

meet the needs of the Transportation department. Failure to do so can result in a

missed run or late pull-out. Such action also covers up the need for staff within the

storeroom/inventory organization that should perform the function of having the

necessary parts available to the mechanic.

Recommendations:

Established truck schedules need to be created and posted at each storeroom parts

widow so there is an established time-line as to when stock will be received. This

also lets other storerooms know at any given time where the truck is located so that it

can be used for getting needed coach down parts from another facility.

The primary recommendation regarding mechanics chasing parts is to appropriately

staff the storeroom/inventory organization to meet the parts needs of the

maintenance staff. An optional, perhaps temporary, solution is to contract a Hot Shot

delivery service that is available 24/7 for parts pick up during the non-coverage of the

stock clerks and truck driver at the Central Warehouse. This will eliminate

mechanics having to leave their job repairing buses to drive to other facilities chasing

parts.

7. Stock Issue of Parts/Materials, Inventory/Cycle Counting, Inventory, and Inventory

Adjustments

Findings:

Most of the stock issues from inventory are to a maintenance system created

requisition for a bus part. This requisition is created after a work order for repair of a

bus has first been set up in the Ellipse system.

When a requisition for parts is created the hard copy print defaults to the on-site

store room printer only if stock is on hand at that location. If the storeroom has zero



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stock or a stock record for the part does not exist for this storeroom a requisition will

not print. When this happens the following occurs:

Mechanic will look at all stores locations and if the part is available will make

arrangements to get the part and leave a note to the stock clerk that the part

was picked at another facility.

If the stock is not available anywhere and is a coach down the mechanic will

notify the stock clerk of his needs and give him the requisition number.

Stock clerk will then follow emergency parts procurement as listed above

Item 1. Emergency Purchases.

Requisitions for parts created by maintenance are retrieved from the printer in the

store room throughout the day and are batch processed.

During the issue process of the requisition the stock is sometimes system count

checked on the shelf to verify that the part in fact was removed from the storeroom

and sometimes due to time restraints the requisition is processed without checking

stock levels.

Minimal cycle counting is conducted due to personnel shortage. When cycle

counting is conducted it is sometimes at the time of a stock issue and at that time

system count and physical count is verified and corrected.

Inventory adjustments are considered as spot checks when processing a parts

requisition issue and comparing system stock on hand with physical count.

Recommendations

All parts requisitions need to prompt a check of the system count and physical count,

and inventory adjustments should be made as a separate action at the time of

discovery. Correct system stock on hand is critical to the system stock

replenishment process.

The Ellipse work order system needs to be corrected so that the following happens

when a requisition is created:

At the time of requisition creation the system should print a hard copy to the

storeroom printer, even if there is zero stock on hand, and a record does exist

at the storeroom where the part is being requested.



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Work orders need to have a time period established that will automatically

close out and prevent issuing of parts to the work order. Only Superintendant

level should be authorized to re-open closed work orders.

Bin management should be done on a daily basis on all shifts and could be

considered a form of cycle counting. Bin management should include assigning

each stock clerk a section they would be responsible for and throughout the day

check the computer system stock against physical stock on the shelf and record any

inventory adjustments.

Stock clerk coverage needs to increase in order to decrease mechanic traffic coming

in the store room to get their own parts.

8. Parts Usage Analysis and Obsolete Stock Identification and Disposal

Findings:

All usage analysis and obsolete stock identification is handled at the Central

Warehouse in the Inventory Control Section and reviewed manually using reports

generated that show stock usage.

Items that are identified as obsolete are pulled from all stocking locations and

transferred and set up at an offsite location and identified as obsolete stock.

Sale of obsolete stock is conducted and handled by the Material Superintendant

when it is felt that enough obsolete stock is available for sale.

Obsolete stock is identified by usage reports created in Ellipse based on a time

period of last sale. Reports on stock material showing zero stock usage are

generated selecting a period starting at 5 years and greater, and then decreased to 2

years. Inventory Control reviews these reports to select obsolete and excess stock.

Recommendations:

Usage analysis should be run through the Ellipse system and draft reports created

that will reflect any changes to minimum and maximum levels and then reviewed by

the Inventory department and finalized for system update.

Stock clerks need to have more input along with maintenance on identifying obsolete

and over stock conditions.



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9. External Parts Deliveries

Findings:

All materials are received at the Central Warehouse other then drop shipments of

bulk fuel, soap, oil and lubricants.

Products are received thru PeopleSoft.

Material being received is physically counted, matched with the shipping document,

and then matched with the purchase order in PeopleSoft. If inventory is verified as

complete the item is then inputted into the PeopleSoft system and the confirming

documentation then sent to Finance for payment.

Once the item is received in PeopleSoft, if it is a stock order there is a waiting period

while the Ellipse system updates PeopleSoft. This time period of transferring

information from both systems can sometime take up to an hour or more. All stock

orders being received have to be staged pending system notification that the update

is complete before the stock can be moved to its assigned bin location.

Recommendations:

During the process of receiving stock into PeopleSoft there is a time delay due to the

interface with Ellipse that needs to be eliminated. Staging of parts pending receiving

notification by the system can delay delivery of emergency bus down parts and

cause confusion on whether or not the part has been received. In some cases parts

requested under emergency bus down may be stocked on the shelf or simply lay

around the receiving dock area with no indication it is for a down bus.

task order 1.2.2: ac transit on-call contract parts ... a... · task order 1.2.2: ac transit...

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