Mass Transit magazine features agency profiles, industry trends, management tips and new product information.
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32 | Mass Transit | MassTransitmag.com | FEBRUARY 2015 BEST PRACTICES INNESOTA'S METRO TRANSIT IS faced with perplexing spare parts inventory challenges. Continually maintaining and retiring aging feets and introducing new ones, they need to know how much of which parts to stock, work- of, or divest. And they need to do this while maintaining or improving service levels, and within budgetary constraints and cost-cutting mandates. Traditional, long-standing planning practices cannot produce the answers Met- ro Transit needs to manage 24,000 parts, valued at approximately $42 million, which support more than 1,000 bus, commuter rail, light rail and other vehicles. Part of the challenge is the sheer number of parts to managed, but there is more to it. Much of Metro Transit's demand for spare parts is intermittent. Seemingly random and with no apparent pattern, intermittent demand is extremely dif- fcult to forecast — and this is the case for 80 percent of Metro Transit's active parts. Because of this, inventory planning at the agency has been an overwhelming- ly manual and tedious endeavor based on the experience and expertise of two planners. When it comes to intermittent demand, many inventory planners either make guesstimates of parts needs based on experience, like Metro Transit, or don't bother to forecast them at all. Investigating how other transit agen- cies address similar challenges, Metro Transit found that several peers are us- ing a combination of specialized sofware and a method of inventory planning with considerable success. Metro-North Rail- road and Société de transport de Montréal deployed specialized demand forecasting and inventory optimization sofware, that enabled them to add thousands of parts for new feets and reduce the value of their inventory by 10 to 15 percent while im- proving service levels. In conjunction with Smart Sofware's technology, Metro Transit is using a service level driven method of inventory planning (SLDP) that will provide it with an action plan to simultaneously reduce its inventory and maintain service levels. Planners found 10 percent of the com- pany's inventory is obsolete and has mil- lions of dollars of parts outside its inventory stocking parameters. Metro Transit found SLDP's critical beneft, beyond knowing inventory is out-of-balance, is to provide a statistically based path to solving inven- tory problems. It enables planners to weigh the trade-ofs between service level and in- ventory costs. It mitigates risks involved in changing inventory policies by testing them before they're implemented, and pro- vides positive results faster. Belmont, Mass. Gregory Hartunian President Smart Software M 2700 W. 36th Place • Chicago, IL 60632 (773) 254-9600 • Fax (773) 254-1110 Web Site: www.wch.com E-mail: wch@wch.com Power Switch Machine • Trailable at any speed • No gears, clutches or chains • On-board programmable controller • Local and remote control • Control packages available • Extremely low cost of ownership For more information, visit www.MassTransitmag.com/10065851 For more information, visit www.MassTransitmag.com/10065991