Maintenance

Outsourcing the Parts Room: When to Do it and How to Begin

When parts rooms become more costly and time-consuming than they should be, it may be time to consider outsourcing. When doing so, identify the issues, define objectives, implement a process, and measure results.

November 2011, Government Fleet - Feature

by Elizabeth Linck, CFM

 

At a Glance

When discussing parts outsourcing, consider these steps:

  • Outline objectives and concerns, and address concerns in the RFP.
  • Analyze and compare current and projected operations.
  • Develop an implementation plan.
  • Get buy-in from all stakeholders.
  • Analyze results to ensure projected savings are achieved.

Parts are a necessity for an in-house fleet maintenance facility. How an operation obtains parts is critical to overall costs, productivity, and reducing parts-related downtime, but admittedly, it's not a core function. Evaluating an operation and taking full advantage of alternative methods and options can dramatically improve the overall operation, and outsourcing the parts room function is an alternative that has many advantages.

In 1990, when I took over the Fleet Department for the Town of Greenwich, Conn., fleet had an in-house parts room operation. The Fleet Department maintained all Town vehicles and equipment, from fire apparatus and police vehicles to dump trucks and snow removal equipment. By the beginning of 1999, the parts room operation had become burdensome and time-consuming to maintain. For example, at that time, due to the bidding process to acquire new vehicles, the Town's fleet had a vast mixture of makes and models of different years. It became harder to obtain parts for older vehicles, and it took employees more time to research these parts. The dollar value of the parts room inventory was more than $300,000. Being a union facility, getting qualified personnel specializing in operating a parts room can be a challenge. The Town needed to find a better way, and outsourcing the parts room function was an alternative method that met that objective.

An on-site turnkey operation customized for the Town offered many advantages. The outsourcing provider would own the parts and stock them in the Town's maintenance facility. These parts would be either OEM-supplied or supplied through the provider's network. Other services available included custom hydraulic lines, recycling batteries, tire disposal, core credits, lubricants, and anti-freeze, to mention a few. Employees determined parts to be stocked by studying the prior year's parts usage and fleet composition. In addition, not paying for the parts until they are actually used would eliminate the need to have thousands of dollars invested in stocked inventory.

In November 1999, NAPA, the vendor that won the bid, took over the operation of the parts room. This continued as a mutually beneficial partnership when I retired from Greenwich in September 2009. The justification, objective, and steps taken for implementation are critical for success.

This is the process that worked successfully for the Town: identify the issues, define objectives, implement a process, and measure results.

COMMENTS

  1. 1. JB Pieler [ January 06, 2012 @ 04:27AM ]

    Some of the justification for outsourcing is highly questionable. 4700 hours/yr for parts mgmt.?? 10 hours/wk for stock orders?? Sounds like the old operation was poorly staffed and operated or the numbers were ballooned to justify outsourcing. The article references purchasing procedures which resulted in a variety of equipment being purchased. The Fleet managers job is to prevent this and institute sane purchasing policies working with purchasing. Outsourcing is certainly appropriate for a very large operation with several dedicated parts employees or locations but this data looks odd.

  2. 2. Frank McIlvenny [ January 10, 2012 @ 10:36AM ]

    I agree with earlier commenter JB Pieler. Stockroom operations today must move inventory at least three times per year. Balancing fleet staff by utilizing worker skill is also necessary in order to keep stockroom operations in-house. For example, at Long Beach Fleet, stockroom operations are responsilble for maintaining a 90% fill rate, special orders, hazardous materials, fleet purchasing, fleet software administration, facilitiy electronic security and citywide fuel ordering. The advantage utilizing personell in the stockroom is to be able to insource more fleet responsibilities and utilize these special skills adding value to the Fleet Operations. Investing into the stockroom operation instead of divesting has been the key to success at Long Beach.

 

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