Calif. County’s Parts Outsourcing Saved $2.1M

May 23, 2016, by Thi Dao

Photo courtesy of Sonoma County.
Photo courtesy of Sonoma County.

Sonoma County, Calif., has saved nearly $2.1 million after five years of outsourcing parts management, exceeding the originally forecasted savings amount by $623,000. The contract ended in December 2015 and in March, the county authorized a two-year agreement with the same company, Santa Rosa Auto Parts, for parts management services, said David Worthington, fleet manager.

The contract extended from 2010 to 2015, replacing the county’s conventional parts procurement and management process where it owned parts and employed full-time staff to manage them. The savings come from procurement, inventory, distribution, accounting, payment remittance, and staffing cost savings.

Fleet requested a shorter, two-year contract in order to minimize disruption of service during a planned move to a new facility late this year. The Board of Supervisors also approved expenditures made during the few months between contract expiration and new contract approval.

The new contact includes additional benefits that staff has negotiated with the vendor:

  • A 1% decrease in the parts markup charged to the county from 10% to 9%. The reduction is forecast to save the county $20,000 over the two year term of the agreement extension.
  • Movement of all parts and equipment inventory, shelving, cabinets, storage bins, computer systems, fluids, and tires from the current facility to the new facility at no cost to the county.
  • Installation of parts shelving in the new facility at no cost to the county.
  • An increase of off-site storage for parts and equipment inventory to better utilize the space allocated for inventory storage in the new facility at no cost to the county.
  • All parts and equipment inventory shelving to be labeled with unique alphanumeric location identifiers and inventory locations added to the parts management computer software databases at no cost to the county.
  • Parts and equipment inventory in place and available at the same time in the existing and the new light equipment fleet maintenance facilities to minimize any disruptions in operations.
  • Inventory-on-hand quantities updated to reflect historical usage patterns to meet the "on-demand" for stocked parts requirement of 85% at no cost to the county.

Before the end of the two-year contract, staff will look into other vendor options.

"We will be developing a new RFP within the next year that will include lessons learned from operating within the new facility," Worthington said.

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