The City of San Diego is improving its parts management security following an audit conducted by the city’s Office of the City Auditor. Fleet management requested the fraud risk assessment in part to improve internal processes following numerous changes to how parts management works at the city, said John Clements, deputy director of Fleet Services.
In implementing changes proposed during its managed competition bid, the city is consolidating 13 maintenance facilities into 12, which results in one less parts room. Additionally, the city began a new parts management model two months ago, which Clements calls a hybrid between a fully outsourced parts room and in-house parts management. The hybrid approach has NAPA supplying all parts on a just-in-time basis, with city staffers managing the parts. The change resulted in a decrease of parts employees from 20 to 13.
The auditor’s goal was to “to identify the financial and operational risks related to the parts purchasing function, and to highlight conditions at the fleet warehouse locations that heighten the risk of fraud,” according to an audit document. Its six recommendations include suggestions to improve physical site security and controls over the inventory system and procedures. Fleet management agreed with all recommendations.
Fleet management has agreed to evaluate whether interior and exterior security cameras are needed at parts inventory locations, look into the repair of fencing around a major repair and parts facility, evaluate the cost-benefit of purchasing a software bridge between the AssetWorks FleetFocus software and the city’s SAP software to allow others to view parts data, and review the FleetFocus system to make sure only appropriate individuals have access to the system and with the lowest level of access necessary. Additionally, fleet management has agreed to complete a wall-to-wall inventory at its major parts locations and perform a cyclical inventory count.
“They had some very valid points and we’ll comply with what they recommended,” Clements said.
The city has 13 repair facilities with parts inventory (which will soon be 12), and purchases $7 million in parts every year. Clements added that fleet is also adding barcoding into its parts operation — staff members currently manually enter parts numbers into the system.
By Thi Dao