February 23, 2012

Chicago transit to reform supply chain system

The Chicago Transit Authority (CTA) unveiled a host of improvements to the agency’s system for managing parts and materials — each designed to reduce costs, increase oversight and improve operations.

Appearing at the CTA’s central warehouse on Goose Island, CTA President Forrest Claypool spotlighted tens of millions of dollars’ worth of old parts and supplies that have sat unused for years and laid out plans to more effectively manage the purchase of thousands of items needed to maintain and repair CTA buses, trains and facilities.

The new initiatives include more stringent reviews of large or non-routine orders and steps to implement an electronic bar-coding system to better track items.

CTA will also seek qualified companies that can provide market expertise and industry best practices related to supply-chain functions.

The CTA will also hire an auction firm to sell off unused inventory, which the agency hopes will salvage millions of dollars to put back into some of the agency’s many pressing infrastructure needs.

Of the more than $70 million in current CTA parts and materials, about 47% has not been used or moved in the last 24 months, Claypool said. 
About one-third of the 330,000-square-foot main warehouse is devoted to obsolete and unused inventory, including parts ordered for bus and rail equipment that subsequently went out of service, as well as orders of larger-than-needed quantities. These items, ranging from 120 spools of copper and communications wire to customized hand carts, have a value of nearly $6 million.

Among the examples Claypool highlighted were a large supply of window films designed to protect vandalism of railcar windows. The CTA ordered them over three years ago and currently has a stock of 1,500 pieces worth over $100,000. At current use rates, the supply will last another 25 years.

This initiative is the CTA’s latest effort, under Mayor Rahm Emanuel’s leadership, to target cost-savings and increased efficiency.

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