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Suggested Citation:"SUMMARY." Transportation Research Board. 1995. Inventory Management for Bus and Rail Public Transit Systems: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/6352.
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Suggested Citation:"SUMMARY." Transportation Research Board. 1995. Inventory Management for Bus and Rail Public Transit Systems: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/6352.
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Suggested Citation:"SUMMARY." Transportation Research Board. 1995. Inventory Management for Bus and Rail Public Transit Systems: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/6352.
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Suggested Citation:"SUMMARY." Transportation Research Board. 1995. Inventory Management for Bus and Rail Public Transit Systems: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/6352.
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SUMMARY During the past several years, many private sector organizations have responded to competitive pressures and financial constraints by expanding their view of inventory as a potential source of cost reduction and as a measure of production efficiency. More recently, public sector organizations, including public transit agencies, have also begun to focus on improving the management of their inventories. In order to finely understand and measure the impacts of inventory management on the organization as a whole, increased attention is being paid to identifying new and better ways for measuring performance. Traditionally, many performance measurements have been used to measure inventory efficiency and electiveness in absolute teens. Examples of this type of performance indicator are inventory value and number of stockouts. However, experience has shown that agencies can gain even greater efficiencies when inventory performance is measured in relative terms, or when one measurement of perfo~ance is presented in relation to some other measure. Examples of relative performance measures are the number of backorders as a percentage of inventory and percent of obsolete and excess inventory as a percentage of inventory costs. The implementation of new and more meanings! indicators of inventory performance, coupled with a focused emphasis on utilizing materials management concepts adapted from the private sector, present substantial opportunities for transit organizations to improve inventory management and operating efficiency. The objectives of this research are to identify and describe those inventory contra! techniques appropriate to the public transit industry, to establish benchmarks, and to create a decision modeling guide that can be used by transit professionals for better inventory management. Strategies used in this research to accomplish these objectives include (~) identifying those inventory management practices and techniques that will best assist transit agencies in meeting inventory management objectives; (2) `determining the effects of different organizational structures, policies, and practices used for inventory management on satisfying inventory management goals and inventory service objectives, and; (3) defining the conditions and developing the strategies necessary to ensure the most effective and efficient implementation of inventory control techniques, decision-making techniques, and performance indices appropriate to the transit industry. APPROACH The approach followed in conducting this transit properties followed by data analysis consisted of the following: (~) a national research project consisted of a national mail sunrey of The survey and data collection and analysis tasks survey of transit agencies; (2) analyses of the relative · --

merits of the filll range of organizational structures, policies, and practices used for inventory management; (3) the development and definition of indices useful for inventory management including but not limited to stockouts, turnover ratios, inventory cost per vehicle, demand satisfaction, stock-keeping units (SKUs), shrinkage, and carrying costs based on such qualifying factors as scale, fleet size and standardization, fleet composition, mileage, etc., and; (4) identification of significant relationships between perfonnance indices and organizational profiles. Organizational Profiles A review of the various organization structures, policies, procedures, practices, performance measurements, and organizational goals and objectives utilized by the transit agencies responding to the mall survey showed five distinct organizational structures. All of the survey respondents, regardless of the size and complexity of the functional units responsible for the management of inventory, could easily be classified into one of these five structures as characterized below: (~) No formal inventor management Unction -- inventory responsibility is located in the Maintenance Department; (2) Formal inventory management Unction -- inventory management responsibility located in a department other than maintenance at the sub-department level; (3) Formal inventory management Unction -- inventory responsibility is located in the Maintenance Department; (4) Formal inventory management Unction -- inventory management responsibility located in a department other than maintenance, and; (5) Formal inventory management Unction -- a single dedicated inventor management group at the department level. Each of these organizational structures were profiled in the context of the organization, inventory management practices, and performance measures utilized by the transit systems examined. The relative merits of the different organizational structures were also evaluated relative to their ability to meet inventory management goals and service objectives. Performance Indices Our survey showed that most public transit properties use a small number of indicators to monitor inventory performance. Moreover, many properties, particularly those with less than SO vehicles, do not Connally monitor inventory performance. These properties merely set minimum and maximum levels for inventory items to control replenishment and address parts shortages as they occur. 1V

Although many of the survey respondents do not regularly track the above indicators, most were able to provide values in response to the survey questions. The respondents also provided information to calculate and examine additional indicators, such as the percent of obsolete inventory and the number of inventory personae! per vehicle. As a result, benchmark values were identified for fifteen inventory performance indicators including turnover, stockouts as a percent of stockkeeping units, inventory dolIras per vehicle, fill rates, percentage of obsolete items, days to fill backorders, inventory dollars per person, and transactions per person. Effect of Organizational Structure on Inventory Performance The objective of this analysis was to exarrune the effects of a public transit agency's inventory management organizational structure and inventory management decisions upon the agency's inventory performance. In addition, selected agency and fleet characteristics were included in the analysis to determine if these factors, combined with organizational factors, have an effect on inventory perfoITnance. lilNDINGS AND CONCLUSIONS The research concluded that transit agency and Beet characteristics alone have no significant effect on inventory perfonnance indicators, except for some differences between bus and rail Inventory. In general, no inventory organization factor, decision factor, agency or fleet characteristic has a comprehensive and consistent eject on inventory performance. Those factors that tend to favor higher sentence levels oRen do so at the expense of higher inventor levels and percent obsolete items. hn addition, none of ache factors affect more than one service level performance indicator (e.g. inventory fig rates, days to fib back orders). Those that effect the efficiency of managing inventory seldom have more than minimal effects on performance factors relating to inventory investment or service level. This mature of ejects is further supported by the regression analysis and resulting equations. In 15 equations (one for each inventor performance indicator), 32 separate variables were selected as significant. Four of these vanables appear in three equations, and one appears In five equations. The other 27 variables appear In two equations at most. The vanable that does appear In five equations, (percent of storehouses covered by a storekeeper) has a positive effect In three equations and a negative effect In two. The survey process yielded valuable information regarding the ~nter-relationships between inventory management and organizational decision factors. However, the conclusions based on this information are prelirnina~y at best. There are some inherent shortcomings in any survey process and the related statistical analysis. Most of the statistical tests applied during this study test a pair or group of factors and assume that "other things are equal". In addition, there was no way to verify the accuracy of survey responses beyond the application of common sense tests to the range of response values, comparing related responses in difference sections of the survey, and comparing an individual response to the normal range of responses. Finally, a survey cannot effectively capture information v

regarding the competence and attitude of the individuals actually involved with inventory management at transit agencies. Therefore, the conclusions should be developed into hypotheses for more detailed testing in a more controlled environment where individual effects can be more effectively isolated and quantified. V1

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