The Continuous Improvement Team’s work with vehicle maintenance has been a pilot effort to try out a “transformational improvement” strategy in which CIT and a team of employees “Lean swarm” a value stream or line of business in an attempt to make big, strategically beneficial changes. The CIT plans to conduct many more of these Lean swarms in the coming months and years.
In June 2014, a King County Transit purchasing specialist at Ryerson Maintenance base received this email from a parts supplier:
“I have noticed that last month and this month has been very slow for overall purchase orders coming through from King County to us. Is there anything wrong or is it just a lull in action for right now?”
Actually, this “lull in the action” was an early sign that continuous improvement was working. King County had been buying too many parts for a long time.
For the past several months, a team of employees from Ryerson transit vehicle maintenance has been working with the Continuous Improvement Team (CIT)—led by Lean specialists Lauri Owen and Jeremy Valenta—in order to change the way that Ryerson (and eventually all vehicle maintenance bases) manage inventory.
Inventory management across the system presented some stark problems when the team first examined the situation three months ago. For example, of the $18 million worth of parts on hand systemwide when the project started, $6 million worth had not been used in over three years. That is, a full third of the Vehicle Maintenance inventory had been bought and paid for, but hadn’t been used and had no foreseeable need to be used.
Those old parts weren’t the only inventory issue. At Ryerson itself, the team found that nearly half of the parts on the shelves (46%) were used less than once a month even though most could be ordered and delivered within 30 days—if not within a day. There was simply no need to have a big surplus on hand.
Complicating matters, Transit periodically rotates bus fleets from base to base—so the type of buses being fixed at Ryerson today might not be there in three months. Yet the parts to fix those buses would continue to sit on Ryerson shelves, rather than move with the fleet to the next maintenance base.
Ryerson’s Lean team and the CIT didn’t just want to reduce all these surplus parts; they also wanted to develop inventory management systems that would prevent excess parts from building up again in the future.
Parts older than two years alone account for more than 10% of the inventory dollar value at Ryerson. Each month, more parts celebrate their second birthday.
The team settled on four improvement projects to trial over 90 days.
Reduce supply of unused parts: removing from inventory the part numbers that have not been used in the past two years. More opportunity remains: part types that haven’t been used in one year, or even six months or less could be pared down.
That connects to the second improvement project:
Adjust min/max levels: reducing min/max levels of parts in order to optimize supply on hand. When the team first started, Ryerson base had been keeping a minimum 90 day supply of parts on hand, with a max of 180 days.
Systemwide, parts average 1.8 turns per year. Imagine buying groceries only two times a year. When Chiriho Nakao, a long-time practitioner of Lean at Toyota, toured vehicle maintenance, he remarked, “If this were a supermarket, your fish would be rotting.”
Starting with 30 test parts, the team halved the min/max to 45 days and 90 days, respectively. The team tracked these parts to make sure that mechanics didn’t encounter “stock outs” when a part they needed to fix a bus was not available. The whole three months, only two stock outs occurred, both of which were rectified within just one day.
Though perhaps an even better indicator of success, as Lead Parts Specialist Paul Bozoti notes, is that when they talked to mechanics at the end of the 90 days, many hadn’t realized that the Lean team had reduced the parts on hand—in other words, the mechanics were still getting the parts they needed to fix the buses when the buses needed fixing.
And what about parts that might get used less often than even once in 90 days? The team addressed that too in the third improvement project:
Restrict adding new part types to a base: adhere to rules that limit adding new parts to a base only if the part demonstrates at least quarterly usage in order to reduce the accumulation of unused parts.
Previously, if a single bus needed a part one time, Ryerson would set stocking levels just to be safe. That’s part of how the county wound up with so many two-year-old parts in the first place.
Now, when a single part is needed one time, Ryerson only orders one, and then tracks part requests to see if that part gets used at least four times per year. Ryerson only sets a min/max for those parts that do.
Going hand-in-hand with that improvement is another:
Move parts with fleets: moving fleet-specific parts more effectively when fleets move or retire can reduce the accumulation of unused parts compared with the current process.
Previously, when bus fleets rotated among bases, Ryerson would need to stock up on parts for the newly arriving fleets, and then would sit on any unused parts when the buses were rotated again.
This was happening at all seven transit bases in the King County Metro system. The plan going forward will be to move the parts with the buses so King county won’t need to have redundant parts for bus lines, though this will take time to implement.
Successes and Savings
When Chris Parrott (pointing) looks at the inventory information he now tracks, he says, “What I see here is a bunch of opportunity.” For example, almost all parts could be ordered based on a function of how often they are used and the supplier lead time each part requires.
After 90 days, the Ryerson team has begun to see some strong positive results:
- 17% reduction in inventory dollar value on hand. Prior to the intervention, Ryerson had more than $1 million worth of parts inventory. Now there’s less than $900,000, a big drop just from these first steps. The inventory dollars on hand will only go down as Ryerson continues and other bases expand upon these improvements.
- Of the test parts, there has been a 35% reduction in days-supply on hand. In other words, the fish are no longer rotting—or at least not as badly.
- More than 700 part numbers have been removed from Ryerson Base inventory.
And the team is still waiting for a bus fleet move to fully implement the “move parts with fleets” plan, but early test moves have worked well. And already Purchasing Specialist Jeri Rollison is training other purchasing specialists in the job breakdown of moving parts with fleets so that soon the whole system can adopt this more efficient approach.
Most of the savings are one-time savings: using up the excess supply of parts will only happen once. Likewise, returning unused parts to suppliers will bring some one-time refunds.
There are also recurrent savings that will add up over time. For example, the new procedures to restrict adding new part types to a base has already saved Ryerson at least $11,000 (and probably much more) in unnecessary orders. Paul Bozoti points out that a certain type of radiator costs $1,445 a pop; so a redundant two or three or ten would add up fast.
The space saved and other efficiencies, such as moving parts with fleets, should also benefit the system’s long-term bottom line, appearing not as cost reductions but as savings against the bigger budgets that might have been.
Rocky Brannan explains the inventory improvement projects to Randy Winders, Manager of Vehicle Maintenance
Continuing the Continuous Improvement
Staff at Ryerson are now more actively empowered and engaged in problem-solving. Rocky Brannan, who supervises the vehicle maintenance purchasing group, looks forward to putting his team to work on answering hard questions, such as developing new formulas for establishing min/max levels on additional parts, “We are not going to do an automatic order for new fleets. These parts specialists will be able to start doing some analysis.”
And Lean’s emphasis on using visual systems to track data and make problems visible is helping the staff identify and lead more improvements in order to build on this initial work.
The Ryerson team itself will be developing training plans and working with their peers at other bases in order to spread their project ideas, learnings, and recommendations across the system.
The hard part of continuous improvement is making it truly continuous. Superintendent Chris Parrott responds, “This was developed by the people who do the work. The people who do the work like it. As long as we support them and remove obstacles it will be alright.”
The full Ryerson Lean team:
John Alley – Assistant Manager of Vehicle Maintenance
Paul Bozoti – Lead Parts Specialist, Ryerson Base
Rocky Brannan – Chief of Material Management
Rod Budd – Equipment Dispatcher, Ryerson Base
Zac Drunkel – Lead Mechanic, Ryerson Base
Dean Fultz – Mechanic, Atlantic Base
Mario Jandoc – Lead Parts Specialist, Central Base
Heather Kilborn – Superintendent, Component Supply Center
Gloria Klein – Data Analyst
Brian Knesal – Chief of Inventory, Component Supply Center
Tom Mulvihill – Purchasing Specialist
Chris Parrott – Superintendent of Vehicle Maintenance, Ryerson Base
Jeri Rollison – Purchasing Specialist
Keith Shartner – Lead Parts Specialist, Atlantic Base
John Wishart – Chief of Vehicle Maintenance, Ryerson Base
The sponsor of this Lean effort is Randy Winders, Manager of Vehicle Maintenance