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Ore. Utility Outsources Parts Room to Reduce Costs

February 16, 2016

Photo courtesy of EWEB
Photo courtesy of EWEB

The Eugene Water & Electric Board (EWEB) in Oregon has outsourced its parts room to NAPA IBS and in doing so, expects to better comply with internal controls, allow technicians more time to work on vehicles, and reduce the true cost of parts.

EWEB fleet previously managed its parts room without a parts person due to its relatively small size — maintaining about 320 units. However, after an internal review, the fleet decided it wasn’t the most efficient method, said Gary Lentsch, CAFM, fleet manager for EWEB. It needed to comply with the agency’s internal controls and solve some of its procurement problems: too much technician time spent on parts purchasing, and the complex and time-consuming process of buying parts over certain dollar thresholds. 

Savings from the switch are expected to be significant. 

“We are anticipating on reducing our entire fleet operation’s operation & maintenance budget by around 6%” in comparison to having an in-house parts person, Lentsch said.

To comply with its own internal controls, the fleet would have needed to add two parts staff members to the team.

“For the cost of just one full time employee, we were able to have NAPA staff our parts room for enough hours to cover both shifts (with two employees),” Lentsch said.

Secondly, crew leaders and technicians normally spent about an hour per day on researching, ordering, picking up parts, and doing paperwork, meaning they had less time to spend on vehicles.

“In order for us to meet our own needs…we added overtime and outsourced more work to balance the workload. With the NAPA IBS program we’ve been able to reduce that time to about 15 minutes day,” Lentsch said. “For us, it was like adding a technician to the shop floor.”

All this extra work also increased the true cost of parts, from technician time to accounting time to cut a check. With the IBS program, the fleet eliminated six of the nine steps needed to procure a part, and the fleet receives just one invoice per month.

The fleet will now also be able to recapture its warranties and core credits immediately, where in the past, staff was often behind in recovering credits.

NAPA purchased 70% of the fleet’s existing parts inventory. Lentsch said only about 40% of parts actually come from NAPA, with the rest being purchased from local businesses.

The utility contracted with NAPA IBS through the National Joint Powers Alliance (NJPA) after evaluating several options, including an in-house parts option. Lentsch expects full implementation to be completed in the next few months.

Comments

  1. 1. Jason Cook [ February 24, 2016 @ 01:40PM ]

    My name is Jason Cook and I represent Caltrans's Division of Equipment's Materiel Operations. My comment is, did the switch net the results expected?

  2. 2. Kristina [ February 24, 2016 @ 02:43PM ]

    Imagine how much money they can save by firing all of their mechanics and bringing in Pep Boys mechanics at $9.45 an hour with no benefits. The bottom line is that they have a need for a second person in the parts room, to take the burden off of the technicians. I would love to see the follow-up to this story, one year later, to see what the real savings were once those invoices start rolling in. No mention is made of how Napa will circumvent the rules governing the acquisition of high dollar parts.

 

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