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Case study Company name: Los Angeles Metropolitan Transit Authority
| Last updated: 04 Dec 2008 |
Los Angeles Metropolitan Transit Authority asked IBM to implement and provide support services on a pilot project involving parts that are maintained at Metro's Central Warehouse and three satellite divisions. According to Metro's Lonnie Mitchell (Metro's Chief Administrative Services Officer), "the pilot has given us deep insight and confidence that an inventory reduction of 28% against the initial $15.4 million sample is achievable. We expect to realize a significant portion of this reduction within the next 12 months. We chose IBM because having the right partner is critical to solving this important business problem properly. IBM was able to bring us a combination of industry knowledge, best practices, software capabilities and change management skills that minimize risk of making these changes." |
Business need | Rapidly increasing inventory was exceeding budget goals and could not be controlled without impacting parts availability and service level targets. |
Key challenges "For the past several years there has been a push to reduce inventory costs at Metro," says Lonnie Mitchell, Metro's Chief Administrative Services Officer. "With 29,000 active line items and over $90M in inventory that was growing every year, we needed to find quick and realistic ways to bring it under control. The challenge was to do that in a way that didn't jeopardize parts availability, and impact service levels, which would adversely impact our operations."
Faced with this dilemma, Metro asked IBM to implement and provide support services on a pilot project involving parts that are maintained at Metro's Central Warehouse and three satellite divisions. |
Solution | IBM consultants and Metro planners quickly went to work using the IBM Dynamic Inventory Optimization Solution. The solution makes use of highly sophisticated mathematical techniques that are designed to help companies optimize inventory at the stock keeping unit (SKU) level while preserving or improving parts availability service levels. |
Results | "The IBM solution provides enhanced clarity of our inventory and minimizes our risk of part obsolescence," says Ted Montoya, Metro's Deputy Executive Officer for Material Management. "Instead of reacting to stock outs, using this tool, our planners will be able to proactively manage the inventory, provide decision support information to make the right acquisition and distribution strategies to meet the business requirements." |
Benefits - Reduced inventory levels and handling efforts
- Increased parts availability
- Reduced obsolescence
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Customer testimonial | "This pilot has given us excellent insight into how we can better manage our parts inventory." - Lonnie Mitchell, Metro's Chief Administrative Services Officer |
Customer information | Los Angeles Metropolitan Transit Authority | | The Los Angeles Metropolitan Transit Authority (Metro) is responsible for supporting the continuous operations of nearly 2500 metro buses and over 225 rail cars in one of the most populous counties in the United States. |
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