Supply Chain Canada: Edmonton revamps fleet parts management

by Array

MISSISSAUGA, Ont: The City of Edmonton has completed a two-year project optimizing its parts management in municipal fleets. Edmonton faced many challenges as a medium-sized city that nevertheless covers a wide breadth of administrative activities, comprises five unions and over 10,000 employees.

The sixth largest city in Canada, Edmonton experienced over 10 percent growth in the last five years and has currently embarked on some major initiatives such as LRT and the development of City Centre airport lands.

“The city is dealing with exponential growth, and its reliance on a property tax base is not sustainable,” said Dan Lajeunesse, branch manager, materials management, with the City of Edmonton.

Hence the need to demonstrate efficient and cost effective management and innovation as part of a shared services model, responsible for centralized management of the city’s procurement and supply chain management.

The biggest focus area was on the procurement side, where there was a spend of $1.6 billion in 2011.

“Edmonton runs the largest municipal fleet scope in Canada with 4,700 equipment assets maintained by the fleet group. It has all the challenges of a very mixed fleet. There are also 13 maintenance facilities, including a new heavy maintenance facility, with additional facility growth planned for future,” said Lajeunesse.

The project started with fleet services, who were dissatisfied with service and rates.

They provided some investment seed money to launch a transformation.

The city has made a huge investment in SAP inventory management, and the aim of the project was to move from a “master servant relationship” and reactive environment of non-standard processes and lack of communications internally with materials management, to a scenario of more integrated planning.

Supply Chain Alliance Partners was selected to provide both consultation sand implementation.

According to Mike Croza, managing partner, Supply Chain Alliance Inc, “it’s the biggest project I’ve done in terms of cultural change. We’re bringing expertise into an organization but we’re not fleet experts,” he said.

Fleet maintenance planning is not a best practice in municipal government, he said.

“Right place, right time, right cost metrics were not well understood. There’s a cultural change in place to educate the customer about what these metrics mean. It was really about standard processes. It was complicated, in a culture that was changing. The objectives were to coordinate processes between the customer and the materials management processes.”

Lack of customer and operating metrics was the most important thing, Croza noted.

“Getting clean data to play pack to the customers, once we did that, it takes all the emotion away and laid the foundation for improvement within the group. SAP is a great, disciplined system, but information that gets in it (data) sometimes needs a cleanup,” he said.

Phase two of the project developed a future state of the organization in terms of policy and roles and implementation followed an aggressive timetable.

“In terms of visibility, we’re now able to separate the types of material requests, stock and non-stock. So it’s important to have the right type of data and transactional data.

In terms of achievements, “we’ve achieved the trust and credibility of our parts group, with system wide KPIs in the last stage of implementation. There are new materials management processes in place across all facilities, and all inventory stock and non stock is being tracked through the system,” said Croza.

Lessons learned include the willingness to adapt outside of a conceptual model of what you’re trying to do.

“Strong leadership and project champions are critical, and you should never underestimate the amount of communication and commitment required to support cultural change. You need to create a culture where people care, can contribute and make a difference,” he said.

Making the changes well understood meant running workshops with all staff on awareness and inventory stratification.

“Customers were also in many cases unaccustomed to many of the supply chain best practices,” added Lajeunesse.