Several cities, towns and regions in Ontario have joined together to consolidate the procurement of transit parts, providing stronger negotiating power and minimizing costs. DetWhat Happened?
Several cities, towns and regions in Ontario have joined together to consolidate the procurement of transit parts, providing stronger negotiating power and minimizing costs.
So What?
Every city buys materials. However, they typically do so with blinders on; nearby towns could be seeking the same supplies or materials, but there is rarely coordination to negotiate better prices and maximize efficiency. Gov1 recently ran a guest column from an Ohio budget official on a similar matter, and this is an excellent example of how towns can coordinate to share services and save. More importantly, it is an example of officials in multiple regions thinking “outside the box,” and creating a process that has benefits across municipal borders.
The Details
The arrangement involved five cities and towns in Ontario, Canada: Oakville, Brampton, Burlington, Hamilton, and London. The transit authorities in those cities, along with the transit authorities in the Regions of Waterloo and York, got together to consolidate their parts procurement. Specifically, the transit managers and administrators wanted to improve negotiating power and reduce inventory management without negatively impacting availability. The process took two years, and leveraged a third party to assist in the process.
The Third Party
Too coordinate the purchasing process between all those cities, towns and regions, the parties leveraged Neopart, a Pennsylvania-based supply-chain management company that happens to specialize in providing such “vendor-management” services to transit authorities.
The Results
The initiative, dubbed “Transit Inventory Management Services” or TIMS, has resulted in several material benefits:
- Savings: By using economies of scale, the coordination of purchasing has saved the participating municipalities money;
- Efficiency: As procurement has been consolidated through a single supplier, the process is more streamlined and efficient;
- Stability: The supplier absorbs fluctuations in inventory space and financing. This is unique, as typically cities deal with those issues.
- Award: Okay, this might not be the most compelling result, but the initiative just won an award called “The Peter J. Marshall Innovation Award,” which is presented by the Association of Municipalities of Ontario.
Savings & Fees
Neopart’s VP of Supply Chain Ray Melleady told Gov1 that the transit authorities are already saving anywhere from 12 percent to 18 percent on their supply-chain purchases. And that’s significant, as the TIMS currently supports 1,500 transit buses which deliver more than 100 million passenger trips per year.
The towns were able to afford the Neopart solution because it didn’t require a large up-front licensing fee; Melleady told Gov1 that parts and materials sourced through the system are supplied on a cost–plus basis. “As the supply chain is refined, costs are reduced and savings are passed along to the end user,” noted Melleady.
Getting Started
According to Melleady at Neopart, this initiative is replicable elsewhere. What is needed is a collective vision, which means reaching out to nearby communities and discussing the possibilities. “Like any successful project, TIMS began with a group of engaged stakeholders and a collective vision on how inventory management could be streamlined using a central warehouse and 3PL [third party logistics],” Melleady told Gov1. “Once the vision was established, key objectives were set and an RFP was drafted.”
Next Steps
Melleady has agreed to make himself available to Gov1 readers with questions. To contact him, simply email rmelleady@neopart.com. Please note that Gov1 has no relationship with Neopart, and does not endorse nor benefit from the company; rather, we are providing the information above as a service to readers who are considering deployment of similar municipal sourcing solutions.