The Detailed Analysis Report

In any business where inventory is involved, the good inventory management can definitely reduce the cost and improve the overall efficiency. The Supersonic Five Team have chosen to examine the inventory management procedure of the service department of the UGA Transit, and to cut cost for the department.

The service department we have worked with is part of the UGA Transit system. It oversees 41 buses of which the models range from 1982 - 1997. At present, the service department holds an inventory of 1200 items with a value of $90,000. As well as the rest of the UGA Transit system, the service department funding is fully sourced from transportation fees paid by students every quarter. We used several analytical tools that proved very helpful in our examination. A flow chart was used to record the different steps that an inventory item actually went through, and we were able to identify the problem. A fishbone diagram was used to look at different causes of the problem.

The flowchart sketches out the entire process of how a part is retrieved. In the past,when a mechanic decided which part was needed, he did not inform the parts specialist; instead, he just went to the stock room for the part and fixed the bus. After the job was completed, the mechanic filled out a work order that specified which part was used. He then handed the work order to the foreman. When the foreman decided the work on the buses had been completed, he recorded the information about the parts used in the inventory, and created an inventory spreadsheet. The spreadsheet would then be delivered to the parts specialist who monitored the number of parts left and decided how many to order and when to order.

On the fishbone diagram, causes are specified why inventory inaccuracy kept happening. First, the mechanics did not report the parts they used in work order form until a job was done. Secondly,it took a long time to record when an item was retrieved and when the information about that item was actually put into the inventory records. For example, it might take a mechanic a long time before he could finish the job and fill out the work order, and it may also take a while for the foreman to make a record for the item used. Moreover, the inventory spreadsheet, which was prepared by the foreman for the parts specialist, had chances of inaccuracy. The foreman made the spreadsheet based on the work orders on hand, but work orders of the buses still being fixed were not available until the buses were completely repaired. There were also times when the foreman put incorrect ID number of the parts on the spreadsheet. Finally, the information processed by the parts specialist could come out wrong because the specialist could make mistakes in deciding what items would be ordered.

According to the fishbone diagram and the flowchart, we concluded that the mechanic is the weak spot of the process. Information about any item retrieved out of the stock room should be recorded immediately and correctly. New order schedules made by the parts specialists should be based on this information, instead of that on the work orders which are usually delayed and have too many other factors involved. Apart from the inefficiency, the problem "ends up costing thousands of dollars each year", said the foreman. Furthermore, extra expenses for the next-day air also arose out of the human error. The service department spent about $1,000 a year on the express mail-in of parts and supplies needed after the initial inventory order. Of this $1,000, $500 was spent to process the unusual items that the department did not keep a stock of, and the other $500 was wasted on ordering items unexpectedly out of stock.

The solution to the costly problem is simple but effective. The solution is the implementation of placing the logbook in the stockroom. When an inventory item is retrieved, the information about the item is recorded in the logbook right away. The foreman would monitor the recording and update the inventory database accordingly. We have concluded that the logbook is the best possible way to reduce the human error.

We have initialized the implementation of the logbook for one week in the service department, and the reaction has been all positive and optimistic. "The program cut the time I had been wasting on checking inventory data at least by 10 hours per month (which means $2,400 a year, considering the foreman's salary is $20 per hour) ," commented the foreman, "and it will eliminate the $500 spent on the next-day air originated from out-dated schedule." Should the success continue, there will be vast improvements in the inventory control in the service department of UGA Transit, which will result in a yearly reduction of costs of at least $2,900 and an overall improvement in efficiency.

Titles Executive Summary Backgound Problem Investigation Solution Results The Detailed Report Photos TheTeam

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