Best Practices in Inventory Management

1. Best Practices in Inventory Management DPI Refresher Course for Directors and Supervisors March 31-April 1 2014 Randolph Community College

2. Inventory Management Inventory is a major portion of any maintenance facility annual budget and should be managed in a way that will not prevent required events from being achieved. The only way to manage an inventory is by making it a priority and by spending time daily to order, receive, issue and manage the stock. Inventory that is truly managed will make the daily operation of your facility run smoother by simply making parts available when needed so bus maintenance can be carried out. The accurate account of inventory also make the TD-1 annual report more easily filled in. If the total in BSIP and the inventory count differs by 1% a written explanation is required and can result in monetary issues.

3. Ordering Techniques • Vendor List for specific parts such as brakes,oil,tires,batteries • Contact person's at each vendor should be established. • Price list from each vendor is recommended. • Order Sheets - Example: TD21 formerly (ME21N) • Ordering schedule should be determined, daily, weekly, biweekly helps lower quantities stocked. • Return policy for each vendor should be determined to eliminate obsolescence for non moving parts. • Vendor invoice file for easy reference on each vendor. Boxed at end of year for future reference or possible warranty claims. • Request invoice when ordering : Original or Fax copy acceptable. Most vendors can supply if requested at time of order. Ask for shipping rates or discounts for qty. or dollar amount purchases such as on state contract purchases. • Warranty the vendor offers, get in writing. • Warranty Clerk at Vendor, get contact information.

4. Inventory Receipt • Proper form to list parts, example: TD21 form and vendor invoice will make accurate receipt of inventory easier. • Include all taxes and shipping at time of receipt unless your LEA requires it differently. • Proper BSIP transaction to receive parts ME21N and MIGO • Double check all entries to insure accuracy at the time of receipt, this seems to be area many mistakes are made.

5. Stock Room Control & Maintenance • Control stock room activity and limit to persons responsible for the order, receipt and issuance of parts. • Setup stock room in manner to be user friendly for daily activity and during scheduled inventory. Bin Location, isle location, cabinet location is very important to assist in proper management. • Record the Bin location information in BSIP and this will save much time in locating parts and in the inventory process. ZMM02Z to change or add Bin location. • Setup an obsolescence program to eliminate obsolete parts and allow for inventory on newer buses to be stocked, and in many cases without increased inventory values. • Daily checks in stockroom of fast moving parts will greatly help in the accuracy of your inventory. It is much easier to find a missing part and charge to the correct bus if spot checks are done at least weekly. This will be similar to the checks done by your field consultants on their visits.

6. Service Truck Inventory • Consider transferring inventory carried on service trucks from main storage location to service truck location to assist in controlling your inventory and in taking your annual inventory. MB1B is the BSIP Transaction for this procedure. • Stockroom location for service trucks is available on the School Bus Safety Website for all service vehicles in your fleet if you are not currently using this function. Look under BSIP/Resources/Handouts/Setup Data. and the locations are listed by LEA. If additional locations are needed due to growth request these from the BSIP help desk.

7. Purchase & Contract • Contracts for parts are still available on the website for Purchase and Contract and the support and protection they have always had is in place. • http://www.ncpandc.gov • Vendor Complaint Forms are listed on their website also for any problems with vendors that might arise. • State Contracts do offer money savings in most instances if they are considered before local purchases are made, and in many instances support if something goes wrong that causes liability issues.

8. DOT # & VRMS Search • Transaction MM03 can be used for the DOT# search procedure as one of the most effective. • DOT # request form located on BSIP resources sight needs to be filled out with correct information or the form will be returned for the corrections to be made. Please search using MM03 before sending the form to save time due to many numbers we are checking already existing in the system. • Transaction ZPMVMRS is used for VRMS # search or use new 8 page VRMS cheat sheet located in the BSIP resource section.

9. Annual Physical Inventory Procedures • Step by Step instructions for taking annual inventory are available on the BSIP link located on the School Bus Safety Website. Take time to read and understand these procedures prior to taking inventory. • Planning for annual inventory is a must. • Set a start date for taking inventory. • Take inventory by groups 180,181,EEA,ECT not the entire inventory at one time this will make any problems easier to solve. There will be issues so make this process work for you not against you. • The annual inventory is taken for the physical year running from July 1 to June 30 each year so timing is important to complete the inventory so the totals can be collected on July 1 before the new year starts. • The totals collected on July 1 are reported on the annual report that is due in August so please be accurate on the data totals collected.

10. Physical Inventory and Budget Impact (Shortages)DPI Message # 688 • Physical inventory of materials on hand is an important measurement of accountability in the use of state funds.  • Physical inventory of all materials must be completed before the end of the fiscal year June 30th. • All inventory results are reported on the TD-1 (due August 1st) • Documentation on how to progress through the SAP transactions involved in taking inventory is available at: http://www.ncbussafety.org/BSIP/documents/BSIP_IA4_AnnualInventory.pdf • Funding implications for 2014-2015 when shortages exceed 1% of stock use. • Fiscal implications will be included as an adjustment to the 2014-2015 transportation allotment.  • LEAs will be given the opportunity to explain any shortages, if it can be determined why the stock is short. • Bus garages should plan to take a very good inventory this year to clear up all issues. Enough time should be allotted to investigate discrepancies before posting inventory counts in BSIP.

11. Physical Inventory and Budget Impact (Shortages)DPI Message # 688 There are a number of possible causes of stock shortages • Stock might have been stolen during the year. • Stock purchased with PRC 056 funds could have been placed on local vehicles and not reimbursed, which would be an illegal use of state funds. • Parts were not correctly charged to vehicles. • And there are additional implications. • Vehicles will have incorrect maintenance and cost records. DPI relies on this information to provide an accurate picture of vehicle costs to the legislature. LEAs rely on this information in the event of an accident or in case of ongoing problems with a vehicle. • Stock shortages alter refund rates which must reflect the actual cost per mile / student.

12. Contact Links NC Bus Safety Website http://www.ncbussafety.org/index.html Division of Purchase & Contract • http://www.doa.state.nc.us/PandC/ Craig warren craig.warren@dpi.nc.gov Kevin Harrison kevin.harrison@dpi.nc.gov