FMCB Awards Contract for MBTA Warehouse Operations; Projected Savings of $64 Million
BOSTON – The Fiscal and Management Control Board (FMCB) today unanimously approved a five-year contract with Management Consulting, Inc., (Mancon) to manage the MBTA's warehouse operations with a projection of $64.2 million in total savings and avoided costs. The shift is estimated to allow a 34 percent increase in the MBTA’s inventory accuracy and improve mechanic productivity, service, and efficiency. A 24/7, 10-hour delivery guarantee of standard requests to maintenance facilities is projected to reduce the MBTA’s current response times by 58 hours, or 2.5 days, compared to the current eight-hours-a-day and weekday-only service.
“The MBTA should and will continue to be in the business of moving our customers more efficiently, and modernized warehouse and logistics operations will both reduce costs and wait times for servicing our fleets,” said MBTA Acting General Manager Brian Shortsleeve. “This contract will allow us to increase the productivity of our maintenance operations and management of our inventory, improving response and repair times and the reliability of our vehicles for the riders who depend on the MBTA each day.”
The total warehousing and logistics operating budget for Fiscal Year 2017 (FY ’17) is allocated at $8 million with the totally loaded budget (including warehousing costs, cost of mechanic labor, cost of retiree healthcare, and pension costs) exceeding $12 million annually. The estimated annual cost based on a five-year contract with Mancon (including the current scope of services, an expanded scope of services, and MBTA administration costs) is $7.4 million. The Mancon contract is anticipated to help ease a forecasted FY ’17 $80 million operating budget deficit and reduce wait times for disabled vehicles, which accounted for more than one in every five dropped trips in FY ’17 to date. The MBTA is projected to avoid $16 million in capital costs to improve its current warehouse facilities and recover $39 million by better managing and divesting of unneeded inventory.
Mancon, which contracts with transit agencies in Ohio, Virginia, and London, was chosen for its extensive and superior performance in managing spare parts operations for public sector entities, including bus and train operations. Mancon proposed a dedicated Operations Manager and team working exclusively with the MBTA as well as the best Transition Plan, fixing the Central Warehouse’s issues sooner than other proposed vendors with modern techniques and industry-best practices. Mancon will use its own facilities, labor, vehicles, software, management systems, and equipment in managing the MBTA’s warehousing operations. The MBTA’s contract management team will also closely monitor the contract with performance-based, industry-standard penalties and bonuses with daily, weekly, and monthly reviews. Current MBTA warehouse employees will have the opportunity to apply for other jobs at the MBTA due to “bump back” rights.
Today’s action is the second effort by the MBTA to contract out and streamline service reliability, following the awarding of a contract to Brinks Incorporated last year to privately manage cash-collecting operations. Analyses by warehousing and supply chain experts found major systemic operational and financial inefficiencies with the MBTA’s main warehouse facility, including warehouse inventory inaccuracies (~61 percent), a delivery time of 68+ hours from warehouse to base locations (compared to the industry standard of 12 hours), and poor productivity of parts collections at 90 percent below the industry standard, resulting in delays servicing disabled vehicles in need of repair.
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