CITYWIDE: COMPREHENSIVE INVENTORY MANAGEMENT
Monitoring City departments’ actual need for materials and supplies is difficult given the largely decentralized approach to assessing and managing inventory needs.
Estimated Annual Impact:
Estimated Implementation Costs:
Barriers to Implementation:
While the Finance Department’s Bureau of Purchases maintains responsibility for procuring supplies, services and equipment for most City agencies, it has no responsibility for evaluating departments’ actual inventory needs or the appropriateness of existing inventory levels. Given that expenditures for materials and supplies represent less than five percent of the studied departments’ total operating budgets for FY2000, this area of departmental expenditures receives comparatively little scrutiny from either departmental leadership or central administration offices.
There exists a tremendous opportunity for the City to achieve significant cost savings through the more efficient and effective management of its materials and supplies inventories. Opportunities for cost savings include: reducing the City’s annual expenditures for materials and supplies, reducing inventory storage needs, reducing the level of slow- and non-moving inventories, and the creation of an investment recovery function responsible for turning surplus equipment and obsolete inventory into value through the use of recycling, redeployment, reselling, and other innovative techniques.
If an intergovernmental team made up of representatives from the Finance Department (Bureaus of Purchasing and Budget) were able to identify areas resulting in a three percent reduction in the level of materials and supplies expenditures within the five studied departments, the level of savings would exceed $1,000,000. Expanding the effort beyond the scope of the five departments studied herein could result in much greater savings.