Paintsville Utilities is located in Eastern Kentucky near the West Virginia, Ohio, and Virginia borders and has been in existence since 1927. It presently serves 1,660 gas, 7,803 water, and 2,478 waste water customers. Paintsville Utilities not only services the City of Paintsville, but also Johnson County and portions of Floyd, Lawrence, and Moran Counties.
In 2018 Paintsville Utilities was building a new “shop” for operating distribution services and housing parts and inventory. The utility for years had used a standard manual “use and resupply” system for inventory control. This system was simple, use parts, write down what is needed to re-order, and then go through a procurement process for replenishment. Often the utility was ordering multiple times a weeks from as many as 5 different suppliers.
This system left a lot to be desired, the biggest gap being lack of data to make informed purchasing decisions. There were gaps before replenishment which would cause heartache, leave the crews unprepared, and often cause added efforts or expense to get parts for emergencies. Using as many as 16 man hours per week driving to source supplies. More often, the Utility would have excess inventory which would become dead stock and wasted money, or money that could have been better allocated. The inventory was often as high as $350,000.00 with as much as 30% considered old or dead stock.
CITCO Water (then The C.I. Thornburg Company, Inc.) presented the CLEAN Inventory Program. This is a program that positions CITCO as the primary supplier for Parts, Pipe, Valves, and Fittings, for the Water Department while being tied electronically to their distribution software to manage the inventory with Data and technology. With parts pricing being fair and competitive.
CITCO sent in a team of specialists to assist with organizing all the current inventory, this including a significant amount of sorting and cleaning, along with creating bin locations, and adding bar codes. After initial clean-up and reset was complete, everything was counted and accurate, the group worked with the Utility to establish proper par values (minimum and maximum inventory levels) The CITCO Team spent a week setting up the new distribution and inventory program. CITCO then provided a device (an iPod) at no expense to the Utility, to be used to scan every item going out of the building whether to replace inventory in the trucks or go straight to a job.
Now every time an item leaves the shelf or yard it is scanned and deducted from the inventory. Once the inventory level hits the pre-determined minimum that item becomes part of a replenishment order, which CITCO fills on a regular delivery schedule.
Paintsville Utility knows the current inventory, for every item, the frequency of use, and the value of the inventory. The program intuitively makes, data driven purchasing decisions and the formatting of the software allows to follow the established procurement path for approvals and allocation.
Old and dead stock has decreased by 50%, the average inventory value is $230,000. The actual purchase price by item has decreased by 8%.
Intangible Costs savings are tied to Valuable employee time that is now spent making repairs and servicing customers not chasing parts for emergency deliveries.
End of year inventory pre-CLEAN Inventory Program took over 250-man hours, this process has become a very simple process of spot checking the reports provided. A total of 16 hours for annual inventory audit.
Paintsville Utilities is saving money on purchases, better using the resources, and has a better managed Distribution Department thanks to the CLEAN Inventory Program.