T says warehouse vendor a big improvement

Officials cites big savings despite ‘bumps in the road’

DESPITE SOME “BUMPS in the road,” the MBTA’s outsourced inventory management system is performing much better at less cost than the old warehouse operation run by T staff, top transit authority officials said on Monday.

“I think we’re heading in the right direction. And the key is we’re measuring our vendors. We’re measuring the warehouse on a regular basis,” T Chief Administrator Jeff Cook told the Fiscal and Management Control Board.

Mancon, the inventory vendor hired two years ago, has hit performance targets for the speed of scheduled parts delivery, and has almost always hit its targets for emergency deliveries, according to the T.

Although the company has fallen short on inventory accuracy, at roughly 89 percent accuracy, the new system is far superior to what it replaced, Cook said.

On Monday, Cook said switching to Mancon should save the T about $5 million in fiscal 2020, but there have been some added costs to inventory management that may eat into the T’s savings. The T hired the firm Alvarez & Marsal to help improve its inventory management at a cost of roughly $1.85 million, according to the T. Cook also referenced a collective bargaining agreement that bumped up the contract cost by $206,000 in fiscal 2020.

Cook’s report to the control board came after two members of the board requested an update and CommonWealth reported on several ways in which Mancon had fallen short of the promises T officials made when the company was hired two years ago.

Mancon, for example, has not been using its own inventory management software, as its contract with the T had specified. T officials touted a 10-hour guarantee for delivering parts to mechanic shops, but instead the T has instead graded the company on whether parts are delivered by 10 a.m. the day after they are ordered. T workers have also complained about inaccurate orders from Mancon – including one alleged instance where a box that should have contained an engine instead contained a paint roller.

Cook said some “bumps in the road” occurred initially because Mancon employees were not familiar with the parts they were delivering.

“Change is never easy. It’s not surprising to hear there’ve been bumps along the road,” said Brian Shortsleeve, a member of the control board who led the privatization effort when he was the T’s top executive. Shortsleeve said Mancon has hit a “home run” with the strides it made improving accuracy, delivery time, and cost.

One change that occurred after Mancon took over is the company closed down the T’s old warehouses in Everett and Charlestown and opened up a new facility in Stoughton, which Cook said is much better organized.

Wynn Resorts, the company hoping to open up a casino right next to the old MBTA Everett warehouse, has been leasing the old warehouse space from the T for about $670,000 per year, according to Cook.

Wynn, which expects to open its casino in June, has been using the building to store materials that will be used in the resort, according to a Wynn spokesman, who said the company has no long-term plans for the building.

Mike Vartabedian, a union official with the International Association of Machinists and Aerospace Workers who represents Mancon employees, said the blame for the new inventory vendor not meeting the promised level of service lies with the MBTA, not Mancon or its employees.

“They talked about a lot different contract than what I think was furnished to Mancon. I believe Mancon’s doing a wonderful job with the contract they were given,” Vartabedian said Monday after the control board meeting. “What they explained to the public is, I think, a little different than what they ended up with.”

Several control board members asked Cook if there were lessons he learned in managing the Mancon contract that could be useful in managing other third-party vendors. “I think as we continue to go forward, we have to build stronger penalties into our contracts,” Cook said, noting Mancon has paid penalties of $46,000 so far for failing to meet key performance indicators.

Joseph Aiello, the chairman of the control board, asked Cook to provide board members with all the work products produced by Alvarez & Marsal.

Control board member Brian Lang also wanted to hear more about the Alvarez & Marsal contract.

“As a board, I think we need to have some answers, particularly around the need to bring in another organization to help us manage Mancon,” Lang said.

Meet the Author

Andy Metzger

Reporter, CommonWealth magazine

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

About Andy Metzger

Andy Metzger joined CommonWealth Magazine as a reporter in January 2019. He has covered news in Massachusetts since 2007. For more than six years starting in May 2012 he wrote about state politics and government for the State House News Service.  At the News Service, he followed three criminal trials from opening statements to verdicts, tracked bills through the flumes and eddies of the Legislature, and sounded out the governor’s point of view on a host of issues – from the proposed Olympics bid to federal politics.

Before that, Metzger worked at the Chelmsford Independent, The Arlington Advocate, the Somerville Journal and the Cambridge Chronicle, weekly community newspapers that cover an array of local topics. Metzger graduated from UMass Boston in 2006. In addition to his written journalism, Metzger produced a work of illustrated journalism about Gov. Charlie Baker’s record regarding the MBTA. He lives in Somerville and commutes mainly by bicycle.

Transportation Secretary Stephanie Pollack said Cook has made improvements in the management of the Mancon’s contract.

“A contract is only as good as how it’s managed,” Pollack said. “Some of those bumps in the road occurred before you started and I think your team has actually been a big part of getting us a lot closer to the KPIs.”