Proposed Paradigm Change to Physical Inventories

Report
Proposed Paradigm Change
to Physical Inventories
Al Green, CPPM CF
Department of the Interior
Office of Acquisition
and Property Management
202-513-7542
Federal Center Chapter
September 26, 2012
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 A Proposed Paradigm Change for Inventories
 Three Proposed Policy Changes and Pilot Test
 What We Learned and Recomendation
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A Proposed Paradigm Change for Inventories
 Personal property over
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one million items of
personal property
valued at over $1.7
billion
 Museum property
consisting of more than
160 million artworks,
artifacts, documents,
and other museum
properties and
priceless !!!
Property Inventory Control Program
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Propose:
 To modify the current methodology for conducting personal
property physical inventories, processes and frequency of
inventories.
Use:
 Industry’s best practices and ASTM International Standards.
Purpose:
 To strengthen the PICP for over a 161 million personal and
museum property assets.
Goal:
 Use systematic control techniques to accurately maintain
asset accountability as required by law for government
personal property in the possession of DOI.
Expected Efficiencies
 50 percent physical inventory reduction
 Effective management of employees time to focus on specific
property types rather than the entire inventory
 Physical control over high risk assets including electronic
stewardship (reuse, remanufacturer, recycle)
 Streamlining and maintaining accurate and timely recording of
transaction historical events
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Current Inventory Methods
Statistical Random Sampling (SRS) Museum
Wall-to-Wall (WTW) Personal Property
HIGH
RISK
LOW
RISK
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Physical Touching Every Asset



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Change of designated authority;
The method for physical inventories, and
The frequency of physical inventories.
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American Society for Testing and Materials
- ASTM International Standards
 Adapting ASTM standards is crucial to the Property Inventory Control





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Program. It is through these standards that will help to identify the
expected efficiencies.
ASTM E2132-01, Standard Practice for Physical Inventory of Durable,
Moveable Property;
ASTM E2131-09 Standard Practice for Addressing and Reporting Loss,
Damage, or Destruction of Tangible Property;
ASTM E2279-09 Standard Practice for Establishing the Guiding Principles
of Property Management
ASTM E2605-08 Standard Practice for Receiving Property.
Note: For your information you can purchase a copy of any of these
ASTM Standards at the following web site:
http://www2.astm.org/ABOUT/overview.htm
Propose Inventory Methods
Statistical Random Sampling (SRS)
Inventory by Exception (IBE)
Transaction Based Inventory (TBI)
Change of Designated Authority (CDA)
LOW
RISK
HIGH
RISK
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Location Survey
Validation Techniques
Location Records Review
 DOI Personal Property
- BLM - Denver National Operations Center
-- Wall-To-Wall (100%)
-- Inventory by Exception
Random Sample
-- 793 (100% Accurate)
285/1000 = (29%)
- USGS - Texas Water Science Center
-- Wall-To-Wall (100%)
-- Fleet by Exception
-- Total Fleet Assets 87
Random Sample
-- Random Sample 17 (100% Accurate)
74/87 = (85%)
 DOI Museum Property
-- Random Sample methods used for last 20 years
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 Department of Energy (Title 41, Part 109 - PPM STD and Practices)
- Resulted in 87% reduction in their inventory effort.
- Changed the majority of their frequency of inventories to
every three years.
- Use statistical sample inventories led to a $6.6 million savings.
- Maintain inventory accuracy rate of 97% or better.
 Boeing, General Dynamics and ITT
- Uses industry leading practices to reduce and eliminate
traditional, costly 100% inventories.
 Leading organizations (Aerospace Industries Association) and (DOI-OSMRE)
- Have completely eliminated 100% inventories by using
inventory by exception or inventory by transaction techniques.
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 Established the basis that anytime an asset is
handled during the inventory cycle, it may be
counted as inventoried using Inventory by
Exception.
 Confirmed that the frequency of inventories
should be a predicated on several considerations:
the type of property; movement of property; the
volume involved; and an estimate of usage.
 Achieved a higher inventory accuracy rate than
expected when we applied the new inventory
methods.
 Level of internal control was better than
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expected and maximizes inventory performance
with minimum interference on operating
activities.
 Validated that ASTM Standards and
leading business practices do help to
streamline inventory processes.
 Testers were able to save time and effort
using the new inventory methods to
replace 100% physical inventories;
training will be necessary to implement.
 Creates the flexibility to choose among
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the inventory methods that best fits
specific personal property types.
Recommendation
1. Approve PICP Methodology
2. Implement PICP Methodology Including Next Steps
Paradigm Change to Physical Inventories
PICP Timeline – 16 Months
PICP
SEP 11
PRE-MGT
NOV11
Pilot Test
APR-JUL 12
POST-MGT
SEP 12
POLICY & TRN
NOV12
IMPLEMENT
JAN13
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Technological Innovations
 Radio Frequency Identification (RFID)
 Global Positioning Systems (GPS)
 Bar-Code Readers
 Tablets and Smart Phones APPs
 Digital Video
 Smart Card Technology
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