Town restores parts business

SCARBOROUGH — Following the failure of a two-year try at outsourcing, Scarborough is once again running its own parts department at the public works building on Washington Avenue.

"It was an interesting experiment but ultimately it was not successful," Town Manager Tom Hall told fiancee committee members at their June 19 meeting. "We would have preferred staying with it, but there just wasn't enough money to be made for the vendor, frankly.”

In 2010, Scarborough entered into its first public-private partnership, contracting with Genuine Parts Corp. to run a “vendor-based inventory system” at the  public works garage. GPC took over the town’s inventory, installed a cage around supplies and running the site as a NAPA store. Although the company maintains similar operations in larger cities, Scarborough had the first system of its kind north of Connecticut, said Hall.

Public Works Director Michael Shaw said he researched the concept for five years before it was launched. Although the town ended up paying 10 percent more than it previously had for parts not in the company’s inventory – specialized equipment that accounted for 60 percent of public works needs – Shaw said he expected to save on volume, especially when factoring office and cleaning supplies the company also carried. The idea, said Shaw, was to make the system a “one-stop shop” for all town departments. However, “there were no savings in the end” for the town, said Shaw, while Genuine Parts reportedly saw no proft on its side.

“In the end, I believe the margin was not there because of our past practice of searching for the best price and quality was more vigorous than they anticipated,” Shaw said last week.

According to Hall, another factor was a lack of “shrinkage.” A euphemism for theft, shrinkage refers to parts purchased for public works shelves that never make it to their intended destinations, presumably because they go home with municipal employees instead.

"The vendor was able to show great success in other communities because they really tighten up control," explained Hall. "But, in our case, that didn't make much difference. The lesson we learned is that we run a pretty tight ship and the profit margin the vendor expected just didn't exist."

Despite Genuine Parts not renewing its contract, the alliance did some good, said Hall. The town had accumulated numerous parts through the years that simply sat on shelves because they went to vehicles the town no longer owned. Genuine Parts was able to move many of those parts at other NAPA stores, and a percentage of each sale went into a reserve account that ultiamtely totalled $67,000. That money, along with funds left unspent this year in snowplowing and overtime accounts, was used to restock the parts department for municipal purposes.

“The total cost to reopen the parts room under town management was $298,000” said Shaw. “Inventory was purchased at the GPC acquisition cost at no markup.”

"We've been able to restock without any hit to the budget, so to speak, and we're back running our own parts department at this point," said Hall.

However, reopening the parts room will not net any new jobs in town. Shaw said he has reassigned a technician who worked occassionally in the parts room before the experiment, and will reassign his floor duries among the remaining techs.

“Through constant review of our policies and leveraging warranties from newer vehicles, we hope to keep ahead of the curve,” he said.