December 2022-January-2023 - 24

Supply Chain
permissible under current law and regulations. The
letter notes the ability of parties in an existing federally
funded contract to modify the contract for a variety
of reasons, including price adjustments. FTA's letter
directed further questions to its regional office team.
Longer term, Melleady would like to see the U.S.
Bureau of Labor Statistics indices restructured and he
believes APTA provides a platform for the industry to
work together on this effort.
" The indices should be reconstructed to contain
newer technologies and components more commonly
used in modern bus and rail manufacturing. Unique
or blended producer price indexes would be available
for Bus, Rail, Construction and Service contracts that
would, by design, mitigate long-term risk for the supplier
and budget certainty for the buyer, " he said.
In addition to making sure these indices are bucketed
properly, Melleady says another major factor is
the trigger date, noting the time between Notice to
Proceed (NTP) and a project start date can be years
with significant impact to the supplier.
" The NTP and the trigger of the pricing should be
" Adjusting
a contract
according to an
agreed upon
index is the
way to make
sure pricing is
reflective of time.
-RAY MELLEADY,
executive vice
president of
United Safety
and Survivability
Corporation
connected to an index which incentivizes both the
manufacture and the end user to set and agree upon
a reasonable date to trigger inflationary clauses. Adjusting
a contract according to an agreed upon index
is the way to make sure pricing is reflective of time, "
explained Melleady.
Despite the immediate challenges, Melleady, a
self-described optimistic thinker, has a brighter outlook
for the future.
" Moving from traditional to strategic procurement
can reduce risk and lower the overall cost of major
purchases. We will work together to get through the
immediate challenge of supply chain disruptions and
hyperinflation and longer term, I'm optimistic about
the manufacturing base and our ability to provide
innovative products that move people in towns and
cities across the United States, " he said.
Shift Toward Adaptability
Gary A. Smith, CPIM-F, CSCP-F, CLTD-F, has more
than 40 years in supply chain management and is a
recent retiree from the transit industry. He continues to
speak on supply chain, conducts training and shares his
expertise in thought-provoking articles, including a trio
of pieces published in Supply Chain Management Review
examining supply chain best practices post-COVID.
" If you look at successful organizations in the private
sector, they are the ones that have world class
supply chains, and mass transit needs to take a page
from their playbook because we need to keep our buses
rolling, " Smith said.
Keeping equipment moving was a goal Smith described
as sacred when he worked in transit, and he explains
a resilient, adaptable supply chain is one way every
entity in the public sector can deliver on a similar goal.
24 | Mass Transit | MassTransitmag.com | DECEMBER 2022/JANUARY 2023
" Supply chains need to change, " Smith said. " Adaptability
equals agility plus resilience, where resilience,
is the ability to absorb a change quickly and agility
is the ability to pivot and come up with a new way of
doing something. "
Smith recommends eight steps to build a more
adaptable supply chain:
1. Create end-to-end visibility in the supply chain;
2. Investment in technology that supports this visibility;
3. Continuous improvement should be implemented
throughout the entire company;
4. Planning should be emphasized over forecasting;
5. Supplier and customer bases should be segmented;
6. A supply chain risk analysis plan should be developed;
7. Transition away from transactional purchasing toward
procurement and collaboration; and
8. Implement sales and operations planning as a process
to balance supply and demand.
" Supply chain is one of the ways to be able to control.
While we talk about cost reduction, we really need to
focus on reducing risk in the supply chain, which means
knowing your suppliers - from tier 1 to tier 3 - and
knowing their issues as well. It's all part of creating
end-to-end visibility and reducing risk, " Smith said.
Smith notes there is not a " magic bullet " to solve
supply chain challenges concerning risk and visibility
but does say there are various software platforms
available that are worth the investment to assist in
the endeavor. He says sometimes convincing the right
people this is an investment worth making can be a
challenge because the platform is not customer-facing.
" It's hard to get people excited about a system no
one sees or to convince them of the 'bang for the buck'
versus, for example, a new train or something that gives
you better lighting on a bus. The result is public sector
systems that are a generation behind, " Smith said.
While the decision to investment in supply chain
management systems comes from the top of an organization
down, implementing continuous improvement
is a way to build resilience from the bottom up and
provides common processes and language that can
improve internal and external collaboration.
" Continuous improvement is something people
can wrap their heads around, and it's not just supply
chain that can be improved. Mechanical and administrative
processes can be improved, and it's a relatively
easy thing to teach. Continuous improvement
gives everyone the same language, so you can really
communicate, " Smith said. " In the next decade, due
to things like climate change and [the retirement of]
baby boomers from the workforce, we're going to be
in state of continuous disruption, and how quickly a
problem can be dealt with and how an organization is
able to adapt will determine what companies survive. "
For mass transit organizations, the question will
be how much more effective or less effective they will
be, and the supply chain is a key to that. "
http://www.MassTransitmag.com
December 2022-January-2023

Table of Contents for the Digital Edition of December 2022-January-2023
