Our objective was to evaluate the effectiveness of the company’s processes and controls for managing and safeguarding its inventory. We found that the Procurement and Supply Chain and the Mechanical departments recently began improving inventory management, but they continue to face challenges strategically managing Maintenance-of-Equipment inventory in ways that have operational, customer service, and financial impacts. For example, the company faces challenges in achieving an appropriate inventory balance, providing an effective ordering system, and safeguarding inventory from risk of loss or theft. We also identified $14.4 million in inventory items that the company will likely never use again—funds that Amtrak could have put to better use. We recommended that the company implement processes to improve inventory data, develop strategic inventory goals, assess the costs and benefits of carrying surplus and obsolete inventory to determine which materials to sell or scrap, and implement processes to safeguard inventory.
Open Recommendations
| Recommendation Number | Significant Recommendation | Recommended Questioned Costs | Recommended Funds for Better Use | Additional Details | |
|---|---|---|---|---|---|
| 1a | Yes | $0 | $0 | ||
| Develop and implement a process to ensure that the data used for MoE inventory demand forecasting and replenishment more accurately and reliably reflect consumption. At a minimum, this should include better tracking of employee practices that distort consumption data, such as enforcing the requirement to track the use of parts cannibalized from other units. | |||||
| 1b | Yes | $0 | $0 | ||
| Develop and implement a process to regularly and consistently review and update inventory attributes that the company relies on for forecasting and replenishment, such as reorder points and lead times. | |||||
| 2 | Yes | $0 | $0 | ||
| Develop and document strategic goals and metrics for inventory management that align with the company’s broader goals. Options might include measuring how frequently an MoE inventory shortage causes a train to be delayed and the extent to which MoE inventory shortages impact the company’s service capacity. | |||||
| 4 | Yes | $0 | $0 | ||
| Assess the costs and benefits of updating inventory item information in the company’s inventory management system. At a minimum, assess the costs and benefits of updating, clarifying, and standardizing item names, descriptions, units of measure, and accompanying photographs, as well as options for doing so. Based on this assessment, determine what actions, if any, to take. | |||||
| 5 | Yes | $0 | $0 | ||
| Develop and begin implementing a risk-based plan to secure inventory facilities across the company. | |||||
