In the pre-privatisation days, management of British Rail’s supply functions was much like any other railway’s in that requirements planning, procurement and material control activities were managed and controlled on a day-to-day basis by railway staff. While the organisation’s approach and efficiency varied from time to time, the railway’s direct involvement in management of supply activities was a given, as it was in most businesses at that time.

Post-privatisation, the supply management landscape within the rail industry changed completely. The British Rail organisation was broken into seemingly logical business units and privatised (or sold). The former supply management entity became several privately owned and separate business entities. Along with the sale of the supply unit went the inventory, historical data on usage and supply systems used by British Rail to manage its supply activities.

At the time, this divestiture did not pose a problem because Railtrack had made a conscious business decision to outsource its maintenance activities. Infrastructure maintenance and up-grade contracts required the contractor to manage, along with other things, the supply of material, resources and plant required for their contractual maintenance obligations. It all seemed pretty simple at the time.

Supply Chain Management Issues Surface

Over time, Railtrack embarked on a series of large infrastructure upgrade programmes. The West Coast Route Modernisation (WCRM) is one of these and the largest. This programme activity was on the heel of decades of under-investment in rail infrastructure maintenance or upgrade. The under-investment continued until the mid 1990s and the WCRM was developed without anyone realising the impact that such a large initiative would have on the capability of the rail industry’s market (including the privatised companies) to support it.

During the years of under-investment, critical labour and professional skills migrated to other areas of endeavour, training programmes ceased, material supply companies either went out of business or shifted to other markets, and specialised plant and equipment grew old and unreliable. Consequently, as the WCRM programme activity ramped up, the rail industry market was not prepared to support it.

During 1999, Railtrack began to realise that successful delivery of its programme activity might be put at risk by the market’s inability to support the volume of work. An ancillary issue was the inefficiency generated by fragmentation of market demand for rail industry materials and resources that resulted from independent infrastructure maintenance planning activities. Railtrack commissioned a study of the current supply chain environment within certain rail industry market segments.

At approximately the same time, Railtrack started requiring firms to tender for their programme management contracts and to demonstrate their capability in supply chain management. PB was able to do this, and was awarded the contract to programme manage the WCRM. We served in that capacity from September, 1999 through February, 2002, and continue to serve as the programme supply chain lead.

Determining Our Strategy

Initially, we spent a good deal of time clarifying our understanding of the present state of the programme and determining what had to be done to set it right. Part of the initial analysis dealt with identifying existing supply chain management tools within Railtrack and the various project teams. We identified a number of supply management issues that had to be addressed to enhance Railtrack’s ability to successfully deliver the WCRM programme, including the following:

• There was no consistency of requirements across the various projects.
• The different companies involved had solutions that ranged from out-dated manual methods to sophisticated system solutions, with the former being more prevalent.
• Planning horizons were three to four months at their best, and more likely shorter.

Development of a comprehensive strategy to deal with these issues meant dealing with each of the facets of supply that could adversely impact programme delivery. Separate but coordinated solutions to dealing with the supply of required materials, people and equipment had to be developed, prioritised and aligned to mitigate the higher risk supply issues.

Our early work had led us to the determination that critical skill shortages were at the top of the risk register, followed by material supply and, lastly, equipment. We developed a three-pronged WCRM supply chain strategy that dealt with these issues through a rationalised approach to managing the unique requirements of each. This strategy was submitted to and approved by the programme’s general manager.

The basic premise of the strategy centred on re-development of an aggregated, forward looking programme-wide information data base that would allow for implementation of efficient supply processes and mitigation strategies for each of the areas of concern. Development of aggregated requirements plans meant that substantial data mining efforts had to be undertaken by the supply chain team. Requirements plans for critically skilled people, materials and equipment had to be developed and aggregated across the programme. This was no easy task because although some of the project teams’ planning capabilities were reasonably good, others were non-existent.

Critical Skills

Our team set about quantifying WCRM requirements for signalling designers, signalling testers, and people capable of performing the design and installation of the overhead line electrification (OLE) up-grade work. This effort was done on an eighteen-month forward-looking horizon. The team also quantified the number of people with each type of skill who were currently assigned or committed to work on each project. At the same time, we also quantified the requirements of all other major Railtrack projects for the same skills and the total UK market capacity to satisfy those requirements.

The resulting picture indicated that acute shortages of staff skilled in OLE installation and signalling testing would occur during various times over the eighteen-month horizon. Armed with that knowledge, the supply chain team began a successful search for additional non-domestic sources of qualified people to offset the projected OLE shortages. German and Swedish OLE installation workers were brought in to work on two separate projects during the summer of 2000; thus enabling the successful completion of the work.

The use of unlicensed or unqualified signal testing personnel was not allowed due to UK regulation, so the option of using non-domestic help was not possible in the short term due to the requirement for assessing individual qualifications. Instead, the information that our team developed about the signalling resource needs was presented to executives within Railtrack Plc who, after consideration of the data, implemented processes that created a platform for prioritisation and deferment of work to smooth demand during peak periods.

These critical skills databases are maintained on eighteen-month moving horizons and have been expanded to include critical skills outside the signalling and OLE areas. They have been adopted as a tool for management of personnel requirements within Railtrack, including project prioritisation and personnel allocation, when necessary. A Web-based tool for gathering personnel resource information is underway through PB’s ProjectSolve application and is being taken forward by Company 39.¹

Our team also conducted a worldwide search for additional licensed professionals in the signalling field. This search resulted in identification of pools of qualified and licensed people in the British Commonwealth countries, such as India, Australia and South Africa. Pools of non-domestic OLE and unlicensed signalling personnel have also been identified in the U.S., France, Romania and Switzerland, as well as in the commonwealth countries.

Initiatives have been implemented to develop these pools of resources through mentorship programmes being established with UK-based companies. It is envisaged that these mentorship programmes, which are aimed at leading to qualification and licensing, will allow for a substantial increase in the resource capacity within the UK to take forward various rail upgrade programmes, such as WCRM. To date, they have increased the capacity of signal designers within the industry by approximately 10 percent.

Material Supply

Material supply chain rationalisation presented a much different challenge. For example, nomenclature used in conjunction with the critical skills area was reasonably consistent, but that was not the case with the various materials used on the projects. Each project team had different nomenclature and processes and, other than materials such as rail, ballast and sleepers, none of the material requirements were being planned or leveraged on a programme-wide basis. A different approach was needed, one that would standardize nomenclature and procedures, and introduce the opportunity to gain supply chain efficiencies on WCRM.

Internal development of the required materials management tools was not considered a feasible option because it would require substantial investments in time and money. This situation led the development of a strategy that would bring the requisite tools to the programme through a third party provider.

Major contract logistics players were identified and preliminary discussions undertaken. In parallel, notices were posted in the appropriate journals to inform the market of the WCRM’s interest in pursuing third party logistics support. As a result, we identified several players who could provide the systems and infrastructure needed to provide enhanced material requirements planning capability, warehousing and distribution support, inventory management and aggregated material procurement/contract management services.

The third party logistics initiative is well underway, having begun its implementation on 1 November 2001. It is bringing to the programme necessary support in e-commerce capability, requirements planning and forecasting, nomenclature standardisation, inventory management/distribution and logistics planning. The initiative is also bringing significant cost savings to the programme as a result of improved material requirements plans, pass through supplier of production efficiencies, procurement leverage and reduction in work disruption caused by material supply problems.

This initiative has also generated interest within Railtrack outside the WCRM to the point where Railtrack is currently in the process of tendering for professional services agreements to carry forward similar strategies on future Railtrack programme work. PB is partnering with Unipart Rail Logistics in connection with this current tender activity and we have been informed recently that we will be included in the short list of tenderers.

Equipment

The last cog of the three-pronged strategy deals with an improved approach to the supply and management of specialised on-track equipment (plant) required to carry out the work.

Most of the strategic plant (i.e. ballast cleaners, tampers) is provided through the contractors as either contractor owned and operated plant or hire-plant. Railtrack has funded the acquisition of certain major strategic plant through the contractor with the proviso that Railtrack takes ownership at programme end. Consequently, the supply strategy developed in relation to plant was focused on:

• Developing a view of the available plant in the UK
• Looking for opportunities to improve plant-hire mechanisms
• Developing a process to improve plant utilisation between contractors to improve efficiency and reduce cost.

Efforts to implement this facet of the overall strategy have been underway for several months. They are, however, still in the early stages of development.

Results

Although implementation of the overall strategy is relatively recent, a number of successes have already been realised:

• Three projects with significant resource problems were successfully resourced.
• The WCRM resource management strategy has been adopted as a Railtrack management tool.
• Resource mentorship programmes have begun.
• Seven programme-wide material framework agreements have been tendered and are nearing award and two potential industry capacity problems have been identified and are being addressed.
• Cross programme requirements planning forums are meeting on a regular basis, and the importance of strategic supply planning has been recognised and is now becoming a mainstream activity within Railtrack.

Through our activities on WCRM, we have helped to place supply chain management in the forefront of Railtrack’s strategic planning. By demonstrating our capability to improve the success of managing Railtrack’s supply chain activities, chances for programme success have been enhanced. Railtrack now recognises the value of determining the impact of its plans on the marketplace and facilitating improvement in supply chain processes.