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EFRTC General Meeting INNOTRACK – Optimising the Supply Chain Summary of Success-Critical Areas Munich, 6 th June, 2008
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 2 Six success-critical areas were identified to get the best value from the supply chain A Market-Approach and - Environment B C Contracting Strategies D Rules and Regulations E On-site Logistics, Processes & Technology F Production Resources Utilisation Planning and Funding
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 3 Six success-critical areas were identified to get the best value from the supply chain (1) A – Market Approach and Environment Overall strategies of Infrastructure Managers to exploit the market for Maintenance contracts Renewal Projects Clarity on Infrastructure Managers side about make or buydecisions Current status of market opening and degree of out-contracting Functioning and competitiveness of markets, handling of market-entry barriers Exploitation of full-service, system partnership business models Coordination between Infrastructure Managers and contractors in purchasing and specification of heavy equipment ("avoidance of over-sized, over- specified fleets") Active supply market development among equipment manufacturers
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 4 Six success-critical areas were identified to get the best value from the supply chain (2) B – Contracting Strategies Current contracting mechanisms (such as "cost-plus", "ad-hoc") often do not include incentives to increase efficiency Longer-term, output-oriented contracts are a way to enable contractors to dimension their capacities accordingly and to increase efficiency as a result of a steeper learning curve Risk allocation and reward sharing is a major area of concern, which can be tackled and improved appropriate contracting strategies Formal, complex and sometimes unrealistic short tender procedures drive cost into the supply chain Communication between the contracting parties can be improved so that the scope of work and the risk allocation is facilitated ("open partnership in competition") The fostering of innovations needs an appropriate sharing of benefits between Infrastructure Managers and contractors
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 5 Six success-critical areas were identified to get the best value from the supply chain (3) C – Planning and Funding Long term planning is fundamental for contractors and Infrastructure Managers to dimension their capacity to the anticipated market needs (avoidance of often over- dimensioned fleets) In a back-to-back approach Infrastructure Managers need long term funding commitments from governments ("Planning stability is at the heart of efficient processes") Long term planning needs to be translated into dependable mid term work programming with a view to consistent sequencing (over time and geographically) of work (see box 'E' and 'F') coordination of activities, bundling and "a clockwork" approach to worksite logistics and work execution (mutual programme management) Careful attention to detail in planning process and optimisation of the supply chain interface with contractors, including project risk analysis. Crucial to avoid surprises ("Money wasted in early decision-making can never be recovered later")
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 6 Six success-critical areas were identified to get the best value from the supply chain (4) D – Rules and Regulations The differing rules and regulations across Europe are a key entry barrier for contractors to market their services internationally A cross-acceptance of certifications for machinery (technical and process) and for innovations would enhance competition and ensure that efficiency gains are rolled-out more easily Market opening also positively effect current over-capacity Sometimes very rigid rules for worksite protection and logistics can have a very substantial impact on productivity. A harmonisation of rules and standards based on 'good practice' would lead to a simplification and added-value A long certification process furthermore is an obstacle to innovations
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 7 Six success-critical areas were identified to get the best value from the supply chain (5) E – On-site Logistics, Processes & Technology The output during track possessions ("time-on-tools") can be improved by processes and technology. Minimum disturbance strategies are more and more required and developed in some countries Innovation-friendly framework has additional potential to improve process efficiency The cost for moving equipment (logistics) is often very high, it consumes considerable time, often as a consequence of improper planning Maintenance and renewal work is often carried by various parties (e.g. staff of the infrastructure manager for worksite protection, contractor's staff for work execution) That increases the number of interfaces and the effort required for coordinating work (elimination of synergies, process perturbations) Due to the fragmentation of work the contractors can not sufficiently influence the overall efficiency of the project
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C:\Documents and Settings\tobiask\Desktop\0187001_GM_080610.ppt© BSL Management Consultants GmbH & Co. KG 8 Six success-critical areas were identified to get the best value from the supply chain (6) F – Production Resources Utilisation Understanding of basic economics of resource deployment (machinery and staff) is fundamental to the optimisation of the supply chain Infrastructure Managers approach is key to create a cost efficient framework, primarily by mid term planning and work programming consistent sequencing of work logistics and execution dependability The fundamental building blocks for good economics of resource deployment with a substantial impact on unit cost are plant and staff deployment during track possessions well programmed project pipeline and sequencing of plant and staff deployment (logistics from work-site to work-site) the objective of an even workload distribution over the year
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