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29 December 2010 | Lindsay Clark
Buyers in the rail sector have echoed concerns raised in a report that was critical of procurement practices in the sector.
Earlier this month, UK transport secretary Philip Hammond announced an overhaul of the rail industry after a report highlighted supply chain inefficiencies.
Janet Strzebrakowski, until recently the interim head of procurement at engineering firm Colas Rail , said she had first-hand experience of it. “Working at Colas, 70 per cent of the work requirement was Network Rail, and because they have previously been public sector, they still have that mentality. This makes it hard for more proactive procurement functions within the supply chain to help them help themselves.”
The government’s rail industry shake-up could reduce running costs by up to £1 billion a year and lead to better, more efficient train services, said Hammond.
His announcement followed the publication of the interim report Rail Value for Money Study, by Sir Roy McNulty. It said the supply chain was overly complex in the rail industry, and didn’t have enough standardisation, while levels of trust and collaboration were low. It also said Network Rail was inefficient compared with its European counterparts.
It added: “Other industries appear to have been more successful at developing mechanisms to encourage partnership with suppliers while retaining the advantages of competition.”
Strzebrakowski said: “There is a keenness within the supply chain to work together, but opportunities for planning, specification and innovation have to be driven by the client.
“The difficulty is that we don’t know the work stream, or the time scales get changed on rail projects, or the specs change.”
On the operator side, Philip Brown, head of procurement at rail operator CrossCountry, said that the way franchises were handed over meant there was no real review of the contract or any supply chain development.
“I’d like to be on it from a procurement perspective because when the franchise changes over you have a transfer period that means any contracts with the original franchise owner transfer over, as is, to the new franchise.”
In some circumstances, he added, winners could be tied in with suppliers until the end of the franchise term.