Network Rail boosts purchasing productivity

13 June 2013

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13 June 2013 | Helen Gilbert

Network Rail has increased the productivity of its procurement professionals by introducing a flexible new operating model, Supply Management has learned.

Over the past year, the average number of projects managed by purchasers at any one time has risen from five to eight, while the average sourcing cycle time from customer requirement to contract award has improved by 30 per cent.

Jim Carter, the rail operator’s head of contracts and procurement operations, told SM much work has been performed by the function to analyse the skills and experience of the team and track their workloads more closely.

Alongside this, customer requests are analysed in great detail before being assigned to the most appropriate person in terms of their available capacity and skill mix to complete the task.

“We used to align people with categories or customers, now we’re much more flexible,” Carter told SM.

“We saw that there was under-utilisation of our resources. When you align people with specific customers they might not need procurement support all the time and at other periods may not be as busy. [We realised] that if we could allocate people to projects based on their experience and capacity we could be much more productive.”

Carter, who has hired more than 35 people in his team over the past year, said the financial productivity ratio – the cost of the function over the benefits provided – had also improved 8.8 times. “That’s a powerful message to send internally,” he added.

Yesterday, the Office of Rail Regulation (ORR) announced it had identified £2 billion that could be saved by the UK railways, while growing and boosting capacity. “Through more effective incentives, ORR is encouraging train operators, Network Rail and the supply chain to work together to create further opportunities to save money,” the regulator said. Network Rail said it was considering the findings and would respond in September.

The news comes after the operator last week signed framework agreements with five major IT suppliers in a move that will see vendors share a lot more of the delivery risk. The deal with Accenture, BAE Systems Detica, Cognizant, CSC and TCS replaces a previous framework agreement with 16 suppliers and forms part of a drive to “simplify” the rail operator’s computing relationships. 

The new ‘zero value’ IT solutions and system integrator framework agreements will not only allow vendors to take more ownership of designing, building and implementing IT solutions, but also delivery risks afterwards, a Network Rail spokesman said.

“Previously we would identify a business requirement and then design a solution, before finally contacting suppliers to get them to implement the solution. Now, we identify the business requirement, and then the suppliers come up with the solution and deliver it. This shares the risk more evenly,” he said.

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