According to the Department for Transport, 1.8bn rail journeys were taken in the UK in 2018/19 – a record number and an enormous 97% increase on the figure for 20 years earlier.
Yet at the same time, much of Britain’s rail estate infrastructure and buildings are creaking, both from the pressure of rising demand and increasing usage, and from the fact that much of it is desperately in need of updating and refurbishment, as Brendan Free, Industry Sector Manager at RS Components explains.
“One of the biggest challenges in the sector is that many of the buildings – stations and maintenance sheds – are old. There has been a lot of upgrading work going on around stations so many of them are now more energy efficient, and there has been some work around maintenance sheds, but perhaps not as much,” he says.
Keeping on top of MRO
Against this backdrop, how operators manage the Indirect procurement category and Industrial supplies for Maintenance, Repair and Operations
(MRO) is critical.
“It’s easier to make the case for keeping tight control on MRO spend for plant and other operationally critical machines, but it’s just as important to look at MRO spend on buildings,” explains Helen Alder, Head of Knowledge at the Chartered Institute of Procurement and Supply (CIPS). “Many organisations have numerous large buildings and, over the course of a year, spend significant amounts on maintaining these.
“It’s vital to have a list of key suppliers that will be able to provide parts as and when you need them.”
In addition to these regularly purchased items, Free points out that there are also a significant number of one-off purchases. “Typically we find that 60-80% of the items companies in this sector buy are one-off purchases,” he says. “As such, it’s crucial to look at the actual MRO process to ensure that it’s as streamlined and efficient as possible, otherwise hidden costs like the time it takes an employee to order each individual item really mount up.”
For procurement managers the imperative is to keep their infrastructure safe, as well as operating with the least interruption; there will be challenges around the fact that rail networks tend to be large and diverse with lots of different types of buildings to maintain over a large geographical area. There will also be issues in terms of needing to work with, or around, outdated equipment or technology.
For the rail industry, there are obvious knock-on effects of things not working properly or ceasing to work at all. Of the three most common categories of complaint about rail services, punctuality and reliability are by far the most frequent at 22%; facilities on board and overcrowding come in at 9% and 8% respectively. As these figures indicate each delay is an inconvenience to everyone waiting to get on or off that train, and can lead to lost productivity, as well as to fines for train operators.
In terms of procurement, common pitfalls can include having too many “one-time” suppliers, too little control over buying and price comparisons, and too many spot buys or “maverick” spending.
“Maverick spending on items such as light bulbs or new washers may seem innocuous on an individual level,” says Alder. “But if it is widespread across your business it’s likely that you won’t be able to keep track of all that spend. You may be paying too much for parts and there’s also the risk that non-branded, inferior parts may be purchased that have a short lifespan.”
Taking a more strategic approach to MRO and developing a proactive MRO strategy can help operators to control costs more effectively and maintain their buildings more efficiently.
For example, in an increasingly digital just-in-time supply environment it is important to recognise you don’t necessarily need to maintain warehouses full of spares that will be eating up working capital that could be used more effectively elsewhere. Using an eProcurement system integrated between your system and a supplier’s website, effectively an integrated electronic catalogue, can also help to automate and streamline procurement.
"Effective MRO is, very simply, about keeping things functioning and the lights on"Brendan Free, Industry Sector Manager, RS Components
“Effective MRO is, very simply, about keeping things functioning and the lights on – literally. It can be the maintenance of equipment such as lifts, elevators and ticket barriers where these are not under warranty with OEMs (original equipment manufacturers), or it can be things such as light switches, fitments, fuses and fuse boxes,” explains Free.
Ultimately, an effective MRO strategy is about taking a step back and reviewing how and why the business is procuring in the way it has been, and then turning over every stone to see whether and how things can be done better.
“Procurement can become a disrupter if it’s not managed carefully and can create tensions. It is important to recognise that it’s not just about where you can buy the cheapest spanner, it’s about what you’re buying being fit for purpose,” emphasises Free.
“It is about striking a balance between investing in and upgrading the building, whether that is lighting, air conditioning, or whatever. It is a balance between upgrading and replacing, and trying to keep old infrastructure going,” he adds.