The railways in Britain, it has to be said, have not had the easiest ride these last few years.
‘There really has been “bad news fatigue”, but what interests me is, what are we going to do about it,’ says Richard Abbott, head of procurement for Great North Eastern Railway (GNER).
The recent crises that have hit the privatised rail system – notably the Hatfield disaster, and the chaos that resulted from infrastructure operator Railtrack’s panic-stricken response to it, followed by Railtrack’s spectacular but predictable bankruptcy – are a sobering lesson to all those who subscribe to the mantra: ‘Outsource, outsource, outsource’.
‘The people at Railtrack ended up outsourcing its core activity – and look what happened to them. People think outsourcing is a panacea, but it is a nightmare if you don’t do it right.’
The reasons Railtrack outsourced ‘was to cut costs – or at least they thought they were cutting costs.’
Richard Abbott’s role is to manage all procurement for GNER. That bald statement hides the fact that he is responsible in fact for a bewildering range of goods and services. Very crudely, it can be broken down into stations, other buildings and everything that goes into them, rolling stock, and spare parts and maintenance thereof and…everything else. This last category covers anything from human resources to computer systems to diesel fuel or electricity.
‘Frankly, some of the things that come out of the woodwork amaze me. ‘Really, it’s anything that you need to run a railway. We’re a major catering business as well as an engineering business; I get involved in forklift trucks.’
It’s hardly surprising, then, that managing contractual relationships is one of Richard Abbott’s specialist subjects. ‘I’m very much in favour of cross-functional teams to help identify issues and any problems that we may have.
‘For instance, spares availability was an issue when I arrived because the supply-chain was disjointed. So one of the first things I did when I arrived was set up cross-functional teams with the rolling stock spares suppliers.’
The teams had ‘sponsors’, including Richard Abbott himself and Railpart’s George Hillier. ‘Our roles were to provide resources, act as a guide and carry out team-building, doing away with all the hidden agendas and so help get GNER’s trains back where they belong – cruising between London and Edinburgh at 125mph.
Taking out cost
‘The other big plus off working together was that we took out a lot of planning issues. Before, there was a lot of overtime or laying on special transport to deliver spares and it was costing a lot of money.’
So everybody wins. ‘But team-building is demanding and challenging. Its much easier to send out a “nastygram” than to get people to work together.’
Suppliers are now an integral part of the GNER team, ‘but the degree to which we don’t do this in the rail industry is frightening. Other industries have recognised the need and done, for example automotive.’
Given the complexity and the number of different supply chains that Richard Abbott is responsible for, there is always the potential for surprises. ‘Getting hold of staff uniforms in the right quantities, and sizes, frankly, used to be a pain. So we set up another cross-functional team, this time involving the recruitment people. What we did was measure people when they came to be interviewed for jobs and fed the information to our supplier base as a potential order, so that before we’d actually recruited a person, the process had been started.’
Abbott gets impatient with people who think ‘anyone can do procurement’. Although he knows a fair bit about engineering – and engineers – he wouldn’t dream of setting about designing a traction motor, so why do other people think they can manage a supply chain without the necessary training or expertise? ‘Procurement’, he says, ‘isn’t like buying potatoes at the supermarket.’ Instead, it means analysing and understanding the real cost: the cost of use. Do we add value by doing this, do we remove waste? If you’re doing that, then you’re doing procurement, as opposed to order-placing.’
Richard Abbott is head of procurement for Great North Eastern Railway, which operates some of the UK’s fastest trains from London to Yorkshire and the Northeast, Edinburgh and Aberdeen. Ironically, he started his working life on the railways. ‘In fact, I was educated by British Rail’, he says, through an HND day-release scheme.
Abbott then spent a lot of time with Timken – whose roller bearings carry a substantial proportion of the world’s rail fleet. He has also worked in procurement for Unilever and Laing International. Spent some time working in the US (setting up a steel mill) and in France. He has also found time to fit in some lecturing in procurement.
Reason for being in the UK rail industry, despite its recent problems: depending on whose figures you believe, the industry needs to spend £100bn over the next few years – a challenge for any procurement manager.