EPRCBerlinNovember 8-9, 2010
Swiss Federal RailwaysSBB-CFF-FFSJohn M WalkerChief Procurement + Supply Chain OfficerPurchasing ¦ Supply Chain ¦ Production
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45. Symposium Einkauf und LogistikBerlinNovember 10-12, 2010
Swiss Federal RailwaysSBB-CFF-FFSJohn M WalkerChief Procurement + Supply Chain OfficerPurchasing ¦ Supply Chain ¦ Production
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Purchasing Production Supply Chain
An integrated approach...
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SBB Swiss Railways - Purchasing ¦ Supply Chain ¦ ProductionOrganisation
Supervisory Board
CEOAndreas Meyer
Finance
Human Resources
HSEQ
IT
Communication &Public Affairs
CorporateDevelopment
Legal &Compliance
PassengerDivision
Urs Schlegel
Cargo Division
Nicolas Perrin
InfrastructureDivision
Philippe Gauderon
Real EstateDivision
Laurent Staffelbach
Purchasing, SupplyChain & Production
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Leiter Einkauf, Supply Chain + Produktion
John M Walker
FinanzenSandro Michelotti
Human ResourcesBettina Filli Zeller
Konzerneinkauf und Top Lieferanten
Urs Matti
Warengruppen-ManagementAdrian Zaugg
Einkauf Infrastruktur
Martin Koch
Produktion Bahntechnik
Jo Haller
Logistik
Rolf Kaufmann
KommunikationGabriela Vrecko
Konzernfunktion enthalten
Stv. L I-ESP
Risiko Sicherheit Qualität Umwelt
Saskia Günther
Projekte
Leitung Beschaffung+ SC Personenverkehr
Dietmar Gessner
Leitung EinkaufCargo
Urs Müller
Leitung EinkaufImmobilien
Alexis Leuthold
Leitung EinkaufKonzern IT
Jacqueline Klaiss Brons
Führungs-Unterstütung
Thomas Liechti
SBB Swiss Railways - Purchasing ¦ Supply Chain ¦ ProductionOrganisation
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xx
Firmly establish Role of Corporate Procurement
DivisionsDivisions
Challenges: 2010Purchasing ¦ Supply Chain ¦ Production
Integration of ‘new’ production facilities
Define and Test Make-or-Buy Process
Drastically reduce Working-Capital
Team Developmen + Succession Planning
Supplier Assessment System
Identify incremental Cost Reductions
Integration of ‘new’ employees
Harmonize SCM Processes
Optimize Warehousing
PurchasingSupplyChain
Production
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Material + Rolling Stock availability Keep the trains running! We don't want construction projects to be idle!
before 2008before 2008
Portfolio Optimization Do we really need 300 different
kinds of cheese? Phase II Supply Chain Optimization
2011 - 20122011 - 2012
Project 100(+50) Category Management to drive Cost Reductions Cross-division Purchasing Cooperation
2008 - 2009
Cross-Functional Teams We can (and will) do more as a Team Phase I Supply Chain Optimization
2010
SBB Supply ManagementCooperation – internal and external – will intensify
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197
324
542
803
3'581
1'715
Our external spend (2009: ~3.6 BCHF) is heavily concentrated across 7 categories und 50 suppliers
External Spend per Division (2009: MCHF)
SupplierBreakdown
Spend Categories
Passenger
Cargo
Real Estate
IT
Infrastructure
thousands 54%
Top 21-50
10%
Top 2036%
Others
4%
IT
2%
Signalling
4%Telco / Energy
5%Services
10%
MRO12%
Rolling Stock
20%
Construction + Track Projects
43%
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54%
Top 21-50
10%
Top 2036%
Top Supplier Management Goals: Reduce costs by identifying efficiencies
and leveraging synergies Develop true partner-relationship for
additional cooperation
Key Initiatives Supplier-suggested continuous
improvements Pooling of volumes Transparent Raw Materials and Energy
management Productivity targets Payment terms
Our external spend (2009: ~3.6 BCHF) is heavily concentrated across 7 categories und 50 suppliers
SupplierBreakdown
thousands
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Category Management Goals: Less reliance on bidding and instead
promote development of transparent “should cost" models
Key Initiatives Bundling + Pooling of volumes Promote more sourcing opportunities to
international suppliers Reduce complexity of portfolio Risk mitigation Simplify specifications
Spend Categories
Others
4%
IT
2%
Signalling
4%Telecom / Energie
5%Services
10%
MRO12%
Rolling Stock
20%
Constuction + Track Projects
43%
Our external spend (2009: ~3.6 BCHF) is heavily concentrated across 7 categories und 50 suppliers
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Our Concept:3 Basic Strategies + 10 Focus Activities
Product Management Strategies (PM)
Purchasing Strategy + Execution
SCM ProcessStrategies
(SCM)
What do I really need to buy? Integrated Product Management:
– functional specifications– Life Cycle Cost– Total Cost of Ownership
How do I purchase and take delivery? Integrated Demand Planning
– reduce internal waste (buffers)– Lean SCM– Project-specific actions
Leverage Procurement Competencies Standardize KPIs
– International sourcing– Frame agreements– Competitive Bidding– Volume Pooling– Post-Award Savings Incentives
oror
?
?
?
?
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Plan Do
CheckAct
low Potential high Potential
11
?
A Product Group strategy is defined in iterative circles by cross-functional teams, and implemented after Board sign-off
Executive Board
Corporate Sourcing /Lead Buyers
CrossFunctionalTeams (CFTs)
PCStrategyBasics /
Research &Analysis
PC Strategy Plan
Sign-off
PCStrategy
Deployment
Def
ine
Implem
ent
PC = Product CategoriesTS = Top Supplier
xxx xxx xxx xxx
xxx xxx xxx.
Competitive arena
Supplier competitiveness intensity
Availability of substitutes
Internal rules and regulations
(External) regulations, law
Influence external stakeholders
Duration of use
none many
little high
tight lose
high little
long term < 1year
tight lose
SBB grip / influencing powerSBB grip / influencing power
xxx xxx xxx xxx
xxx xxx xxx.
Nov. Dec.
44 514645 47 5248 49 50
Label
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Label
Label
11/2/10
Label
Label
Label
Label
Label
Action
19
4
Label Label Label
3
2
6
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4
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Complexity ReductionExample: turnout / switch manufacturing
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Complexity ReductionExample: tie / sleeper procurement
Example Sourcing Process (wooden sleepers ¦ ties)
– Timber industry requirements are defined
– Lumber is ordered from the Timber industry
– Wood is cut, dried and placed in storage to dry (several weeks)
– Cut wood is chemically treated– Treated wood must be stored– Mounting hardware requirements
are determined– Hardware tender is placed– Assembly of complete ties– Transport to trackside– Material management on-site
Top 20Lieferanten Top 20Lieferanten
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Complexity ReductionExample: tie / sleeper procurement
Example Sourcing Process (wooden sleepers ¦ ties)
– Timber industry requirements are defined
– Lumber is ordered from the Timber industry
– Wood is cut, dried and placed in storage to dry (several weeks)
– Cut wood is chemically treated– Treated wood must be stored– Mounting hardware requirements
are determined– Hardware tender is placed– Assembly of complete ties– Transport to trackside– Material management on-site
Top 20Lieferanten Top 20Lieferanten Top 20Lieferanten Top 20Lieferanten
Advantages for SBB and Suppliers
– Reduced complexity
– Bundling effect
– Logistics optimized
– Warehousing optimized
– Public-tendering regulations fulfilled
New Sourcing Process
– fully-assembled components ordered from the supplier
– supplier manages value-chain and transport to trackside
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Sourcing Processes within SBB --- how do we really compel supplier cooperation?
Since 2002 SBB has been obliged to adhere to public tender laws and regulations.
The laws were intended to create transparency and ensure a more competitive playing field.
All purchases of goods + services > KCHF 640 and construction > MCHF 2 must be publicly tendered.
International suppliers must also be allowed to bid – we may not give preference to Swiss suppliers
Key Data
Transparence +Demand Planning
CategoryManagement
Porter’s 5-ForcesModel
SupplierProfile
KraljicMatrix
Public tender
BoeB / VoeBor
RFx ¦ RFi
Negotiationand Award
Contracting
The impact of Public Tenders
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‚ ‚ ‚ ‚‚
Our category and supplier-management network is a fairly new concept, and requires significant effort and energy
SBB Divisions
‚‚
I P G IM IT
‚
Top Suppliers
Category Management
Supplier Management
‚
‚ ‚Examples:- Hardware + Software- Telecom Services- IT support
Categories
‚ Lead Category Buyer-
Buyer
Category Network
‚‚ Top Supplier Lead
Buyer
Network
‚
‚
‚Example:- Temporary Employees- Engineering Support- Project Analysis- Product + System Testing- Other Services
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Vast majority of sites were not connected into our ERP-system
Situation ThenStorage and Reserves - Scattered and very often unstructured
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TBDTemporary Material Storage Facilities
TBDTemporary Material Storage Facilities
85 5Equipment + Machinery
Assets
85 5Equipment + Machinery
Assets
30 6Production
Centers
30 6Production
Centers
19 6 Large
Warehouses
19 6 Large
Warehouses
16 5LogisticsCenters
16 5LogisticsCenters
Short- und Midterm-Plans:
Deploy regional asset optimization strategy
Radically reduce +78'000 part references
Ensure all facilities have ERP interconnection
Situation NowRationalization of Production, Warehousing and Logistics Centers
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20
Evolution of Inventory Levels – Infrastructure Division
J
204
232
SJ D
217
N
221
O
222225
A
199
228
207
234
M
210
235
A
213
236
M
215
F
216
J
217
193
20102009
186
Stock [ Mio. CHF] Definition
Stock Level Gross amounts per
month end Rolling 3-months average
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1,55
1,50
1,45
1,40
1,35
1,30
1,25
2010
2009
12
1,41
11
1,38
10
1,38
9
1,35
8
1,54
1,35
7
1,52
1,31
6
1,49
1,28
5
1,46
1,30
4
1,29
3
1,43
21
1,43
1,61
1,60
1,65 Stock Turnover Consumption / Stock Total consumption Rolling 12-months consumption Impact of internal transfers
neutralized
Stock Turnover Definition
Evolution of Inventory Turnover – Infrastructure Division
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Year after year the Sourcing Team and its Cross Functional Interface Partners develop distinctive know-how and learning
Definestrategy
Lead Buyer & CFTRefine
strategyGroup Sourcing,
Purchasing Board Sign-offstrategy
ExecutiveBoard
Break downsaving targets
Purchasing Board
Define sourcingsaving targets
Executive Board
Define implementation
measuresLead Buyer & CFT
Implementmeasures
Lead Buyer & CFTQuarterly reviewsavings progress
Corp. Sourcing Lead Buyer
Yearly reviewsavings & strategy
Purch. Board Corp. Sourcing
Quarterly reviewsavings progress
Purch. Board Corp. Sourcing
HY reviewsavings progress
Corp. Sourcing Exec.Board
Yearly reviewsavings & strategy
Corp. Sourcing Lead Buyer
Strategy & Goals
Capabilities
Processes
Organization
Systems &Methods
CFT = Cross Functional Team
Def
ine
Capture
PC = Product CategoriesTS = Top Supplier
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Our category and supplier-management network is a fairly new concept, and requires significant effort and energy
SupplierNegotiations
“Which opportunities
offers the market?”
“Which TL-targets do we
pursuit?”
Product CategoriesFocus Strategies
“Which PC-targets do we
pursuit?”
Supplier Management
PC = Product CategoriesTS = Top Supplier
Competitive arena
Supplier competitiveness intensity
Availability of substitutes
Internal rules and regulations
(External) regulations, law
Influence external stakeholders
Duration of use
none many
little high
tight lose
high little
long term < 1year
tight lose
SBB grip / influencing powerSBB grip / influencing power
SBB Supplier
Top-Supplier ManagerLead Buyer
Competitive arena / markets
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Analysis of Savings by YearPreliminary Results
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Preliminary Results
The SBB anticipates 4.2 BCHF in average annual external sourcing volumes (at today's rates that's roughly 3.1 BCHF).
Between 2011-2016 we plan to source more than 25 BCHF. Challenge: identify "significant" savings potential by challenging
the status quo – a long-term (2011-2016) strategy is necessary. About 3.6 BCHF is managed through our cross-division lead
buyer network. Preliminary Project Team results:
– 150 MCHF identified through traditional procurement improvements (squeezing the lemon)
– 300 MCHF through further improvements within the supply chain (inventory reduction, waste elimination)
– 600 MCHF through cross-functional cooperation by asking very tough questions : "Do we really need a Rolls-Royce? Would a Skoda be good enough?"
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