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Collaboration – the key to unlocking hidden efficiencies

Steve Freeman, director of Rail Asset Management at Babcock International Group, examines how partnership working can benefit the rail sector’s approach to fleet management and maintenance.

Working in collaboration is critical to the UK rail industry. Since privatisation and the segmentation of the sector it has been necessary for train operating companies (TOCs), freight operating companies (FOCs), Network Rail and suppliers to work together to deliver a cohesive national service.

These partnerships are born of necessity; where else across the sector can collaboration deliver the efficiencies and improved services necessary to reduce costs and support ever growing volumes of passengers? One example is asset management, as maintenance costs are one of the few areas where TOCs (and FOCs) can significantly reduce costs.

The current system sees rolling stock manufacturers supply assets to the rolling stock operating companies (ROSCOs). These four leasing companies (Porterbrook, Angel Trains, Eversholt and QW Rail) then lease these assets to the TOCs. The maintenance for the rolling stock can be either managed in-house by the TOCs or FOCs, be subcontracted to a small local supplier close to the relevant depot or managed by the ROSCO or original manufacturer.

There is another option – outsourcing the responsibility, and risk, of managing collaboration across this supply chain to an external asset management expert, giving them the responsibility to coordinate all partnerships in a way that will deliver benefits and efficiencies back to the TOCs and their passengers.

Some in-house managers may feel there is no need for this – that there is no slack in their operation – but without the full view of what is happening on a day-to-day basis by depot, they cannot know for sure. Similarly, whilst working with one manufacturer appears the simplest solution on paper, this could be ‘simplicity in a straitjacket’ as managers may have little leverage in negotiating service and supply agreements and will never be sure if they have optimised their fleet as the options are so limited.

Perhaps the most important point is that maintenance and asset management is not the core business of the TOCs. Therefore, dedicating internal resources to it detracts from their main objective, which is serving passengers over the course of their franchise and winning a new contract.

So how can collaborating with an external asset management specialist deliver benefits? At present the industry is very prescriptive about maintenance. For example, a manual will advise on the frequency of inspections and servicing and it will be followed. Yet fleet management companies use remote condition monitoring, which can identify issues well in advance and prolong the operational lifetime of rolling stock – helping to maximise availability.

Another means of quickly delivering efficiencies is through simplifying processes to deliver more consistency. There are currently no standardised contractual arrangements regarding rolling stock; each deal has its vagaries. By empowering one expert to manage contractual relationships, TOCs give them the ability to negotiate across a range of suppliers, driving down cost in the process.

In 2011 the McNulty Report investigated how the fragmented structure introduced at privatisation had established many barriers
to efficiency, leading the UK railways to be 20% more expensive than its counterparts in Europe. With five of the country’s 16 rail franchises due for renewal before the end of 2015, and possibly before the general election, any successful re-franchises will need to articulate clear cost reductions as part of their bid.

Collaborating with external organisations with a proven asset management culture is one way of delivering these savings. It enables companies to consolidate their relationships with myriad suppliers and manufacturers into one partnership with an expert who then manages that collaboration on their behalf.

Babcock is an asset management specialist whose business is to deliver optimised, well-managed fleets, and have a strong heritage in supporting the fixed infrastructure side of the UK train sector. We manage £42bn worth of assets around the world on behalf of customers in sectors as complex as nuclear, defence, transport and mining and know how to deliver in time-sensitive and highly regulated markets. For example, Babcock manages the ground support equipment at Heathrow, critical to the smooth running of the UK’s hub airport.

This experience has enabled Babcock to develop ALCAMiE, a customised and unique approach to managing large and complex fleets of equipment. ALCAMiE combines a toolbox of customised systems and processes that deliver services and manages costs over the whole life of an asset, from procurement to disposal.

Key to this is the granular information it produces to provide a panoramic picture of the fleet and enable strategic decisions to be made, such as when to add new stock to the fleet or when to mothball existing assets. Babcock plays a truly agnostic role, with no ties to any one supplier. We only ever recommend the right kit for each job, using information to accurately assess products across the environments they are used in.

In summary, a key driver during re-franchising will be the ability to commit to cost reductions. For TOCs to do this with confidence they need to collaborate with experts who can knit together the complex and challenging network of suppliers, essential to the smooth running of the nation’s railways, in such a way that delivers savings and improved services.

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