Australian Railway Leader Reduces Labor Costs by 80% and Easily Passes Safety Audits After Partnering with Avetta

This railway leader operates a fleet of 407 three-car train sets over 837 kilometers of track, providing over 14,000 services each week and carries 415,000 passengers each weekday. Over the course of a year, its train fleet travels 30 million kilometers and provides more than 228 million customer boardings. The company is a metropolitan passenger rail network franchise in Australia, responsible for safely transporting citizens to and from work each day. Safety is a top priority, touching all aspects of the organization, including the construction and maintenance of trains, stations, and tracks. The company manages a large supply chain, including 3,500 contractors, to ensure that all work is performed safely and efficiently. The organization faced challenges in managing this extensive supply chain, particularly in prequalifying and overseeing contractors and suppliers. The lack of proper oversight and inefficient manual processes led to significant issues, including a failed audit by the Federal Safety Commissioner. This prompted the company to seek a comprehensive solution to improve supply chain management, ensure compliance, and enhance overall safety and efficiency.

For a metropolitan passenger rail network franchise in Australia, managing the supply chain is about more than bringing efficiency to the process or finding ways to save money. Although those goals are certainly important, the company’s primary responsibility is safely carrying the citizens to and from work each day. More than 415,000 passengers use the rail every weekday, and getting them to their destination safely, and on time, is the highest priority. Safety touches all aspects of the organization, including construction and maintenance of every train it operates, every station in the system, and every kilometer of track it lays. Since much of that work is done by contractors and suppliers, the railway leader needs to know that each of them are qualified to perform the work for which they’re hired. It’s important that suppliers deliver the service at a competitive price, but it’s vital that they meet environmental and safety requirements. For this company, supply chain management has enormous implications for passenger safety and service. Nevertheless, qualifying and managing some 3,500 contractors was a massive job that the organization simply wasn’t adequately staffed for. That was the stark conclusion of its Supply Development & Performance Manager when he stepped into a procurement role for the company. While reviewing the procurement process, he discovered that management of the supply chain—including prequalification of contractors and suppliers—wasn’t being performed properly. Responsibility for selecting and introducing new suppliers was largely handled by superintendents in the field. The lack of careful oversight hit a critical point—and came to the attention of the executive staff— in October 2013. That’s when the office of the Federal Safety Commissioner audited one of the organization’s business units—the group responsible for new stations, sections of mainline, and other construction projects. The audit of this group’s contract management process failed across the board, receiving one point out of 100. This was a key catalyst for change within the organization and provided incentive to revamp the way it managed contractors and suppliers. The problem wasn’t simply a lack of oversight. To the degree that the company prequalified and managed its supply chain, the process was simply inefficient. The prequalification process was a basic, manual, and labor-intensive process. It relied on paper records, was handled entirely in-house, and lacked the automation necessary to efficiently manage thousands of third-party workers. Various people across the company spent a good deal of time on this process. And because it was difficult to share information, there was a lot of duplication, both internally and within the supplier community.

In exploring supply chain risk management solutions, the internal team was thinking beyond problem-solving. They knew they had to correct certain deficiencies—fix the prequalification process, ensure compliance, modernize the procurement process and so on—but they also had a larger vision for the solution. Effective management of the supply chain was considered critical for passenger safety as well as the growth and agility of the organization. Moreover, while the company itself was growing, its parent company was also on the verge of landing its second franchise in Australia, serving another large city. This metro system would require the same careful management of its supply chain, and could leverage this solution—if it worked. The organization’s vision for supply chain risk management included all of the rail industry. The rail network franchise felt it could help propel the industry into the 21st century with respect to procurement and supplier management. This idea of developing a “rail sector solution” was discussed with every supply chain risk management vendor that the company approached. Avetta was the only company willing to work with them to develop more functionality in a long-term, collaborative approach to the product. This openness to the idea of a collaboration was an important reason the team chose Avetta for its supply chain risk management solution. Ease of use was another key differentiator of the Avetta solution. The company wanted a solution that end users would actually use. The organization found the Avetta solutions to be very accessible, very easy to use, especially from the users’ point of view. In addition, Avetta provided other core capabilities and functionality that were needed, including reporting, dashboards, and risk management. Of the five vendors considered, Avetta met the broadest range of requirements. After a rigorous process and proper due diligence, the company selected Avetta in the summer of 2014 and went live with the solution by September. Avetta supported the go-live process by collaborating with the railways leader to inform contractors and suppliers about the new system. Avetta called each one, sent out an initial mailing and worked with the internal team on program education. This “two-pronged attack,” with efforts by both companies, helped underscore the importance of the initiative and led to a faster sign-up rate. It also reinforced the collaborative approach so important to the organization.

• In October 2014, the Federal Safety Commission performed another audit on the business unit that had failed a year earlier. This time, the company scored 99 points out of 100, thanks to the work done within the contract safety management committee and the engagement with Avetta.
• The impact in terms of cost savings and potential cost savings were equally impressive. The team estimated that managing the thousands of contractors and suppliers internally would require six full-time employees working 40 to 50 hours for at least six months. Instead, they have one person sitting in that seat.
• The time required for manual prequalification of contractors would be 80 hours per week. With Avetta, the railway staff spends just 10 hours per week on prequalification—an eighth of the time they would otherwise spend.
• Prior to engaging with Avetta, the company contracted with some 3,500 suppliers, with unnecessary overlap in numerous areas. Avetta gave the company a unique opportunity to cull its list, retaining high-performing, certified contractors and eliminating redundancy.
• The organization now works more closely with its approved, green-flagged contractors and suppliers. This has led to greater trust, confidence, and loyalty between the hiring company and its stable of contractors.

• Reduced labor costs by more than 80%.
• Scored 99 points out of 100 in the Federal Safety Commission audit, up from 1 point the previous year.
• Reduced time required for manual prequalification of contractors from 80 hours per week to just 10 hours per week.