Integrated Business Planning Implementation
London Underground handles up to 5 million daily passenger journeys. With core operations to maintain and operate key assets like rolling stock fleet, rail tracks, signalling, stations and electrical and power infrastructure, they came to 4C for help with their end to end planning to address their budget challenges.
To discuss how we can help you with similar challenges please contact Mark Ellis.
The Problem
London Underground came to us for help with their asset operations budget challenge. The high cost of materials needed to manage the assets and overall cost to serve was identified as a priority area. High cost was driven by:
- Large working capital tied in inventory as well as high cost of materials management and obsolete stock write-offs
- Frequent stock-outs for planned and reactive maintenance resulting in constant firefighting, escalations, blame culture and high cost of maintenance
- Reactive approach to procuring materials needed for asset maintenance resulting in high prices from the suppliers
The Solution
- An E2E planning approach was introduced for forecasting the material requirements, materials management and procurement
- A 3-year maintenance plan was developed based on asset maintenance requirements and maintenance jobs identified
- Governance of an 18-month rolling tactical plan was established to optimise the operations capacity and supply chain
- BOMs were developed with the engineering team to identify the materials needed
- A forecasting model was developed to prove the concept and detailed plan for integration within the SAP MM module
- The procurement team were engaged to utilise the forecast and deliver benefits
- A framework of alternate options and scenario planning was developed to transform the materials management operations
The Impact
- 15% reduction in materials cost was achieved across £120m annual spend
- The client has a roadmap to reduce the materials inventory from ~£100m to less than £40m.
- 30% efficiency gains were achieved in the procurement and materials management team
- Our project supported the strategic plan to transform the materials management function
- Our work will support keeping public transport an affordable, sustainable alternative to more polluting methods of transport