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Success Story | 02/20/2016
Alstom Transportation boosts its productivity
Our eSourcing solution gives us the power to strategically manage costs, quality, and delivery times over a period of one to three years, and to develop a three- to five-year plan for technical innovations and partnerships with our suppliers
For Alstom, transport is more than just a matter of handling the flow of passengers and freight. It’s an entire process that starts with listening to customer needs and ends with putting streamlined and efficient solutions into action. Alstom Transport, a division of the Alstom Group, operates in more than 60 countries and employs 32,000 people. Revenues for the 2014-2015 fiscal year reached 6.2 billion euros. It divides its business activities into four major areas: rolling stock manufacturing (trains, subways, trams, etc.), signaling, maintenance, and global, turnkey rail systems solutions.
Consolidated tender management across the Group
Some 900 specialists in the Group’s Sourcing and Purchasing department process 3.5 billion euros worth of purchasing transactions every year from over 8,000 suppliers. Group leadership decided to centralize its procurement operations six years ago. “Purchasing used to be managed locally by a dedicated department within every major factory,” remembers François Gautier, Sourcing Performance Director at Alstom. “The only thing that buyers around the world shared in common was a supplier database.” A roadmap was put in place for centralizing the purchasing organization and Alstom developed a productivity monitoring system, and launched a call for tenders the following year to procure an RFQ solution with an integrated bid validation workflow.
“It became crucial for us to implement a tender management solution,” Mr Gautier explains. “Local staff conducted investigations their own way and had their own workflow for validating bids.” Even though some locations had developed some pretty powerful tools for their own use, nothing had been standardized across the entire Group. “We wanted to consolidate the tendering process not only to have better control over transactions, but also to improve buyer productivity and business oversight.“
Establishing internal processes
Different solutions were considered, but SynerTrade’s suite quickly set itself apart due to the extent of its functional capabilities and how closely the eRFx module was able to meet the purchasing organization’s needs. This was a critical factor, given that the chosen solution had to be able to support internal processes such as Delegation of Authority, or cross-division purchasing.
Once the solution was deployed, key users, who were first trained by the project team, subsequently trained users in the field. As a result, every buyer uses the tool on a consistent basis. If a purchase exceeds a given amount, it cannot be approved unless it has been recorded in the workflow. And although some users may at first resent the transparency that the solution brings to the tendering
process, they overall respond to it quite favorably. François Gautier adds, “The RFX module creates a framework for buyers that saves them time and lets them be more productive.”
At the same time, the Contract Management module was implemented. All of the contracts company-wide are now stored in a single database. The eAuctions module was deployed the following year, proving to be particularly successful for direct purchases.
Overall visibility of supplier performance
Then, an audit database was added onto the Purchasing function. The goal was to obtain an overall picture of the entire organization, from a year-to-year basis. This revealed the need to acquire a supplier performance management solution. “Most of our suppliers deliver to various sites. We had no way of sharing their performance with the rest of our buyers, logistics specialists, and quality managers so that we could have a comprehensive view of each and every supplier” explains Didier Mardon, Sourcing Domain Manager. With the help of SynerTrade, a pilot was launched in one of the Group’s factories.
Quantitative information (number of purchases, orders, non-conforming items delivered, revenues) as well as qualitative information (by way of a set of objective questions) is gathered. This ensures that suppliers meet QCDT requirements (Quality – Cost – Delivery – Technology), which is a top priority for Alstom.
Once all of the information is gathered, an aggregate, overall score is given, based on data from all of the Group’s factories.
Every month, this information is communicated at the factory level, which is then integrated within the local dashboard and automatically rolled up to the Group level. The centralized purchasing department therefore has both a quantified and qualified view of every major supplier.
A valuable indicator, Mr Mardon acknowledges. “The monthly dashboard is now the key performance indicator for the entire purchasing organization. It provides information about our suppliers’ performance levels, and supplements the annual audit, which in turn reports on the performance of the organization.”
Compliance, visibility and time savings
SynerTrade’s solution has been implemented as part of a long-term measure. “The eSourcing solution gives us the power to strategically manage costs, quality, and delivery times over a period of one to three years, and to develop a three- to five-year plan for technical innovations and partnerships with our suppliers” François Gautier said.
Today, Alstom’s purchasing organization has the confidence in knowing that internal audit policies are
being followed and that suppliers are being compared against an official company-wide matrix. Management has clear insight into the performance of suppliers and the organization. From a users perspective, the solution proves to be a big time-saver. “With a staff of four hundred buyers, each saving four hours a week by using the software, that’s equivalent to hiring forty more buyers” boasts Mr Gautier.