VIEWPOINT FEATURE | |
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Leading the way to productivity improvements Phil Bulman, partner and cost-based management consultant at Vendigital explains how the rail sector can achieve valuable, long-lasting change and a more sustainable cost base
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s a result of the pandemic, there’s an urgent need for the rail industry to reduce its cost base without negatively impacting levels of passenger service. To achieve this, a focus on stepping up productivity through the effective use of people, alongside technology and innovation, will be key. According to recent figures, demand for rail services is recovering, with passenger numbers rising to about 70 per cent of pre-pandemic levels by November 2021. Nevertheless, in order to secure a sustainable future, the industry must achieve a step change in its efficiency and productivity. According to data from the Office of Road and Rail (ORR), the industry is facing an £8 billion hole in its finances. As part of the effort to reduce costs, The Department for Transport (DfT) has tasked train operating companies (TOCs) to support them in cutting spending by ten per cent following the Autumn Budget. The asset-heavy nature of the rail industry can make cost reduction particularly challenging, with a significant percentage of spend locked into rolling stock, track and other critical infrastructure. At a time when the industry needs to encourage passengers back, there’s also a risk that axing routes and services as part of a cost reduction drive could negatively impact their experience. Instead, the key to achieving efficiencies lies in boosting productivity levels across the industry. The development and implementation of new technologies within the supply chain has an important role to play in boosting productivity. This will enable the sector to achieve performance benefits, while managing costs and improving working conditions for staff. However, considering the industry’s asset-heavy nature, it’s surprising that the workforce accounts for a significant proportion of its overall costs – around 35 per cent. In August 2021, Network Rail launched a voluntary redundancy programme, with the aim of cutting between 7,000 and 9,000
jobs – the equivalent of between a third and a quarter of its employees. In particular, the scheme has focused on its head office management roles, which have grown significantly over the last decade. However, this approach has not addressed the need to drive productivity in the industry, which will require changes in working practices, including improved flexibility and some re-skilling of staff to support changes in technology. In recent years, a number of technological
innovations have changed the industry’s staffing requirements and many more such developments are on the horizon. For example, the rise of e-ticketing has altered levels of demand for customer service. On the other hand, increased automation across the sector is driving demand for digital skills. With around 45 per cent of the current workforce eligible for retirement in the next ten years, it’s vital that the industry finds a way to map its changing skills requirements and bring in new talent. Rail Professional
