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September 2011
Supportability :The Difference between Profit and Loss in the Rail Industry
Keith Jordan – Hitachi Rail Europe
September 11
Agenda
Supportability: The Difference between Profit and Loss in the Rail Industry
Introduction to Hitachi Rail
The UK rail industry – how does it work?
Where does your ticket money go?
The Intercity Express Programme
Providing a service linked to passenger
requirements
Supportability – so what?
Summary
September 11
Hitachi
Supportability: The Difference between Profit and Loss in the Rail Industry
• Hitachi GroupHitachi Group
– 350,000 employees worldwide350,000 employees worldwide– $90B Turnover$90B Turnover
• Hitachi RailHitachi Rail
– 1500 employees Japan1500 employees Japan– 40 employees London (4 supportability)40 employees London (4 supportability)– 110 employees Ashford Kent110 employees Ashford Kent
• Hitachi Rail UK Track RecordHitachi Rail UK Track Record
– First contract win 2005 (£500M)First contract win 2005 (£500M)– Invested £60M in new maintenance depot 2005 - Invested £60M in new maintenance depot 2005 -
20072007– First train delivered to UK 2007First train delivered to UK 2007– Delivered first UK high speed service to Kent in Delivered first UK high speed service to Kent in
20092009– Selected as preferred bidder for the Intercity Selected as preferred bidder for the Intercity
Express Programme in 2009Express Programme in 2009
September 11
How does the UK rail industry work?
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11
Who runs the railways
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11
Where does your ticket money go?
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11
The Railway money go round
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11
The Intercity Express Programme
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11
What does the customer want?
Supportability: The Difference between Profit and Loss in the Rail Industry
East Coast50+ servicesDaily
GWML - 56 services daily
September 11
Good value or Compensation culture?
Supportability: The Difference between Profit and Loss in the Rail Industry
Business Driver
People buy tickets to travel
More people take the train if it is punctual
Ticket price refund for major delay
Customer satisfaction is high when all facilities working (eg Toilets)
Revenue is enhanced through catering/shop
Incentive
Paid daily payment per train
(one charge includes lease (65%) and maintenance (35%)
Penalty for technical delay
Major penalty for train breakdown
Penalty for functional failure
Bonus payable on average KPI
September 11
Obsessively well engineered trains
Supportability: The Difference between Profit and Loss in the Rail Industry
• Excellent quality product
• Evolution of existing proven technology
• Minimise maintenance cost
• Designers fully briefed on maintenance
• 6 month design window
• Cost based design trade off
Design guarantee to Maintenance
• Manufacturer pays 50% of penalties until
MDBF target met
• Bonus paid by maintenance for achievement
September 11
• Boeing 777 ‘Evac’ system
• 100% compliance with regulations
• Vandal proof
• Communication system
– Customers
– Maintainers
Who cares about toilets?
Supportability: The Difference between Profit and Loss in the Rail Industry
“We have already spent
10,000 hours on the toilet”
September 11
We have rehearsed 30 years of maintenance
Supportability: The Difference between Profit and Loss in the Rail Industry
Train by train
Proven operational robustness
September 11
Supportability so what?
Supportability: The Difference between Profit and Loss in the Rail Industry
• Brake pads
• 32 per coach x 1000 coaches = 32,000 pads
32,000 pads x £50 x 10 replacements per year
= £1.6M / /year (£56M over the life)
Electric brake down to 5mph - £15M investment
32,000 pads x £50 x 2 replacements / year = £0.3M / year
(£11M over the life)
Total saving £56M – (£15M + £11M) = £30M
September 11
Wheel life extended by 6months
Stock control fully automated
Major equipment change in 1 hr
Minimise spend on maintenance
Supportability: The Difference between Profit and Loss in the Rail Industry
1 hr equipment exchange
September 11
Using technology to save money
Supportability: The Difference between Profit and Loss in the Rail Industry
Auto inspection
– key systems measured daily
Brake systems
Power systems
– Automatic maintenance instruction
sent to shift manager.
• Train ‘health data’ sent via wifi upon
incident trigger
– Remote access of train management
system to diagnose
– Automatic spares allocation
– Automatic maintenance instruction
sent to shift manager.
September 11
Information supports decision making on performance
Supportability: The Difference between Profit and Loss in the Rail Industry
Automatic Inspection
Train managementSystem Data
Electronic Job cards
Inventory Control
Staff and Attendance
Dashboard Reporting
September 11
Summary
Supportability: The Difference between Profit and Loss in the Rail Industry
September 11 Supportability: The Difference between Profit and Loss in the Rail Industry
The UK rail market is commercially very complex
Our customers will not accept poor performance
Our income is linked to our performance
We are striving to eliminate maintenance cost
Cost effective, through life support is the
difference between profit and loss