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DEUTSCHE BAHN

Undergoing a digital transformation in the railway sector

DEUTSCHE BAHN Digital disruption in the railway industry

WRIT TEN BY

SE AN GA LE A-PACE PRODUCED BY

JUS TIN BR AND

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Uwe Günther, Chief Procurement Officer at Deutsche Bahn, discusses the procurement methods his company has utilised amidst a significant digital transformation

Photo: Thomas Herter © Deutsche Bahn AG

s an international provider of mobility and logistics services operating worldwide in over 130 countries,

Deutsche Bahn (DB) is a leader in rail passenger transport across Europe. Overlooking the 04

busy streets of Berlin, Germany, from his desk in the heart of the city, Uwe Günther, Chief Procurement Officer (CPO) at DB, says his procurement strategy has transformed significantly since first joining the firm in 2007. “From the beginning, I have put an increased focus on a better structure, a consistently applied strategy and a more reliable procurement network,” says Günther. “Since I joined Deutsche Bahn as CPO, we have worked to bring the procurement function together as we needed to provide all the necessary goods for our business units in the areas of public transport, logistics and infrastructure. In parallel, we have to ensure the right quality and cost as well as enabling efficiency.”

Photo: Martin Jehnichen © Deutsche Bahn AG

DEUTSCHE BAHN CHIEF PROCUREMENT OFFICER, UWE GÜNTHER, TALKS EXCLUSIVELY TO BUSINESS CHIEF EUROPE

Photo: Max Lautenschläger © Deutsche Bahn AG w w w.de utsc he bah n . com

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By connecting customers to other

ensure the right technology is being

parts of Germany and beyond, DB

implemented, the company’s technical

offers passengers a safe, efficient and

and commercial teams collaborate to

affordable method of transport to allow

decide on the best way to approach

its customers to explore all Europe and

procurement. “We made the decision

the world have to offer. Considered the

to change the direction of our digitali-

longest rail network in Europe, it con-

sation. We started with upgrading the

sists of over 33,000km and more than

infrastructure, bringing out new trains,

74,000 switches. Transporting around

improving passenger information sys-

2.7bn people annually and operating

tems and so much more related to new

approximately 250 high-speed ICE

technologies,” explains Günther. “We

trains, Günther understands the im-

also have a strong technical depart-

portance of meeting the needs of DB’s

ment, which works very well with the

customers amidst constant technology

procurement department. Together,

transformation. “I believe the customer

we’re defining which technology is the

has changed a lot due to the mobility of people increasing in the past few years,” Günther explains. “We’re in competition with cars and airplanes as well as other trains. Personally, I am convinced the train is the best way to move from one location to the other because it provides safety, quality and convenience.”

DIGITALISATION IN THE RAILWAY SECTOR With technology transforming the way companies across all industries conduct their business, DB has put a particular emphasis on digitalisation over the past few years. In order to

DEUTSCHE BAHN CHIEF PROCUREMENT OFFICER, UWE GÜNTHER, TALKS EXCLUSIVELY TO BUSINESS CHIEF EUROPE AND EXPLAINS ‘DB2020+’’

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best for our trains, for our business and for the infrastructure. We have also decided jointly, from the technical and commercial sides, what the best procurement model is.” With a clear strategy in mind, DB has established the DB2020+ plan, focusing on three key elements: becoming a profitable quality leader, a top employer and an eco-pioneer. To optimise DB’s core business and take advantage of international growth opportunities, the German mobility leader has created an additional five-point plan. “It’s impor12

Photo: Oliver Lang © Deutsche Bahn AG

tant to us to have a clear strategy. Our

Photo: Oliver Lang © Deutsche Bahn AG

aiming for uncompromising excellence,

underlying strategy was DB2020+, but we have sharpened it with the creation of our agenda for a better railway through the five-point plan. In order to achieve our goals, we must increase our punctuality in passenger and in freight transport,” says Günther. “We need to increase customer satisfaction, we will invest a greater amount of money in our infrastructure, in new lines and trains. We want to become more reliable and provide better information as well as a comfortable journey to every customer. We’re expanding our services, restructuring our rail freight

Photo: Georg Wagner © Deutsche Bahn AG

E XE CU T I VE PRO FI LE

Uwe Günther Uwe Günther studied Electrical Engineering and Business Administration. Before joining Deutsche Bahn (DB) in 2007, he was active in various procurement leadership positions in the aviation as well as in other industries. From 2011 to 2014 he led the infrastructure procurement department of DB. Since July 2014 he is Chief Procurement Officer of Deutsche Bahn AG.

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DEUTSCHE BAHN CHIEF PROCUREMENT OFFICER, UWE GÜNTHER, TALKS EXCLUSIVELY TO BUSINESS CHIEF – WHY ARE PARTNERS IMPORTANT?

activities and making our rail service

the railway industry. “Railsponsible

greener to drive sustainability. In the

forms the basis for a common under-

end, the most important thing is to im-

standing of what makes a sustainable

prove service quality for our customers.

supply chain. It fosters a clear focus on

Every month, we set a new customer

supplying goods and services sustain-

record by welcoming more passengers

ably and allows us to create the same

onboard our trains; and we want to re-

standard across the industry. Together

main a mobility leader in our field.”

with the other Railsponsible members

As Deutsche Bahn puts sustain-

we look at how we measure the sus-

ability at the heart of its business, it is

tainability of different suppliers within

also a proud co-founder of the industry

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“ We are currently implementing a P2P process, which means designing an entirely digital process from the order request to the payment of the invoice” — Uwe Günther, Chief Procurement Officer, Deutsche Bahn

and use a digital system to send out digital tenders,” says Günther. “We are currently implementing a P2P process which means designing an entirely digital process from the order request to the payment of the invoice.”

FORMING KEY PARTNERSHIPS In terms of Supplier Management, Günther lays out four key areas which the company’s procurement function manages. “First we define the quality of the service and the goods we need and check that the supplier can provide them while complying with our standards. Next, if necessary, we look at the

With DB maintaining a key focus in

development of suppliers in prepara-

areas such as Smart Mobility, Smart

tion for competition. We then select

Logistics, Smart Assets and Smart Ad-

the best suppliers for our requirements

min as part of its digitalisation roadmap,

and after the tender, we make a sup-

this strategy has been aligned with

plier appraisal and give every supplier

the Finance4DB program which helps

a rating. If a supplier performs poorly,

to improve DB’s finance function and

we consider the fourth phase, which

drives digitalisation. In order to make

we call the adjustment phase.”

its end-to-end processes easier and

Having established key partnerships

its internal procurement process more

with a range of different companies –

efficient, DB has utilised Plan-to-Strat-

including Ed. Züblin, Spitzke, Thales

egy, Source-to-Contract and Procure-

Germany, T-Systems, UWC, CRRC and

to-Pay (P2P). “We want to improve the

EY consulting – Günther affirms how

transparency of our internal demand

vital developing relationships with other w w w.de utsc he bah n . com

SPITZKE is a leading innovator for rail mobility. With our areas of expertise â€“ track, technology, equipment/electrical engineering, structural engineering, logistics and production â€“ we are already creating the future of railway infrastructure. We develop and connect our business segments systematically to ensure that sustainable mobility remains permanently available. www.spitzke.com/en/home

Photo: Christian Bedeschinski © Deutsche Bahn AG businesses is to achieving success

with us, it usually signifies a long-term

in the digital sphere. “In procurement,

collaboration. That’s standard for our

we have a clearly structured supplier

partnerships,” he explains. “We have

management system. However, the

very good construction partners to

most important thing is for there to be

build new tracks, bridges or tunnels.

mutual trust and cooperation with our

A long tunnel, for example, might cost

partners. If a supplier wins a tender

over €500mn so we need to ensure we w w w.de utsc he bah n . com

O U R PA R T N E R S

Ed. Züblin Ed. Züblin AG is an important and long-standing supplier in the infrastructure sector of Deutsche Bahn AG. The company is able to handle demanding projects responsibly and has been one of DB AG’s leading infrastructure suppliers for many years.

Spitzke

As a system supplier, Spitzke has a high degree of specialist knowledge and understanding of the railway system. Supplier evaluation is always at least “good” in various performance areas. The company supports DB by independently developing innovative and new construction and logistics concepts to achieve its ecological goals. For its outstanding performance over the years, Spitzke received the DB Supplier Award 2018 in the category infrastructure. Spitzke Fahrwegsysteme Spitzke Fahrwegysteme is an efficient and long-standing supplier of sleepers, turnout sleepers and concrete masts for the infrastructure of

Deutsche Bahn AG. Since 2013, the company has been continuously classified as a Q1 supplier and meets all product-specific qualification requirements. The continuous improvement process, which enables the company to identify errors and eliminate their causes on a sustained basis, deserves special mention. This is reflected in a comprehensive FMEA process. The company supports DB AG through close cooperation with the Quality Assurance for Procurement and Technology department of DB Netz AG in the continuous improvement of technical standards. With a high level of competence and willingness to innovate, suggestions are introduced into the discussions and the company’s own production facilities are further developed. Support for quality assurance is currently being tested by providing statistically processed quality data.

Thales Germany Thales Deutschland GmbH is an important and long-standing supplier of control and safety technology for Deutsche Bahn AG. It is a reliable partner in project management and a supporting pillar of DB Netz’s innovation projects in the field of LST digitalisation.

T-Systems T-Systems International GmbH has been an IT service provider and strategic partner for Deutsche Bahn for over 20 years. With its portfolio from servers and network technology as well as maintenance and services, T-Systems is a participant in all relevant tenders of Deutsche Bahn. T-Systems was awarded the DB Supplier Award 2018 in the category General Requirements and Services.

and regional trains, locomotives and freight wagons. Since the beginning of the collaboration with CRRC, we have been very impressed with their product range, production capabilities and especially with the quality of their products. We’ve already placed orders in two product categories (shunting locomotives and cargo wagons) and are working together on the delivery of these products. They will be in operation at DB from this year moving forward.

21 UWC

EY consulting

UWC is a high potential supplier of freight wagons and rolling stock parts, with DB signing its first contract with UWC at the end of 2018. During the assessment phase, we aim to observe the high competences and production capabilities that UWC already has in place. We’re happy that UWC is joining our supplier pool for cargo wagons.

An Ernst & Young consultant was retained for our project “OPEXstabilisation — Introduction Regio Production System” between 1 March 2018 and 31 December 2018. The cooperation with the EY consultant as well as the execution and the quality of the work delivered were absolutely exemplary. The consultant was extremely committed and goal-oriented which meant the substantial goals could be achieved. The documentation presented by EY at project closure was of high quality.

CRRC CRRC is the world’s largest provider of rolling stock, including high speed

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have a very competent partner which can offer not only a reliable product but also provide the best innovation whilst remaining within budget.”

FUTURE PLANS With the customer always at the forefront, Günther believes there is further room for growth and affirms that DB is seeking success through business optimisation and digital transformation. “In the end, the most important thing is

“ We want to invest a greater amount of money in our infrastructure for the implementation of new trains, with the aim to increase customer satisfaction” — Uwe Günther, Chief Procurement Officer, Deutsche Bahn

to improve the satisfaction of our pasw w w.de utsc he bah n . com

“ In the end, the most important thing is to improve the satisfaction of our passengers” — Uwe Günther, Chief Procurement Officer, Deutsche Bahn 24

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“Sustainability is very important for the procurement function at DB. Railsponsible means that we have a common understanding of what makes a sustainable supply chain” — Uwe Günther, Chief Procurement Officer, Deutsche Bahn

sengers. While we have significantly

and change further. Günther, how-

increased the efficiency of our service,

ever, remains well-positioned in his

there is always room for improvement,”

understanding of what DB must do in

explains Günther. The organisation

order to sustain success in the field.

is aiming for 80% punctuality across

“The customer has an ever-increasing

its network, and Günther stresses the

expectation for punctuality, technology

importance of getting every single

and information available onboard the

member of staff on board to achieve

train and it’s vital that we reflect that.

this goal. “It’s important for everyone

The customer is paying for the service

within the company to think about what

we provide so we have to make it the

they can do to improve that KPI.”

best it can be.” To maintain the service

Over the next few years, customer expectations are predicted to adapt

with as little disruption as possible, DB is mindful of when and how it carries w w w.de utsc he bah n . com

€44bn+ Approximate revenue (2018)

1994

Year founded

320,000

Approximate number of employees

out improvements. “For example, we

for operations at the end of 2017. Now,

try to bundle all the different construc-

every month we have a new passenger

tion works we need together when

record. We’re using more trains than

making an investment in a new track.

ever before in that area and we’re a real

This means that we are trying to realise

competitor against airplanes. That’s

a tender for a track of over 100 or more

a significant success story for us.”

kilometres with a single construction

Looking to the future, Günther affirms

company,” explains Günther. “A good

his company can continue to grow over

example is the new track between

the next few years. “Deutsche Bahn

Berlin and Munich which we opened

will continue to be successful as the w w w.de utsc he bah n . com

“ We’re winning a greater number of tenders and as a result of that I believe the procurement volume will increase in the upcoming years” — Uwe Günther, Chief Procurement Officer, Deutsche Bahn

business itself and the company’s excellence are constantly growing. We are catering to more and more passengers, and our cargo business is growing too. Customer numbers in the logistics area are increasing across over 70 countries worldwide. We’re winning a greater number of tenders and as a result of that, I believe the procurement volume will increase in the upcoming years. However, that requires the development of my organisation, also in terms of digital know-how, and we would like to become a real worldclass procurement entity,” he explains. “I also want procurement to become a place for the personal development of every employee. I want procurement to be the place to be where everyone can develop, increase their know-how and

become a better part of our railway business at Deutsche Bahn.”

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Deutsche Bahn AG Potsdamer Platz 2 10785 Berlin Germany www.deutschebahn.com