Transnet’S Competitive Supplier Development Program (Csdp)

Transnet’s Competitive Supplier Development Program (CSDP) (Part 1) Presented by Fanie van der Walt CSDP Implementation Manager 2009-01-29

CSDP Purpose for Transnet Background • For the pat 30 years, the capacity of Transnet’s supply base for capital good has declined along with their capital investment. • However Transnet is now investing strongly in infrastructure again. From NIPP to CSDP • Cabinet approved the new policy on 25 January 2007 • The DPE established a Competitive Supplier Development Program (CSDP) to which Transnet GCE formally gave notification in February 2007 to DPE that Transnet wishes to participate. Programme Aim • Transnet’s long-term aim with CSDP is to localise its supply chain of imported manufactured goods or services to a reasonable level while promoting local industries and South Africa as an off-shore site of choice for OEMs’ and multi-nationals’ procurement personnel. • This will depend on Transnet’s ability to create a cohesive picture of future spend, to be the catalyst for local suppliers’ investment in their own capacity and in their capability to meet Transnet’s future manufactured equipment requirements. Approach to CSDP • To achieve this ambitious aim, over the next five years Transnet will implement CSDP in a phased manner, starting off by engaging with opportunities in two priority-focus areas, namely Rolling Stock and Port Equipment, while preparing SM staff to exploit emerging localisation opportunities. • Transnet’s CSDP rollout will be supported by a holistic Change Management Programme, which will include a strong focus on stakeholder management and communication.

CSDP focus areas: Rolling Stock & Port Equipment Transnet Spend 2008 – 2012*

CSDP: Current & Future Objectives Focus Area Focus Area Focus Area Focus Area Priority 1 Priority 2 Future Priority Focus Priority Locomotives – Infrastructure Other components Harbour and spares

Transnet’s CSDP Approach Transnet’s CSDP phase one Strategic Approach will be to focus on Tier 1 suppliers and to assist them in engaging local Tier 2 suppliers Supplier Supplier Supplier Base Development Development Category Activities Export Transnet’s CSDP Port Equipment Rolling Stock SM personnel lobby with Sphere of Control OEM Global Sourcing Team OEMs: Kalmar, Liebherr OEMs: GE, GM, EMD, Cranes, Straddle Carriers, SM personnel Focus Mitsui, Alstom, Siemens RTGs, Tugs, Dredgers RFx process Tier 1 and contract OEM Systems – negotiation IP Subsystems FDI CSDP Focus TRE Suppliers’ SM personnel Kalmar DCD advise on Liebherr / CPS Projects available UCW Tier 2 Goods partners and Alstom SURTEES* s Services TRE Assemblies involvement Transnet’s ED Skills Suppliers’ PP Focus SM personnel Focus Tier 3 identify ED opportunities Components Sphere of Influence Transnet’s PP Focus Other *SURTEES IS A WAGON MANUFACTURER IN MINING INDUSTRY **ED – Enterprise Development / PP – Preferential Procurement

Railway and Harbour Association & Tender Process OEM’s OPERATORS SUPPLIERS SA Regional Rail and Harbor SADEC Tier 0 Tier 2/3 Tier 1 Operator process Plan Tender RFP Award Contract Implementation DEAD ZONE – NO COMMUNICATION OPEN ZONE - COMMUNICATION

Railway & Harbour Supply Chain Association CSDP (Transnet Contracts) Meeting 15 Aug 08 (Operator) + Administration + www.rhsupplychain.com (Railways Africa) + * Training * Self Assessment Meeting 25th Aug 08 * Final Assessment Benchmarking (OEM’s, Suppliers) * Networking (UNIDO) www.benchmark2grow.org + * Professionalization - IPSA * CIPS/ NQF Qualifications Skills Development * Boot Camps

Railway & Harbour Supply Chain Association The initial foundations for the affiliation between UNIDO and CIPS is based on: In the case of CIPS* • to assist the purchasing and procurement officers of private and public organizations • in gaining greater transparency on possibilities for local procurement in developing country environments; and • in making more informed procurement decisions. In the case of UNIDO** • to assist local enterprises in developing countries to be more visible and attractive as suppliers; and • expand their market access through supplier contracts. RRA Foundry Rail & Road Association Foundation of SARA South Africa Southern African (Supported by CSIR) Railway Association

New Association Structure OEM’s RHSCA Operators Suppliers Communication Administration & Marketing Chair DPE Steer Committee Phillippa (Founders) Fanie, Karen - Transnet Yolandi - IPSA Working Group Priority Work Streams (Focus areas) CSDP: Fanie IPSA - Yolandi UNIDO - Herman components and Ports & Harbour Locomotives – Marketing & Admin - Phillippa Infrastructure Current Technology R&D - Phillippa Priority 1 Priority 2 Priority 3 Priority 4 Priority spares Other Foundry – Fanie Focus Area OEM’s Future Suppliers Priority Other Operators Focus Area

Professionalization: Benchmarking Graduate Diploma Leading Supply Chain Strategic 6 in Purchasing and and Influencing Management Supply Chain Supply in Purchasing in Practice Management National Qualifications Framework Levels Plus 2 choice units from 3 options Legal Aspects in Purchasing and Supply; Advanced Project Management; Finance for Purchasers Advanced Diploma Management in Risk Management Improving 5 in Purchasing and the Purchasing and Supply Chain Supply Chain Supply Function Vulnerability Performance Plus 2 choice units from 3 options Marketing for Purchasers; Storage and Distribution; Operations Management in the Supply Chain Foundation Diploma Effective Purchasing Developing Measuring Managing 4 in Purchasing and Negotiation in Contexts Contracts in Purchasing Purchasing Supply Purchasing Purchasing Performance and Supply and Supply and Supply Relation ships Certificate in Understanding Purchasing Client and Securing Purchasing 3 Purchasing and the Purchasing Operations Supplier Supply in Action Supply Environment Relationship Introductory The Role and Systems Working with The 2 Certificate in Scope of and Suppliers importance Purchasing and Purchasing Procedures of Purchase Supply in Contracts Purchasing

CSDP SUCCESSES TO DATE: PRACTICAL EXAMPLES APRIL - DECEMBER 2008 • Achievements • Next steps – – Ports Kalmar has submitted the plan Working with Kalmar to • Supplier to the DTI to satisfy their NIPP finalise the plan. – Kalmar obligations (over Euro 26m). Implement – Liebherr This plan will satisfy our requirements, as it is a Cartego School (fright solution training for container cargo). – Liebherr have considered two – Set up meeting end CSDP options – both in training. November with Liebherr The Austrian Ship-to-Shore to discuss next steps. training school is at full capacity and they want to create a second site here. Also there is a possibility to send welders to an apprentice programme in Ireland. Rolling Stock – Ongoing – GE – SSM working with TRE continue – EMD discussions on localised part – MARS (Mitsui) manufacture, such as traction motors, with GE and EMD for current fleet. – Other OEM’s (TBD)* – SSM working with TFR on new loco RFP documentation, including CSDP. * TBD = To Be Determined

CSDP SUCESSES TO DATE: PRACTICAL EXAMPLES APRIL - DECEMBER • Area • Achievements • Next steps – Ongoing – Meeting with Operators & Suppliers * Railways and Harbours Supply Chain from Railways and Harbours occurred. • Current Association – Well attended Activities – Industry voted – Nature & Mandate of Association Established – Web Page Created – Networking – AC DC Locomotive discussion – UNIDO to perform training & perform – UNIDO Training in progress to develop final Supplier Assessments by end Champions to perform benchmarking February 2009; All suppliers to be * Top 20 Strategic Local assessment (Tier 2 &3) registered on Association & Yellow Suppliers for Rolling Pages database by end December Stock (Loco’s) 2008 Identified- 80: 20 – Suppliers identified (Tier 2 &3) – Principal All suppliers to be registered on Association & Yellow Pages database by end December 2008 * Top 60 Tactical Local – Road shows were held with Suppliers Suppliers for Rolling Stock (Loco’s) – All suppliers to be registered on Identified Association & Yellow Pages database by end December 2008 – Interest shown by other SOE’s which * Transnet Port Terminals contacted Transnet to assist in – Identifying Synergies Alignment meeting to be held Supplier list 1December 2008 followed by future rhythm meetings to Identify Synergies * ESCOM & PetroSA

CSDP Challenges April – October 2008 Resistance to Change - Both Internally & Externally - Transet was not allowed to Negotiate up to 2005 - Transet Business Units operated in Silo’s Time Constraints - Limited Resources - Training & On boarding time of Suppliers - Synchronization of Supplier Development & Capital Expenditure (Tenders) Sustainability of Capability & Capacity Building - Poor Sustainable Demand Management & Forecasting

Closing Summary Continue with Capability & Capacity Building through: - CSDP Methodology - Working with RAILWAY & Harbour Supply Chain Association - UNIDO Benchmarking - IPSA Skill Development Collaborate with other SOE’s - Identify Synergies - Combine efforts & Resources - Share Lessons Learned & Successes

Questions

Transnet’s Competitive Supplier Development Program (CSDP) Part 2 (Supplier Benchmarking) Presented by Fanie van der Walt CSDP Implementation Manager 2009-01-29

The main objectives and value proposition for Benchmarking • From a supply chain perspective we aim to achieve the following: • Improved alignment between buyer and supplier organisations which improves the effectiveness of the total supply chain; • More sustainable trading relationships based on clear measures and expectations; • An increase in local participation in both local and global supply chain opportunities; • A more sustainable business by accelerating the competitiveness of the participating individual firms and the industry as a whole; and • Providing suppliers with a network of support organisations and possible funding to focus on specific change interventions. The high level process • The benchmarking and development process will be implemented in stages, starting with the locomotive contracts and the harbour equipment contract opportunities, from where it would be rolled out to other commodities.

A collaborative framework to accelerate industrial development across the economy Alignment • Common assessment • Benchmarking • Cluster development • Industry-wide development • Shared IT platform • Visibility

The Benchmarking and Supplier Development Process Supplier Benchmarking and Development Process Inputs • Benchmarking information Improvement Cycle • Comparative country strengths • Other industry studies • Supplier Development Plans 7 2 Do any local 1 Possible shortlisting Identify focus Buyers capture suppliers meet Buyers for participation in areas for local requirements buyer buyer’s supply chain procurement (assisted by UNIDO) requirements? 3 UNIDO facilitates access to govt./buyer/donor Invite all potential supplier development programmes UNIDO suppliers to participate 4 5 6 Assisted self Develop Implement Suppliers assessments improvement plan improvement plan Ongoing improvement cycle

Competitiveness is increasingly driven by the ability to integrate within a broader network of organisations Supply Value Drivers Chain • Strategy Execution Community • Customer Centric Strategic • Market Responsiveness Business Value Collaboration Extended • Performance Excellence Supply • Organisational Efficiency Extended Chain Marketplace Industry Community Integrated Enterprise SC Execution Integration Cross- Functional Customer Integration Integration Supplier Alignment & Collaboration The Fundamentals Integrated Business Planning SC Visibility Process Alignment Key Measures Isolated Level of Integration Improvements Network Functional Supply Chain Business Hierarchical Process

The immediate focus is to facilitate the participation of the rail and harbour community through the following process: • On-boarding workshops: This entails a series of workshops, including owners and operators to discuss the initiative with the Railway and Harbour supply chain community and gain commitment for those companies interested to participate. • Participation registration: Organisations provide their basic information on the benchmarking web site www.benchmark2grow.org. • Training invitation. Organisations that are registered on the web site will be invited for a training programme. • Training courses: A two day training course which should ideally be attended by a senior executive who is overall accountable for competitiveness and growth within the organisation, and the operational person who would implement the initiative. • Implementation: Supplier benchmarking and development process including benchmarking, development plans and support. • CSDP Implementation Champions:

Working throughout the infrastructure development programme supplier network Typical Supply Chain Structure Focus of Procurement Teams Buyer Procurement teams embed local procurement Buyers Tier 1 Suppliers (i.e., OEMs, requirements in RFx and Sphere of System contract negotiation process Control Integrators) Buyers Tier 2 Suppliers (i.e., System or Subsystem Sphere of Procurement teams identify Assemblers) Influence ED opportunities and advise on available partners Tier 3 Suppliers (i.e., Component Manufactures) Tier 3 Suppliers (i.e., Other Input Industries

It provides a detail view of performance gaps, what to do about it and who can assist in doing so Below Expectations Exceed buyer expectations Financial Performance • Cost management • Productivity Output Areas • Financial Stability Customer Performance • Product Quality • Service Quality • Customer responsiveness Internal Processes • Operations Management • Supply Chain Management Building Blocks • Information Management • Corporate Governance Learning and Growth • Leadership • Human Capital Management • Safety and Health • Environmental Management

The programme deploys a common framework to rate competiveness and develop this in line with contract and/or management expectations Supply chain matrix • The benchmarking framework provides the ability to Ability to minimise risk strategically position a company in terms of it ability Expectations to minimise cost and risk performance. This can be cascaded into the detail evaluation of each of the underlying performance areas. Current • It then provides the means to identify the competitiveness rating development areas in line with management and/or customer expectations. • It provides the means to determine what needs to be Ability to minimise cost done to address development gaps and who can assist in this. Financial Performance • Cost management • Productivity Output Areas • Financial Stability • It then provides the management team with visibility Customer Performance • Product Quality on the ongoing development of the organisation, • Service Quality • Customer responsiveness which can also be provided to customers and other Internal Processes • Operations Management stakeholders. • Supply Chain Management Building Blocks • Information Management • Corporate Governance Learning and Growth • Leadership • Human Capital Management • Safety and Health • Environmental Management Broad-Based BEE contribution: 9 8 7 6 5 4 3 2 1

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Transnet’S Competitive Supplier Development Program (Csdp)

by Railways and Harbours on Jan 30, 2009

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Transnet’S Competitive Supplier Development Program (Csdp) — Presentation Transcript