First Group is the UK’s market leading bus and train operator. As with many historically public sector businesses now competing in the private sector, it inherited a number of common legacies:
- Predominantly in-house support operations
- A tendency to use customary practices in sourcing and contracting
- Diminishing subsidy payments and therefore a need for organic growth and aggressive cost reduction to supplement the impact.
The change from public to private sector forced First Group to define its identity and to challenge what is / should its core business be, and what products / services should be in-house or outsourced?
To assist First Group in readdressing its purchasing processes and practices after the transition from public to private sector.
In the case of the rail franchises, a key aim was to rationalise the purchase-to-pay process between First Group and other Train Operating Companies (TOCs).
In the case of UK Bus, a key aim was to develop a model to outsource vehicle maintenance operations.
ADR developed and implemented a master agreement with each TOC which incorporated performance measurement and a process to manage demand changes in terms of volume and specification.
As a result of this, First Group reduced its Inter-TOC Agreements from 122 to 14 and identified points of contact, significantly reducing complexity and the cost of contract administration.
In the case of the bus companies, ADR supported a strategic review of the way in which First Group sourced, operated and maintained its vehicles. In what was essentially a "Make or Buy" study, ADR worked in a project team including the Directors of Purchasing and Engineering, to develop a sourcing strategy.
This created a new market in the UK, i.e. service provision which encompassed a package of vehicle financing, leasing and contract maintenance.
ADR led the strategy development including construction of the RFP, evaluation of bids and negotiations with selected suppliers (including the transfer of undertakings - TUPE) and supported the development of an off-balance sheet leasing structure.
As a result of the project it was decided to pilot the outsourced approach in 5 companies with different suppliers the results of which would then be used to support future outsourcing plans.
David Thompson, Director of Purchasing, First Group
“ADR's contribution was significant, its drive and insight helped to ensure a successful outcome to these high profile and high priority projects."
Transport & Distribution
Develop a model to outsource vehicle maintenance operations
Readdress purchasing teams processes and practices
The project it was decided to pilot the outsourced approach in 5 companies with different suppliers the results of which would then be used to support future outsourcing plans