How to build a lean railcar manufacturing supply chain – by Ross Sterland

Last week @AuManufacturing revealed NSW had bought 2,000 railcars and trams in a decade overseas. Here Ross Sterland, explains how the problem could be turned into a lean manufacturing local opportunity.

The year is 2050. Australia’s rail rolling stock manufacturing industry is world-leading. At a federal level, the government’s 30-year plan to reinvigorate the industry has come to fruition.

State governments are working in unison as part of a sophisticated supply chain. A steady flow of state-of-the-art passenger trains and tram cars are continually being unveiled. Underpinned by a large export market, employment levels within the industry have returned to levels not seen since the middle of the twentieth century.

Sound like utopia? You’re right; it is.

But, as the saying goes, if you aim at nothing, you’ll hit it. For a country with such a rich manufacturing history and a culture of giving people a “fair go”, we need to start thinking longer-term if we’re serious about re-establishing and sustaining a rolling stock manufacturing industry. And realistically, it needs to be state governments that make it happen.

A long-term commitment to sovereign manufacturing capabilities

@AuManufacturing recently reported that the NSW Government had procured almost 2,000 rail carriages and tram cars over the last ten years, at an estimated cost of $2 billion, with much of the manufacturing completed overseas.

This type of outsourcing decision is often made as it will be quicker, and on the surface cheaper. However, this loss of potential investment in Australia’s rail industry has undermined its ability to develop and grow at a time when local economic support has never been more essential.

To be fair, it would have been tough for the NSW Government to mobilise and build all of those 2,000 units locally in the short timeframe they were required to start carrying passengers.

But that’s the crux of the problem. Collectively, we need to plan beyond short term requirements towards a longer-term, 30-year-plus manufacturing strategy. Failure to do so will leave the industry in a vicious cycle of losing investment offshore, further weakening our sovereign capabilities.

Looking through a lean principles lens

There’s no doubt that like any industry, in any country, there are efficiencies that can be found to help bring down the cost of manufacturing trains locally – thus making it a more attractive proposition. Introducing lean principles in the manufacturing process and adopting a culture of continuous improvement is key to achieving this.

But lean is more than just operational improvement. To compete on a global stage, we need to be looking at the industry through a ‘lean principles lens,’ and adopting a long-term philosophy to create an industry that will serve us for decades to come.

Build it, and they will come

Today, old facilities are repurposed to support short term project requirements.

We need to invest in state-of-the-art manufacturing facilities that can stand the test of time. To enable long term strategic investment, these could be state-owned facilities that are occupied by the service providers awarded a contract at any given time.

Strength in numbers

At the highest level, state governments need to implement a procurement framework that diversifies the end to end supply chain to multiple companies. This would tap into and build on Australia’s already strong rail manufacturing sector, creating healthy competition and giving numerous companies a slice of the pie.

Knowledge sharing & collaboration

As the saying goes, ‘the whole is greater than the sum of its parts.’ So, with the supply chain established, there should be clear incentives introduced to encourage inter-company collaboration and knowledge sharing for the greater good of the industry.

One way to ensure this would be to set strict criteria targets around supply chain collaboration – commercially rewarding the suppliers that meet or exceed the targets.

Simply great design

Moving away from a project approach to building larger fleets over many years allows greater emphasis to be placed on design for manufacture principles.

While this shift will require an increased engineering investment, there’s tremendous ROI to be gained longer-term. Take the automotive industry as an example. Through meticulous design engineering and planning, it takes 17-18 hours for the likes of Toyota and others to manufacture a car.

People & Processes

Finally, the workforce must follow standard manufacturing processes. To drive efficiency, governments should mandate the adoption of true lean manufacturing principles by all suppliers. Regular assessments and commercial incentives would be introduced to ensure a culture of continuous improvement is developed across the industry.

Make no mistake; the task at hand is monumental.

It won’t happen overnight and will take a significant investment to do it properly.

However, by taking a longer-term approach, having clear objectives, and a shared purpose laying the foundations for success, Australia could be on the right track, before we know it.

Ross Sterland is Director and co-founder at lean manufacturing specialists, ORBIZ, and has diversified industry expertise across energy, mining, rail, construction, utilities, FMCG, defence and healthcare.

Picture: ugllimited.com/metro train Melbourne

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