V/Line – Asset Management Supply Chain Transformation

S.no	Topic	Page
1	Executive Summary	3
2	The Transformation	4
3	Contributions to the Organisation	6
4	Final Comments	7
5	Appendix A – Inventory Item Label Example	8
6	Appendix B – Screenshot of WMS on Handheld Scanner	9
7	Appendix C – Front Page Excerpt of WMS Work Instruction	10
8	Appendix D1 – Snap shot of Inventory management standard	11
9	Appendix D2 – Before and After of Audible Track Warning Signals Policy	12
10	Appendix E – Screenshot of ServiceNow Ticketing System	13
11	Appendix F – Logistics Alert Weld Kits Expiry	14
12	Appendix G – Rotables and Repairs spares examples	15
13	Appendix H – Jobs Completed in ServiceNow by Month	16
14	Appendix I – GS1 Standards Adoption Impact Assessment	17

Executive Summary

V/Line is Australia’s largest regional public transport operator. V/Line manages assets throughout their lifecycle by performing asset management activities classified as either Routine or Major Periodic Maintenance administered by V/Line’s Asset Management Group.

V/Line’s Asset Management Group had a basic internal Logistics support function, responsible for project and maintenance materials activities.

A Gap analysis was conducted, and Executive management identified poor performance within the Logistics group that did not align with the financial and operational requirements of the business. A new manager was appointed to resolve the issues within this group, which resulted in the positive transformation outlined in this submission.

The Transformation

A review of findings from mid-2015 the VAGO report showed that numerous issues with inventory management were evident with an “indicative finding of weakened inventory management”. The report identified issues when testing year-end inventory balance with sample counts, pointing to inaccurate stock counts.

Several strategies were developed that would address the major problems in the V/Line Asset Management Logistics group. These included a workforce plan for the required structure of roles within the Logistics group to meet functional requirements, establishing Cycle counts at Maintenance depots, the adoption of standardised labelling and barcoding, the implementation of a Warehouse Management System, development of Inventory Management policy documents and the establishment of Rotables and Repairs capability. A workforce plan was developed as part of the 36-month strategic plan and started with the introduction of three new Inventory Controller positions, an Inventory Manager position, and an Inventory Support Officer position. Visits to other rail operators within Victoria were also conducted and allowed the Logistics group to see best practices in the industry. One of these was Inventory cycle counts performed on a regular basis.

A cycle count program was established to perform count all Maintenance Depots around the state every quarter based on an established selection criteria of ABC analysis. Cycle count reporting was also developed to capture inventory accuracy, variances and provided a platform for feedback and continuous improvement opportunities. In addition, a Logistics mailbox was established as a central point of contact to streamline communications from network maintainers around the state.

The next stage involved the adoption of standardised labelling and barcoding for identification of Inventory items. This involved several workshops with key stakeholders to develop labels requirements and standards. Once a design for the Inventory labels was finalised (see Appendix A), first phase of labelling across the state commenced. The Logistics group also engaged subject matter experts with significant industry experience to identify complex inventory assets such as turnouts, crossings and points. A strategic action plan was developed by the Logistics group to roll out the inventory labelling over a 3 month period. Adoption of GS1 barcoding system enabled us to fast track inventory and improve maintenance operations. Implementation of the standards also laid the foundation for establishing seamless digital systems and a streamlined approach towards managing our inventory master data and supplier’s information.

Inventory Management capability was further enhanced with the implementation of a Warehouse Management System (WMS) integrating to V/Line’s ERP system. A key requirement is to support GS1 barcode standards and scanning. A trial run was set up to operate within the V/Line’s main Logistics depot. Warehouse workflows were optimized with the introduction of handheld devices which had the ability to scan 2D barcodes on the inventory labels (see Appendix B). Customised WMS documentation for logistics group was developed to train the wider team members on various functions. (see Appendix C).

A detailed review of outdated policy documents in V/Line’s Document Management system has taken place. A suite of high level inventory management policies and procedures were created. As an example, Inventory management policy was developed to define requirements for inventory management within the Asset Management group in support of maintenance and project work (see Appendix D1). Other critical document that was reviewed was the ‘Audible Track Warning Signals (ATWS) materials standard which documented the procurement, storage, transportation, and disposal procedures of these materials. Review identified that the document referenced an outdated location where the ATWS were to be taken for disposal. It also placed responsibility for ATWS disposal on a position that no longer existed. As ATWS are classed as an explosive, it left a severe safety risk on how these materials were disposed. A collaborative review with V/Line’s Safety team concluded that ATWS were to be taken to the V/Line Logistics Depot for organizing safe disposal, with responsibility for disposal placed on the Logistics Coordinator (see Appendix D2).

One of the major challenges that logistics group faced during transformation was the overflow of different inventory requests impending to the central logistics mailbox. Manual management of these service requests and customer feedback over completion of requests was a very slow and time consuming process. Series of workshops with key stakeholders in IT, internal customers and logistics group led to the innovative adoption of an online ticketing system called ServiceNow. (see Appendix E). This ticketing system allowed the Logistics group to record and track requests and provide constant updates. Survey tool was also setup to measure the service level on selected requests.

Communication with the other departments in V/Line was a vital component when improving inventory management practices. A method of communication adopted by the Logistics group was the creation of a ‘Logistics Alert’ document in V/Line’s Document Management System. This document allowed the Logistics group to communicate inventory management practices to relevant department

Improved visibility of inventory management practices identified the need for appropriate disposal of inventory items such as weld portions and lubricants. Site visits to the various maintenance depots identified expired weld portions on hand which could not be disposed prior with no proper procedures in place. A Logistics Alert directed the maintenance depots to transport the expired weld kits to the V/Line’s prime Logistics Depot (see Appendix F). Logistics team then organised for the expired weld portions to be disposed of by an approved waste disposal company. Had these weld portions been disposed of improperly through general waste, they would have had a significant impact to the environment.

Within the logistics group a base capability to manage the Rotables and Repairs function was also established. As part of the work force plan, Rotable and Repair coordinator was recruited. This role is leading the establishment and operation of the rotable and repairable spares capability within Asset Management. Responsible for developing a comprehensive rotable and repairable spares programme that will incorporate the required policies, process and procedures required to assess, repair, verify and control a range of track and signalling items. Rotable and Repair coordinator is working with maintenance, engineering and reliability specialist to ensure suitability and reliability of repairs/rebuilds of spares and develop decision points for repair/rebuild or write off considering cost efficiency and reliability (See Appendix G)

Contributions to the Organisation

Since the implementation of the ServiceNow ticketing system, Logistics has, on average, completed 37 complex jobs per month works in the over millions of infrastructures works. Due to the seasonal nature of some maintenance works within the rail industry, however, the actual jobs completed reached as high as 53 in October 2018 and went as low as 21 jobs completed in September 2018 (see Appendix H). A study was also done in collaboration with the Department of Industry, Innovation and Science within the Australian Government to measure the level at which the changes had contributed to the internal stakeholders. This study found that the adoption of standardised barcoding and labelling by V/Line had helped increase internal customer satisfaction by 95%, largely due to “trust and confidence from stakeholders as well as quick turnaround times for parts availability” (see Appendix I)

By introducing the trial implementation of the WMS with the use of handheld scanners at the V/Line prime Logistics Depot, inventory counts could be directly uploaded to the ERP system and reviewed by the Inventory Manager for quick processing. Prior to this integration, Cycle counts would take several days to complete and process as opposed to currently it takes few hours. Introduction of WMS enabled to streamline warehouse processes and perform real time Cycle counts, Inventory transfers between the depots and issue of inventory items to Work orders. Due to the ease with which cycle counts could be processed and the low impact to the daily operations at the V/Line Logistics Depot, an agreed change was made where daily cycle counts would be performed. This allowed the Logistics team to ensure that the accuracy of inventory holdings at the Logistics Depot was as close to one hundred percent as possible, and provide extra assurance to the financial stakeholders on the business. As evidence of this, in the month of February 2019, the Logistics Team performed a count of 308 inventory items in different locations, of which 14 had variances between quantity counted and quantity on hand in V/Line’s ERP system. Accuracy of inventory holding levels for the month of February 2019 was therefore held as being 96.71% accurate. In comparison, a cycle count in September 2018 had a total of only 114 inventory items counted, with 17 variances, with an overall accuracy of 85.08%.

The Logistics group also became the central point of contact for the disposal of scrap metal and now is in a position to forecast the future requirements. This in turn is allowing us to better negotiate the scrap rates with contractors and gives a greater commercial benefit from the revenue received.

Final Comments

Considering that, several years ago, the Logistics group started as a very basic function within Asset Management, and now structured functions to meet both internal and external stakeholder requirements, the Logistics group is a testament to how an Asset Management function of a business can be grown and matured to an extent that did not require a huge transformation from the rest of the business. The extra level of assurance that is provided by the Logistics group has increased confidence in other groups of wider Asset Management functions and leading to better collaboration. For instance, V/Line Finance now has a transparent view of future Inventory purchases and can budget accordingly. V/Line has been a driving force across the rail Industry in implementing GS1 barcode/labelling standards and working on project i-Trace demonstrating another step in the modernisation transformation. This process is streamlining the information across the supply chain and helping us to better manage the product availability and shelf life. V/Line is also leading the engagement with key suppliers in the rail industry to adopt standardised labelling and barcoding systems. Logistics group is working with qualified suppliers to come on board with the implementation

V/Line Network Maintainers have increased confidence levels on Logistics group for reliable and Ontime delivery of materials in support of maintenance activities.