Digitalising the Rail Supply Chain

The term “Automation” was coined in 1946, when Ford engineer Del Harder named the department that would replace the company’s research and experimentation assembly-line workers with machines. He took the noun “Automation” meaning self-operating mechanism, and turned it into a verb “to automate”. Today, there is a growing awareness that automation can greatly improve productivity and increase supply chain transparency across all industries, including rail. However, the technology selected for inventory management determines the level of visibility you have across a facility. Here Chris Billinge, business development director of supply chain specialist TFC, explains the capabilities of digital inventory management technology in the rail industry.  

The aftereffects of COVID-19 created an imbalance between the supply and demand of goods, adding pressure to supply chains. Events like the conflict in Ukraine and shipping containers stuck in traffic at ports have exacerbated the issue, impacting the supply of critical materials and components across a variety of industries.

This comes at a time when the UK’s rail operators are expected to deliver a better level of service while spending less, despite high passenger numbers and bottlenecks with infrastructure. These has been a great deal of expenditure on the UK’s rail network, with high-profile projects like CrossRail and HS2 taking shape. To keep costs down, businesses at all stages of the rail supply chain need to find ways to improve efficiency, productivity and profitability to allow operators to hit their contractual targets.

The pressure of high demand coupled with barriers to the global supply chain have pushed inventory management to the forefront of rail industry professionals’ minds — without adequate inventory, the supply chain cannot run efficiently, or even at all. Stock control is a critical component of supply chain management and when inventory is managed well, the flow of products throughout the supply chain is smooth. But it’s not as simple as it sounds. 

The Journey to Digital

Since the late 20th century, inventory management has been partly digital. Early examples of inventory management involved sending telegraphs to factories and mines when stock began to run low. The 1990s saw a significant acceleration in technology production as part of a logistics boom driven by the introduction of the now-ubiquitous Enterprise Resource Planning (ERP) system. Fast-forward and manufacturers everywhere are turning to cloud-based warehouse management systems to keep their inventories stacked. All areas of the rail supply chain are ripe for digitalisation — from production line to railway line.

Monitor and Control

However, many organisations still have limited visibility of indirect material usage, often due to untracked storage locations or areas of the business with limited control over use. Without an audit trail, products can be lost, forgotten and wasted. Systems that rely on manual inputs are at high risk of human error and cannot feasibly be updated in real-time. This makes it harder to track each individual item and can result in false stock readings.

Limited visibility increases the likelihood of leakage, excessive spend and user error going unnoticed, causing delays in replenishment. For example, a personal protective equipment (PPE) supply runs out early after an employee that is required to use one pair of gloves per day regularly takes two. Without an up-to-date record, it is difficult to understand why more stock is needed or identify where to train the workforce to improve health and safety understanding across the business.

Removing the Noise

A popular way of reducing the headaches associated with supply chain management is vendor managed inventory (VMI). In this situation, a third-party provider takes responsibility for sourcing the components, as well as managing the supply and flow of parts. The VMI partner ensures that parts, fixings, consumables, material and other products are delivered to the right place at the right time, providing timely stock replenishment in-line with a predefined delivery schedule. As a result, the customer never finds themselves in a position where their manufacturing comes to a halt because a particular C-Class product is not available. This is particularly attractive in the current climate, where sourcing stock can be challenging and businesses are facing long lead times.

VMI helps manufacturers reduce operational costs by ensuring parts are only purchased when needed, which reduces delivery costs, frees up warehouse space and improves internal efficiency.  In addition, the customer doesn’t have the overheads associated with warehousing stock and, because they aren’t being invoiced for that stock until they are ready to use it, VMI frees up working capital.

VMI solves many traditional inventory management bottlenecks, offering  a customisable service that resolves unique challenges for businesses. However, it is primarily a manual service provided by the VMI partner’s employees, who will attend site regularly to check the stock available in bins, manually fill bins and create new orders for the following site visit.

With the launch of VMI Smart Solutions, businesses can supercharge their VMI with a whole host of smart technology that helps improve compliance, reduce waste, keep inventory available, charge power tools ready for use and more and achieve a first visit fix. Relevant digital inventory technologies include industrial vending, mobile automated replenishment systems, asset management solutions and app-based inventory management. Crucially, these are connected to cloud-based software for real-time access to reports and information. The adoption of digital inventory management technology brings a typically manual process into the Industry 4.0 era.

Digital Inventory Management Technologies

Locker-based solutions are growing in popularity as a way to improve the ability to monitor and control material use. These allow managers to carefully control access to items and ensure employees have the right materials when needed. They can access data on each employee’s stock use, including the time and location stock was accessed. With a locker-based system, manufacturers can track the use of high-value items, such as power tools.

Ensuring the right tools for the job are available and charged when required is a key benefit for manufacturers with high-value inventory, like maintenance and repair operations (MRO). Smart VMI can reduce MRO costs by consolidating suppliers and avoiding unnecessary consumption. Locker-based solutions are also helpful for health and safety management, for example by restricting access to hazardous products only to authorised personnel, or for ensuring the correct PPE is supplied to every employee. Ensuring employee safety is absolutely paramount and can be a huge pull for technology adoption.

Scale-based inventory management technology is another useful tool for rail businesses, who can use it for automated replenishment. This involves storing stock in bins that calculate stock levels based on the weight of an individual component. The data stored can be shared with distributors, to better manage replenishment cycles and automatically trigger an order when the weight drops below the set minimum level.  The ability to analyse exactly what was used for each individual service gives manufacturers better control of stock use. The added visibility improves supply chain efficiency and reduces costs by driving down consumption.

There is also technology available that allows rail businesses to use their smartphones to manage stock. For example, app-accessed cabinets that act as a secure unmanned stores solution, or enterprise-level storeroom management solutions that can be accessed by scanning a tag on a smartphone or other handheld device. Inventor-e’s app-based technology SmartStores, for example, enables users to manage and control all material usage in a facility, as well as providing a live overview. Employees can use their smartphones by installing the SmartStores app or using a supplied hand-held device.

Building an inventory management solution is a complex feat. With the right support, integrating automated technology can make product availability easy in even the most unpredictable manufacturing environments. For help implementing the right mix of digital technology into your business, contact a supply chain specialist.

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