Exclusive: Network Rail and its measures to keep the supply chain moving during the COVID-19 crisis

Never have the pressures of the nation to keep key workers and supplies moving rested so heavily on the shoulders of the railways and all its staff.

This whilst at the same time the workforce is being stretched – with some staff and their families inevitably being forced to self-isolate as cases of the COVID-19 pandemic increase throughout the UK.

The spine of these efforts lies with Network Rail’s supply chain – the thousands of suppliers providing services from cleaning through to the engineering.

Clive Berrington is Network Rail’s Commercial and Procurement Director and is the strategic lead for engagement with the supply chain during this crisis.

He has spoken exclusively to railbusinessdaily.com about the challenges facing suppliers and the support available.

“Things like this are difficult to foresee,” he said.

“All you can do is be in a position to mitigate the impact when it does happen and that is the same for both Network Rail and for our suppliers in the private sector, many of which have limited liquidity.

“It is a very challenging time and the phone is ringing non-stop and I’m having daily conversations with suppliers to best support them through this difficult time.

“We need to be having these conversations with the supply chain and making sure that communication is good.”

Lessons learnt from collapse of Carillion

Mr Berrington has been at Network Rail for seven-and-a-half years, where his current role encompasses category management, sourcing, supplier management and procurement operations for goods, works and services across the organisation.

Although the impact of the spread of COVID-19 is unprecedented and is changing daily, he says lessons have been learnt in crisis management from the collapse of Carillion and more recently the sale of British Steel.

In the case of Carillion, Network Rail paid out arrears on around 300 of the rail contracts the company was involved in.

“Whilst we managed Carillion reasonably well, we learnt a lot of lessons from that situation which we’ve now built on over the last couple years,” he said.

“I would say that British Steel, which I was in this role for, allowed us to continue to build on the lessons we learnt there; and we have done a lot more work in bringing in processes to understand our supplier vulnerability, who our critical suppliers are, and mapping out our supply chain.

“This has helped us enormously and I feel we are in a different position with our supply chain and we are having much more open and transparent conversations. This kind of relationship is really helping.

“Although we are in a much better place, this is obviously a very different, more wide-ranging crisis which is moving so quickly.”

The importance of conversations with the supply chain

The importance of the supply chain can’t be underestimated, as to put it simply, Network Rail is dependent on suppliers to help deliver rail services across Britain.

This is why conversations are held on a daily basis with conference calls and letters keeping both the supply chain informed on the situation and Network Rail informed on how the supply chain is doing.

“There are about 13,500 suppliers which are either working for us, have worked with us, or have shown an interest in working for us,” he said.

“We are communicating reasonably well and that is important. It’s something we are reviewing on a weekly basis.

“There may be some slight differences in the messages to the supply chain from the regions, but there is generally consistency and that is crucial when things are moving so quickly.”

The vulnerable list of suppliers

Among the safeguarding measures undertaken by Network Rail over the last 18 months has been the segmentation of its direct suppliers to understand the likelihood and impact of any supply chain interruption or supplier failure.

Mr Berrington said: “We have a list of about 220 of the most critical suppliers which we are working on from a supplier vulnerability perspective. That list changes a little bit depending on the nature of the crisis and what is required.

“Clearly something like our cleaning suppliers are absolutely critical in the Covid-19 environment and whilst we already had some of those suppliers on our vulnerable list, there are one or two others who weren’t on there, but we’re having to consider them as being so at this time.

“We’re also looking at our Tier 2 suppliers and beyond to understand where they are supplying goods and services or even works not only directly to us but also to our Tier 1s.

“This doesn’t necessarily mean any special treatment, but we are more likely to review their position more regularly than some of the others in the supply chain.”

Support available for the supply chain

One of the big concerns facing the supply chain will be cash flows, as businesses close down as work slows down due to illness and as people adhere to the Government’s restrictions to stop the spread of COVID-19.

Alongside Government initiatives such as loans, funding and a scheme to pay 80% of the wages of employees unable to work, Network Rail is looking into its own support.

He said: “We’ve been talking to a lot of suppliers in the last few weeks and among their concerns have been how to implement social distancing, the speed of payments, shortage of PPE, the level of support available, and how to source that support and equipment.

“We are in constant conversations with the Government, particularly the Department for Transport and the Department for Business, Energy and Industrial Strategy, and are making sure we are kept up to date with the latest situation, but also that they are aware of the problems that the supply chain is having.

“From our perspective, we have moved all our suppliers to immediate payment terms, or as close as you can get following approval of the invoice and we expect that to flow down to the supply chain.

“For freight operators track access charges, we have put back payment terms from 28 days to 56 days, to help them with their liquidity.

“Some suppliers have flagged that we normally pay on the commissioning of a particular service, so we’re now looking at interim payments to make sure they can continue to operate.

“We are also looking at the impact of the furloughing of staff and what we can do. We want to support the supply chain as much as we can. We are trying to help where possible, but we are also directing them to the Government when we can’t do any more.”

Easter work

Over Easter thousands of rail workers are due to deliver over 400 projects – worth £113m of investment across Britain. Network Rail has been reviewing this programme with COVID-19 in mind. While the exact impact on Easter isn’t fully known in terms of which projects have been curtailed, or possibly even cancelled, new rules have been agreed with the Trades Unions regarding what work should and should not take place.

Mr Berrington said: “All planned work will proceed where we are able to follow Public Health England’s social distancing guidelines. Where this is not possible due to the nature of the work, only work that is essential to maintaining a safe and operational railway will be undertaken – such as emergency repairs or planned track renewals.

“Where colleagues have to work within two metres of each other, this will be carried out in accordance with Personal Protective Equipment (PPE) guidelines, with all workers wearing gloves and glasses to minimise the risk of transmission. We are also implementing other measures across our worksites – for example, reducing shared transport, introducing segregation at sign-in points and enforcing new rules to prevent colleagues from congregating at certain work locations.”

Conclusion

These are unprecedented times, but Network Rail and its supply chain is working extremely hard to keep the railways moving.

Network Rail seems to be working and communicating better than ever before with the supply chain to overcome the challenges.

Mr Berrington: “There is an enormous amount of work going on in the railways, particularly during these challenging times.

“I can’t thank the supply chain enough for their efforts and we will do our best to support them.

“Looking to the future and although our priorities are understandably the near term, we are looking to the months ahead.

“Things may look different and the supply chain may look different.

“There could be some changes, but it is too early to say. It depends on how the virus evolves, how much work is curtailed and how long it lasts.

“One thing for certain is that the work of suppliers will be crucial in the coming months and communication will be key so we can meet this challenge together.”

A dedicated email address has been set up for the supply chain for any questions or concerns. Email COVID-19supplychain@networkrail.co.uk

Photo credit: Network Rail