Case Studies

PSI recently concluded a Phase I assessment of a major railroad's Maintenance of Way Operations which contained approximately $300 million of external supplier spending. Although we could not solve the organization's $1 billion shortfall, we could ensure they had "best-in-class" processes in place in their Materials and Procurement areas, yielding double-digit savings in their external supplier spending. We further committed to helping the client transition their supply base to a new and improved network of working relationships mutually beneficial to the organization and their suppliers.

Our team of four senior consultants immediately examined the management process in Maintenance of Way and discovered the tracks owned and operated by the client were maintained by teams with approximately 25-35 mile segments. As we interviewed many of the team leaders, it became apparent that the Inventory Management System did not have a level of integrity that left the team leaders confident that they could requisition replacement/repair parts and confidently get them in a timely fashion. As a result, each team generally maintained their own inventory for their track segment. This approach resulted in excess inventory across the system.

By putting in place a more centralized ordering process and upgrading the Inventory Management System to ensure that parts were available for the various segments when needed, the client was able to cut costs resulting from excess inventory.