Case Study: Transportation Systems

The European Rail industry is characterized on both the supply and demand side, by a limited number of participants on the market: A low number of manufacturers of rail vehicles and a manageable number of important rail operators as potential customers. As a result, there are few purchasers for new rail vehicles. This situation is made even more acute by the long lifetime of the vehicles; it is not unusual for vehicles of over 30 years to still be in use. Manufacturers of rail vehicles are no longer able to concentrate purely on selling new vehicles. In order to secure long-term growth they must position themselves in the market for replacement parts and overhaul of such vehicles. This aim is, however, also being pursued by specialist replacement part manufacturers and service providers in the replacement part trading and overhaul business. As a result, competition is fierce in a market that is of limited volume and growth. In conjunction with a leading manufacturer of rail vehicles, Barkawi Management Consultants have developed an entry strategy for the aftersales market. The aim of the manufacturer was to take over the provision of replacement parts for all rail vehicle ranges they supply. After carrying out a detailed analysis of typical customer requirements, a large market potential was discovered in the field of extended cooperation between the manufacturer and their customers, the rail operators. Within the framework of this collaboration, the manufacturer takes on the responsibility for the provision of replacement parts, from the planning of requirements through to purchasing, and right down to storage and transportation.

After carrying out the profitability calculations, Barkawi Management Consultants initiated talks between the vehicle manufacturer and a large European rail operator. Following the successful design of a collaboration model by Barkawi Management Consultants a pilot project was introduced in which the manufacturer proved the profitability of this cooperation for selected series of vehicles.