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Bombardier Transportation & CSC

DRAFT V 5 post-réunion S. Plovier -A terminer. Bombardier Transportation & CSC. September 24 th, 2003. About CSC. Enterprise & Technology Solutions. Market Sectors. Business Areas.

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Bombardier Transportation & CSC

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  1. DRAFT V5 post-réunion S. Plovier -A terminer Bombardier Transportation & CSC September 24th, 2003

  2. About CSC Enterprise &Technology Solutions Market Sectors Business Areas • CSC Is One of the World’s Largest Providers of Consulting, Information Technology (IT) and Outsourcing Services • Founded 1959 • $11.3B in revenues for 12 months ended March 28, 2003 • Nearly 90,000 employees in locations worldwide • Serving 15 industries on six continents • Our key MRO solutions integrates • Industry expertise • Customer intimacy • MRO performance improvement • IT leading edge • Outsourcing science • Manufacturing • Automotive • Aero Defense • Process • Public Sector • Transportation • Retail • Telco and Utilities • FS - Banking • FS - Insurance • Procurement • Supply Chain • Operational Performance • IT performance • Collaborative Development • Finance and Accounting • Human Resources • Customer Service and MRO • SAP • Siebel • PeopleSoft • Oracle • Windchill • BaaN • I2 • E4 • Infrastructure • ... Consulting $ 1.3 B InformationTechnology $ B € $ 6.9 B Outsourcing Some of our major MRO clients :

  3. Our goal : continue to be the leading global provider of quality operational services for Industry and Government . . . with an absolute commitment to customer satisfaction 12,500+ Employees $988 Million in 2002 Revenues $2.29 Billion Business Backlog More Than 500 Locations Worldwide Currently in 45 Countries with experience in many others Performing More Than 150 Contracts Valued at $3+ Billion BPO offerings Procurement MRO/Supply Chain & Logistic support Insurance underwriting, benefits, and claims administration Billing, remittance, and customer care General accounting and reporting Healthcare payor and provider management Human resources and payroll Pension plan administration MRO BPO represents towards 60% of CSC BPO activity Examples of CSC BPO Clients About CSC … and BPO Photo attendue de JP. Del Fondo

  4. About CSC We do joint go-to-market with our clients JOINT VENTURES CLIENTS Key automotive supplier BAESYSTEMS ? Raytheon?

  5. Key changes in procurement and MRO in the french public sector • Trend : professionalization of the Procurement function • Ongoing process of replacing« traditional French » procedures with EEC directives • Purchasing Departments are put in place in theadministrations and in government-owned companies • Stronger pressure on cost-cutting objectives • Buyers from private sector are hired and given incentives on savings • Leverage of « Make or buy » and BPO best practices • Public sector key players are investigating BPO opportunities • Part of French government strategy for its own benefits and to strenghten industry • French companies (even in sensitive areas) have already started: • Thales and DCN have created a JV (ARMARIS) to support spare parts for French Navy • Ministry of Defense has appointed a committee on IT and BP outsourcing policy • EADS Services was created to develop new business from European Airforces • GDF has invested in the Facilities Management Business through COFATHEC subsidiary Is it time for SNCF and RATP ?

  6. Purchasing : 1.3 billion EUR Turnover : 2.812 billion EUR Rolling Stock 2 440 Motrices (1 786 Motrices Métro, 588 Motrices RER et 66 Motrices Tramway) 1 669 Remorques (1 168 Remorques Métro, 468 Remorques RER and 33 Remorques Tramway) Headcount : 42 685 employees MRO : 10 748 agents EST – Équipements et Systèmes Électriques : 2 131 ITA – Infrastructures et aménagements : 1 696 MRB : Matériel Roulant Bus : 2 816 MRF : Matériel Roulant Ferroviaire : 2 820 SIT – Systèmes d'Information et de Télécommunication : 1 285 Customer services : 27 164 agents Infrastructure 16 Subway lines, 211,3 km railways, 380 stations 2 Tramway lines, 115,1 km railways, 67 stations Challenges to address Social context requiring to be cautious while implementing change Different trains generations A saturated network RATP key figures As of 2001

  7. RATP Business reality • Situation overview • RATP is a growing company : subway near saturation, bus traffic increase of 10% over the last years, Tramway development • « The core business for RATP is Passenger transportation and Maintenance » (CEO JP. Bailly, 2001) • EEC rules on transportation will increase competition in the mid/long term: need to improve business performance • First BPO experiences undertaken on signaling and stations cleaning • Rolling stock availability is not a key issue today • Procurement and MRO perspectives • Selection of major suppliers which can bring packaged offers on products/ services : current pilotsi.e. escalators to supply parts and field services • Suppliers are asked to estimate the « Total Life Cycle Cost » of rolling stock and equipment, under the assumption that RATP itself performs the maintenance ; RATP in the near future is warming to piloting externalized life cycle management • Today’s parts Management is at component level. Tomorrow it will be on subsystems / subassemblies levels and will put higher pressure on inventory turn • Financial pressure is increasing especially on inventory value (reduction of the number of inventory locations, …) There is a growing need to improve parts procurement, inventory and delivery management. However, this is not core business for RATP

  8. SNCF Business reality Raphaël : peux-tu STP vérifier la complétude des références ? (HR, …) • The SNCF • 185,000 employees (+39,000 including subsidiaries) • turnover of € 13,6 Billion (+ € 6,4 Billion including subsidiaries) • purchasing power of approximately € 4 Billion per year.

  9. SNCF Business reality • For several years, SNCF is facing financial difficulties and is under pressure to achieve significant cost savings • Two key objectives for President Gallois (confirmed in March 03) • pacify the social situation following the 2003 strikes in protest of the government’s revised retirement plan • balance financial accounts in 2004 after successive losses (-176 M€ in 2001, -143 M€ in 2002, -324M€ forecasted in 2003) • Recently nominated COO Guillaume Pépy announced an cost reduction plan called “STARTER.” For the first time in four years, SNCF is expected to lose 3500 jobsthis year • In parallel, a procurement cost reduction program was launched in the beginning of this year • Due to poor Freight and Passenger service quality, large transformation programs were launched • Freight Division: previous CEO fired and replaced by Marc Véron, former COO of Air France. A rescue plan will downsize the current freight traffic by 18% on non-profitable clients. In parallel, a social plan is likely to be announced. Investments on rolling stock will probably be drastically reduced • Passenger Division: an improvement program called “ALLIANCE,” in which CSC participates, was launched by the CEO to improve rolling stock availability

  10. SNCF Business reality (2) • Strong pressure is being put on rolling stock Maintenance Division to improve its performance • A new Vice-Director, D. Lux (former Director of Air France Maintenance) was named end 2002 • A program « Modernisation de la chaîne de Production » is launched and combines process re-engineering with IT PeopleSoft implementation • Scope of activities • Rolling stock maintenance represents approximately 24,000 employees and 61 different premises • Maintenance and investment projects for the rail infrastructure represent approximately 35,000 employees, 8 factories, 60 storage areas, and 3,000 delivery points • Rail industrial purchases represent € 800 Million per year, 100,000 purchase requests per year, 1,600 suppliers, and 25,000 inventory movements per week

  11. SNCF MRO BPO Opportunities • SNCF to act more and more as MRO integrator (modular maintenance) • There is a proven interest to outsource some repair activities (ie « appareils de voie » to COGIFER) • There is a realization that the current logistics management (inventories, transport, storage) is not efficient and very costly. 70% of rolling stock unavailibility is due to a poor supply chain performance ; thus, parts procurement and delivery is another potential BPO opportunity • Numerous employees are expected to retire during the next four years providing opportunities to reduce headcount and/or redefine responsibilities and the organization • The challenge on MRO : • It will be hard for SNCF to transform by itself • External providers could be a real alternative • Inhibitor: political and social issues are key for decision • Driver for change: financial balance

  12. Joint Value Proposition Opportunities • Availability DrivenSupply Chain • Reduction of cost of procurement process • Reduction of working capital : stock turns, … and Investment • Reduce material and value added costs • Improve the Transportation Service Quality • Subsystem specialised repair shops • For targeted subsystems • Operational Performance Improvement of repair operations • Service station • Increase availability by lead time reduction on level 1 maintenance • Social issues are likely to inhibit opportunities here FRANCOIS Quelles idées pour le Service Station ?

  13. Railway in France : the key influencers RFF ? • SNCF: • L. Gallois (CEO) / G. Pépy(COO) • R. Bonnepart / D. Lux (Materiel) • B. Claro (Purchasing) • RATP: • AM. Idrac (CEO) • J. Rapoport (Operations) • A. Le Duc (Finance) • F. Combelle (Purchasing/Logistic) • Government: • F. Mer (Ministre de l'Economie, des Finances et de l'Industrie) • D. Bussereau (Secrétaire d’Etat aux Transports et à la Mer, auprès de G. de Robien Ministre de l’Equipement, des Transports, du Logement, du Tourisme et de la Mer) • Regional key political actors: • May be influencers to promote industrial strategies

  14. Lessons learnt from a previous experience • Under promise over delivery • Speed of implementation • Lack of commercial focus on parts selling • Kits + upgrade management • Configuration management • Innovation on service offering • Change Management • Sales operations not bought in • Carry stock : control / accountability on availability • Standardisation : low • Inventory • Manufacture on demand : need to have right processes, capacity planning • Meet executives !

  15. LEVEL 4 • Depot Parts management • Inventory management • On-site resident staff • Management and financing of capital and insurance parts LEVEL 3 • Single source for parts supply of entire fleet(s) • Obsolescence control • Guaranteed avalaibility • Parts purchasing support & advice • Detailed reports on parts 'added value' performance • Account representative SERVICE LEVEL LEVEL 2 • Parts availability commitment • On line ordering (EDI or Internet) • Reconditioned/spare parts’ service • Annual discount based on prices and quantities • Performance reporting on consumption, status LEVEL 1 • Guaranteed lead time for quotation and delivery • Best global price for same offers • On-line quotation and catalogues • Standardised guarantee time • Discount on quantities • Assistance offer in case of emergency SERVICE COST Spare parts managementExample of possible levels of offers

  16. Next actions • Open to discussion

  17. Experience. Results.

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