How a procurement transformation helped to mould Ansaldo STS into a transportation leader

How a procurement transformation helped to mould Ansaldo STS into a transportation leader

Faster, safer and more efficient: today’s communities are demanding more from their transportation systems and it seems that many have found the answer when working with Ansaldo Signalling and Transportation Systems (STS). Over the past decade, Ansaldo STS has continued to make a lasting impression when designing and implementing railway signalling, automation and integrated transport systems for both metro networks and railway lines, and through its operations, has ensured that people can easily get from A to B.

As a Hitachi Group company, Ansaldo STS has leveraged its international experience to help transform transport systems around the globe. This means that whether you’re in Italy or France, the US or India, Ansaldo STS has the expertise to help. In fact, today, the technology firm has designed and implemented solutions in around 28 countries, generating about USD$1.5bn in turnover. Now, as its global footprint expands further, the company has also transformed its procurement process to ensure that it can cater to its global outlook.

This responsibility has partly fallen into the capable hands of Filippo Fanfani, Vice President of Procurement. Joining the firm in 2014, he says that for global companies like Ansaldo STS, having a best-in-class procurement function is more important than ever before. “We are a global business: we have our core business, such as signalling, where we design and produce our own products but on the other side, we also offer turnkey solutions and act as a technology integrator,” he explains. “For this business, we create the main contract on behalf of our customers and therefore, a major part of our costs comes from the external partners and suppliers. Recognising this, we have implemented a new strategy, management and organisation of our supply base. I would say that this is even more important in a global environment where we have key projects across the globe.”

With support from top management, Ansaldo STS has undergone a restructuring, creating a new procurement organisation that deals with engineering, development, manufacturing, construction and the projects through supply chain planning organisation. This has helped to foster more robust and strategic sourcing process. “Our procurement team is fully involved from the beginning of the process and can lead the sourcing of each package. It’s fundamental for the turnkey business so we can define the external cost of each project and maintain a sustainable margin. I would say that negotiation of cost and risk management are, for sure, two key aspects that they keep in consideration.” In order to be even more effective today the company decided to restructure the global operations, moving towards a supply chain and construction focused organisation spanning, procurement, manufacturing, logistics, supply chain planning and construction.

For Ansaldo STS, procurement is organised in a global matrix structure under Filippo Fanfani’s leadership. On one hand, roles are organised by regions and on the other axle the global commodities. This matrix responsibility provides the reasonable balance between global efficiency and local effectiveness as well as a proper managerial control over the decision-making process. Moreover, with this procurement organisation the benefits are two-fold: the firm can not only negotiate tenders from the beginning of the process but it can also enter the global market with sound knowledge of the specific technologies and processes needed for the project. “It's important for us to work alongside the business and to go to the market as soon as possible,” observes Fanfani. “Technology changes every day and our customers are looking for innovative tools, so it's very important that we can go to the market and understand what our partners can provide to us from the offset. We need to lead the process.”

Across its turnkey business, Ansaldo STS has to work closely with partners to implement cutting-edge transport technologies. Its supply chain organisation has, therefore, been invaluable: by working shoulder to shoulder with both customers and suppliers from the offset, it’s allowed Ansaldo STS to lead the way and negotiate cost-efficient tenders, without getting swept up by new waves of digitisation or time constraints.

“Leading the sourcing from the beginning of the bid, we understand the documents we have in our hand, what we need to have shortly. We definitely have to consider what are the constraints, the opportunities and the supplier base we need to get on board. There are several functions involved in the planning of the sourcing – providing data, documents and in general inputs during the sourcing process – and so it helps us lead that process respecting each function delegation of authorities and get a proper match among technical contents, costs, prices and risks,” adds Fanfani. “Thanks to this approach, we have a strong understanding of the specifications of our customers’ needs and we flow them down to our suppliers.”

Supplier relationship management is a pressing concern for any supply chain professional and it is one which Ansaldo STS has tackled head-on. By working consistently with its partners and suppliers, creating lasting relationships has become second nature to the firm. “This continuous relationship with our key suppliers is critical as well for our success in a global environment,” notes Fanfani. “As a buyer, you’re responsible for maintaining a strong relationship with your key suppliers. The balance between global and local interaction in our supply chain organisation also allows us to leverage the right partner who can deliver a cost-efficient product.”

A digital enthusiast himself, Fanfani is keen to keep abreast of the latest technological innovations shaking up the sector. After the procurement organisation zeroed in on identifying the best practices and processes, digitisation was seen as the next natural step. As a result, Ansaldo STS is currently in the process of implementing a new digital procurement platform. “This will help us streamline our processes and it will also give us a global tool where all procurement professionals can work during the sourcing process,” observes Fanfani. “I strongly believe that in a global environment like today, which is becoming more and more digital, procurement also needs to be in line with that. I would say that this is the first step for implementing further technologies in the future.”

In today’s global market, Ansaldo STS may be facing stronger competition but Fanfani is confident that with its newfound global approach, the company is well up for the challenge. Leveraging the power and image of its parent group, Hitachi, it seems the only way for Ansaldo STS is onwards and upwards. “As a subsidiary of Hitachi, we can leverage their expertise and utilise the power we have behind us, particularly when it comes to technology. It’s really important for us to be updated with the latest digital transformation. It’s not something to be considered ‘nice to have’, it’s mandatory.”

Ansaldo STS
Filippo Fanfani