ADDENDUM E: CASE STUDY FOR ASSIGMENTS (SEMESTERS 01 AND 02) No stopping this train! Background: Replacing outdated trains in South Africa Trains are at the core of the modernisation program of the Passenger Rail Agency of South Africa (PRASA) to deliver improved passenger services to the country's commuters. In one of South Africa's largest-ever infrastructure projects, Gibela Rail Transport Consortium contracted with PRASA for a train upgrade replacement programme serving as a catalyst for transformation in South Africa, which includes stringent economic development commitments. Gibela is a South African joint venture (JV) which brings together Alstom (a French train manufacturer) and local empowered businesses. Training and development are fundamental to Gibela's commitments as they work to build and enhance rail technology skills amongst employees, suppliers and students. Following Gibela's tracks The road to delivering the first train at the end of 2018 required focused planning, negotiation and commitment, as can be seen in the following milestone events. 2013-2014 Milestone 1: Gibela's vision to develop local supply chains Following Gibela's tracks The road to delivering the first train at the end of 2018 required focused planning, negotiation and commitment, as can be seen in the following milestone events. 2013-2014 Milestone 1: Gibela's vision to develop local supply chains In October 2013, Gibela was awarded a contract by PRASA to manufacture and replace South Africa's outdated trains and deliver 600 new passenger trains into the South African rail network within 10 years. This project also involved the construction of a manufacturing facility in South Africa. In 2014, Gibela preselected nearly 100 local companies as possible component and service suppliers to show their commitment to fulfilling local content requirements during the servicing of the R51-billion rolling stock* contract. The company targeted 70% local content in its components and services to revitalise the South African economy and develop local supply chains. At that stage, before negotiations even took place, eleven letters of intent for the provision of steel, cables, lights, interiors, connectors, and insulation had been signed, while four contracts with local suppliers had already been in place. In some cases, Gibela even began the processes necessary to raise the potential suppliers' product specifications to international standards. Suppliers had already been in place. In some cases, Gibela even began the processes necessary to raise the potential suppliers' product specifications to international standards. 2016 Milestone 2: Gibela's progress towards meeting the local content target By 2016, Gibela had already initiated the construction of a state-of-the-art local factory where 580 of the 600 trains were to be built by trained and skilled South Africans using South African inputs. At that stage, the factory was scheduled to deliver its first train by the end of 2018 and, thereafter, to deliver five completed trains each month for 10 years to PRASA. Prior to 2016, 20 of the 600 trains had been built at Alstom's Brazilian plant. All components for the first 20 trains had been made in South Africa, using South African materials, and had been shipped to Brazil. During a site visit in June 2016, the first 32 South African suppliers to provide local content for the new passenger trains being built by Gibela were welcomed to PRASA's Wolmerton depot to view the manufacturing of the first five X'Trapolis Mega** trains to be completed. This visit 52 provided the local component and service suppliers with an opportunity to see, first-hand, how their products would be contributing to the creation of fully operational trains. Welcoming the suppliers, Gibela's CEO Marc Granger said that, in just two years, Gibela's journey in delivering the next generation of trains to South Africa's rail-commuter public had gained momentum on all fronts and in particular, in the sourcing and supply of local equipment and components of a standard that was meeting Gibela's high quality and other standard demands. In Granger's address to the suppliers he added: "By producing quality components such as these, local suppliers will, in addition to being able to service Gibela and the South African rail sector as a whole, be able to compete in global markets, opening up the real potential for significant exports and resultant foreign exchange earnings for South Africa. We are starting to make substantial progress in rejuvenating our local rail manufacturing industry's capabilities and capacity." While making it clear that his list was not exclusive, Granger flagged a broad range of South African- made components visible inside and outside each train, and other equally important components not visible to passengers, such as batteries, heating and braking systems. Although there had been no contractual obligations for local content on the 20 Brazilian-built trains, Gibela took a strategic decision to get a head-start to ensure that local suppliers are well prepared in terms of technical capability, capacity and investment) for an intensive manufacturing programme adhering to stringent standards of quality and tight delivery schedules. For each train that had already been built in Brazil, 22% of procurement spend was on components sourced from South African suppliers of which a large percentage was on interiors, energy and sheet metal work domains. Contributing to the success of the South African suppliers had been the technical advice and assistance provided to them by Gibela itself as part of efforts to develop a robust and sustainable South African supplier base. The following examples of Siyahamba Engineering and LED Lighting SA proved their success in this regard. Siyahamba Engineering had been responsible for the supply of cabin doors and partition walls for the new trains. CEO Julius Motshopi said: "Gibela brought in a specialist from the UK to work with us to help us industrialise and organise ourselves. We have gone through a steep learning bin in the process" Siyahamba Engineering had been responsible for the supply of cabin doors and partition walls for the new trains. CEO Julius Motshopi said: "Gibela brought in a specialist from the UK to work with us to help us industrialise and organise ourselves. We have gone through a steep learning curve and developed a good working relationship in the process." LED Lighting SA, a Cape Town-based medium-sized company, supplied Gibela with one of the world's first set of exterior LED lights to comply with international rail standards. CEO Andrew Glenday commented: There's much more of a buzz in South Africa around the rail transportation and I believe that well-structured investment in our local rail business will be repaid many times over through export, employment, skills development and even intangibly in national pride. I am proud of the offices and factory we have set up. They are as well established as any factory in the United States or Europe; we're making world-class products and we are gearing up to export." 2017-2019 Milestone 3: Gibela delivers the first South African-made trains to PRASA By May 2017, the construction of Gibela's manufacturing facility in Dunnottar was well underway and was due to be completed by the end of 2017. The on-site Training Centre had already been completed and admitted its first intake of students in April 2017. At peak production, Gibela was confident that they would produce 62 trains annually. At that stage, Gibela reported that a supplier base, consisting of a panel of 200 local suppliers would be manufacturing equipment and components for the 580 locally-produced trains (X'Trapolis Mega commuter trains) from 2018 onwards. Local suppliers would be able to 53 compete in global markets, opening the real potential for significant exports and foreign exchange earnings for South Africa. In December 2018, the first train was dispatched from Gibela's new train manufacturing complex at Dunnottar, in Ekurhuleni, travelling to PRASA's Wolmerton depot, north of Pretoria. The train took 14 months to complete, with production having started in September 2017. It was a celebratory moment for Gibela to report that the first train has been built, while also completing construction of one of the largest manufacturing plants in the world. As soon as November 2018, the second state-of-the art X'trapolis Mega commuter train was also nearing completion, with a minimum of six trains scheduled to be delivered to PRASA by the end of the first quarter of 2019. The R1-billion plant was described as the only one in Africa containing R350-million worth of specialised equipment. The equipment included seven axis- welding robots, the first of their kind in the railway industry globally. Gibela was proud to announce that thousands of people, mostly South Africans, had been involved in the scores of activities related to the construction, sourcing, skills development, and manufacturing to get to this point. In April 2019, PRASA unveiled the next two Gibela-built X'Trapolis Mega trains in Cape Town, South Africa. Going forward: A win-win relationship Actom Southern Africa is pleased to he narticinating in the South African railway transport Going forward: A win-win relationship Alstom Southern Africa is pleased to be participating in the South African railway transport revitalisation project. The success of the joint project with Gibela positioned them as a reliable partner, established for the long-term in South Africa. Gibela is consistently receiving recognition through various industry bodies, such as the South African Government's Transport Education and Training Authority for excellence in Skills Development and Training. *rolling stock: locomotives, carriages, wagons, or other vehicles used on a railway ** The X'Trapolis Mega train is a variant of Alstom's X'Trapolis electric passenger train developed specifically to fit South Africa's 1.067 m gauge. It is environmentally designed to consume 31% less energy than existing fleets due to its lighter stainless steel bodyshell and IGBT regenerative braking system, associated with a 66% motorisation ratio. Sources: https://www.alstom.com/press-releases-news/2016/12/alstoms-south-african-jv-gibela-successfully-handed-over-to- prasa-the-first-xtrapolis-mega https://www.polity.org.za/article/gibela-vetting-100-local-companies-as-possible-suppliers-for-prasa-contract-2014- 07-30 https://www.gibela-rail.comews-and-events/media-releases/media-releases-2016/144-gibela-makes-progress- towards-meeting-local-content-target delivers-its-first-south-african-made-train-to-prasa-2018-12-07 Questions 1 to 10 are based on the case study in Addendum E. QUESTION 1 The relationship between the parties in the Gibela Rail Transport Consortium can best be described as ... [1] transactional. [2] collaborative. [3] an alliance. [4] a cooperative. 17 QUESTION 2 The buyer-supplier relationship between Gibela and LED Lighting SA can be classified as ... [1] skills development. [2] a learning curve. [3] world-class. [4] cooperative QUESTION 3 Based on the information provided in the case study, which one of the following statements on the supplier selection process is most relevant in Gibela's drive to contract local suppliers? [1] Local suppliers had to be contractually obligated to provide local content for the 20 Brazilian-built trains. [2] [3] Although local suppliers had to provide quality components, Gibela was willing to invest in improving the suppliers' quality standards. Site visits to PRASA's Wolmerton depot mainly served the purpose of showing local suppliers the level of flexibility expected from them. Local suppliers' financial status had to be carefully scrutinised before they could even be considered as part of the component supplier base. [4] QUESTION 4 In the case study, the R1-billion plant is described as the only one in Africa containing R350- million worth of specialised equipment, which includes seven axis-welding robots, first of their kind in the railway industry globally. Which one of the following options describes the most likely purchasing and supply situation at the plant? [1] The purchasing and supply manager mainly considers "technical capability" as a supplier selection criterium when choosing a specialised equipment manufacturer and has the sole authority to approve the purchase within budget constraints. [2] Since seven axis-welding robots are used successfully worldwide, the purchasing and supply manager can assume that all such equipment suppliers maintain high quality standards. Thus, "delivery would be the main supplier selection criterium. [3] Replacing manual labour with robots poses a conflict in management decision- making; therefore, the purchasing and supply manager would be obliged to select equipment that requires manual operation. [4] Purchasing state-of-the art robotic equipment requires inputs from a cross-functional team, while considering a combination of supplier selection criteria. The purchasing and supply manager would have the purchase authorised by a board of directors. QUESTION 5 Local suppliers are often accused of charging unreasonable prices and provide inferior products. What is the main motivator behind Gibela's vision to develop local supply chains? [1] Promoting local well-being and development. [2] Encouraging South African suppliers to embrace new technology. [3] Gaining visibility among manufacturers with a world-class plant. Ensuring that both visible and non-visible components enhance commuters' safety. [4] QUESTION 6 To which phase of the outsourcing process does the following milestone event refer to: "In 2014, Gibela preselected nearly 100 local companies as possible component and service suppliers to show their commitment to fulfilling local content requirements during the servicing of the R51- billion rolling stock contract."? [1] Operational phase [2] Transitional phase [3] Strategic phase Cost-based outsourcing phase [4] QUESTION 7 In which quadrant of the strategic sourcing matrix would the seven axis-welding robots used in the manufacturing of the X'trapolis Mega commuter trains fall? [1] bottleneck, due to their high risk and monopolistic nature [2] [3] critical, due to their complexity and high value leverage, due to their substitution possibility and standard product specifications routine, due to their substitution possibility and high amount spend QUESTION 8 The value chain of Gibela's manufacturing facility in Dunnotar includes ... [1] suppliers of robotic welding machines. [2] the inbound logistics after receiving LED lights. [3] PRASA as the receiver of the first X'Trapolis Mega train. [4] industry bodies recognising Gibela's contribution to commuting. 19 QUESTION 9 An example of one of Gibela's second tier suppliers would be ... [1] the supplier of robotic welders to the manufacturing plant at Dunnotar. [2] LED light bulb manufacturers providing bulbs to LED Lighting SA. [3] Alstom's manufacturing plant in Brazil manufacturing 20 trains. [4] the second completed X'trapolis Mega commuter train delivered to PRASA. QUESTION 10 In 2013, Gibela began the processes necessary to raise potential suppliers' product specifications to international standards. In which way would this action directly lower total cost? [1] Quality programs launched among local suppliers may reduce Gibela's losses associated with faulty components. [2] Technologically advanced quality trains may allow Gibela to gain faster access to other commuter markets. [3] [4] Suppliers of different sizes of quality steel plates used in train manufacturing may satisfy Gibela's requirement of supplier flexibility, Access to suppliers of unique global innovative robotic welders may put Gibela in competitive position with quality outputs, eventually resulting in cost savings. well known retailer in South Africa that marthe