LEVERAGING INFORMATION TECHNOLOGY TO IMPROVE THE
PRODUCTIVITY OF FIXED AND MOVING ASSETS
(This article has been published in the October 2003 issue of the Journal of The Institution of Permanent Way Engineers – India )
1. INTRODUCTION
1.1 Major Problems Confronting IR: The two most basic problems which Indian Railways (IR) have been grappling with for the last many decades are low productivity of moving and fixed assets and the deep rooted departmental biases in railway working resulting in low morale in the rank and file and poor management ethos at the higher echelons of the organization. Root of all the other more visible problems, such as perennial constraint of resources, erosion of market share, poor safety record and a lack of customer responsiveness can be traced to these two fundamental problems. A third one which is not included here is the poor public perception of railways which in spite of being the most energy efficient and economical mode of transportation has not received its due vis-à-vis pipeline, road and air mode of transportation form the powers that be. As this deals with exogenous factors it would be subject matter of another paper. Emphasis here is on the internal systems over which railways have total control and have no one else to blame.
Low productivity of assets could be attributed to absence of normative benchmarks for measuring productivity. Low morale in the rank and file of the organization and poor management ethos could be ascribed to a lack of goal congruence in various departments, a lack of managerial accountability at several levels and a lack of transparency in policies. The reasons for this state of affairs lie in the Railway’s manufacturing process, which is carried out in real time and can no longer be managed by manual management control systems.
1.2 Characteristics of A Typical Industrial Enterprise: In a typical industrial enterprise the manufacturing plant and equipment is location specific. Raw materials (resources) are fewer in number and have uniform characteristics and can be stored for use as needed. Consequently accumulation and analysis of the manufacturing costs is comparatively simple. Manufacturing process has been standardized after Method Study and Time and Motion studies. Managerial cost accounting models have been developed to determine normative benchmarks for the consumption of raw materials, labor inputs and machine hours for the manufacture of unit product. IT based management control models have been successfully implemented which bring in sharp focus managerial accountability at several levels. Such models have been in existence for many decades and have been refined to the nth degree.
1.3 Distinguishing Characteristics of Railway’s Manufacturing Process: In contrast manufacture of railway’s products, namely, wagon-kilometer, ton-kilometer, passenger-kilometer, etc. is carried out by a process in which the capital plant (Rolling stock and motive power) is not stationery. Consequently, these have to be tracked in real time. Further, the resources (line and station capacity consisting of fixed assets such as track, signals, OHE, etc.) employed in the manufacture of the railway product have highly variable characteristics (gradients, curves, track structure, varying standards of signaling, etc.). Consequently, consumption of raw materials, namely, line occupation in terms of units of time is variable and has to be tracked in real time on a continuous basis.
Moreover, resources are spread throughout the length and breadth of the country and fall in the jurisdiction of very large number of responsibility centers. The two main elements of the cost of manufacture of ton-km are engine-/wagon-hours and line/station occupation in units of time. Both these cost elements are amenable for tracking only in real time and technology is now available to do so.
1.4 Lack of Goal Congruence: Numerous Responsibility Centers (RCs) incur these elements of manufacturing costs, the most important of which are the costs of idling of the rolling stock and unplanned failure of equipment resulting in the wastage of resources, namely, prolonging the line/station occupation. Imposition of a caution order also results in prolonging the line/station occupation and slows down the manufacturing process and its cost should be explicitly recognized. These RCs are under different functional departments and administrative divisions/zones. In the absence of quantitative benchmarks of performance, there is no goal congruence among these RCs and each department can get away with its own agenda, which may not be in line with that of the organization.
1.5 Manual
Operational And Management Control Systems Have Become Obsolete: These came down to us from
the British and stood us in good stead up to the fifties when the intensity of
traffic was low. There has been phenomenal increase in traffic over the past 50
years generating tremendous pressures for greater economies in the usage of the
resources (line and station capacity utilization), but unfortunately, the art
and science of management on the IR has not significantly advanced in the last
half century.
It
is unclear if the available line or terminal capacities are being utilized in
an optimal manner by the section controller/station manager as they don’t have
the benefit of simulation of train movement in real time for scientifically
arranging precedences/crossings and movements in major yards taking into
account the availability of resources.
The inspectors responsible
for maintenance of the fixed assets have no idea of the cost of wastage of the
resources due to non-availability of the line as a result of rail fracture or
signal/OHE failure or caution order. The inspectors responsible for the
maintenance of the moving assets have no idea of the cost of on-line failure of
the rolling stock leading to a slow down in the entire manufacturing chain.
The yard master/SM/TXR, etc.
have no idea of the opportunity cost of capital (inventory of rolling stock)
idling in a yard or sick bay or a way side station under their control.
In the absence of managerial cost accounting on the Railways these disparate elements of cost are not explicitly recognized in the existing manual management control systems.
There is inadequate customer orientation due
to slow progress of automation. We have not been able to offer to the customer
the facility of tracking his parcels and wagons on the net by computerization
of railway receipts (RRs) and Waybills and introduction of real time tracking
systems of our assets. Many tiny courier companies are routinely offering such
a facility today on the net.
Irony of the matter is that
lack of reliability of moving and fixed assets cannot be pinpointed. Absence of
quantitative measures of performance combined with very large spans of control
is partly responsible for pervasive diffusion of accountability for lack of
performance. The stark reality facing us for quite some time is that IR cannot
continue to be managed by manual qualitative OMC systems.
1.6 Unfortunately, there is no proven model of
OMC for a railway system of the size and complexity of the IR. Hence
substantial expenditure of time and effort would be involved in the development
of such a model.
The challenge before the IR is to create on-line databases which capture in real time on a continuous basis the two elements of manufacturing costs of a ton-km, namely, cost of the moving capital and the cost of occupation of the line and station capacity, the basic raw material used up in order to motivate the field supervisors (section controllers, yard masters, train examiners, loco inspectors, inspectors from various departments responsible for avoiding wastage of raw material viz line capacity by controlling on-line failures) to exercise utmost economy in their use. Cost of wastage of resources must be allocated to the RC responsible for incurring it. Then alone can the productivity of our assets take a quantum leap.
These elements of cost provide the basic building block for computer-based management control systems, as they are amenable to aggregation and summarizing for management control at any level.
2 HIERARCHY
OF MANAGEMENT CONTROL SYSTEMS
2.1 General: Management Control Systems follow a hierarchy indicated below, which needs to be clearly understood in order to derive full benefit of the potential of Information Technology (IT):
At the cutting edge level are the Quantitative
Decision Models and on-line database systems, which generally adopt Operations
Research Techniques and statistics to facilitate executive decision making.
Information Technology
(IT) has made unparalleled strides both in terms of capacity and power of
computers as well as communication infrastructure to facilitate distributed
data acquisition and processing in real time. Simultaneously, the costs have
also diminished exponentially. This has spurred the application of Operation
Research (OR) techniques and simulation models in business as such models
involve processing of vast amounts of data. Because of the distinguishing
characteristics of railway’s manufacturing process on-line database systems are
essential.
Next comes the application of managerial cost accounting to business operations to gather and analyze cost data in the entire chain of manufacturing process. As the size of an enterprise attains a critical mass (there are inexorable pressures globally for mergers and acquisitions due to imperatives of technology and in order to realize economies of scale), it is no longer possible to manage it by manual management control systems. Managerial cost accounting provides the wherewithal for computerized management control systems.
Quantitative Decision
Models combined with Managerial Cost Accounting provides the foundation for
Operational Management Control Systems (OMCS).
Higher level Management Control Systems & Strategic Planning, a staff function, utilize the management information systems existing in any organization on statutory considerations (e.g., financial accounting systems) and those developed for exercising operational management control..
3 QUANTITATIVE DESCION MODELS AND ON-LINE DATABASE SYSTEMS
3.1 General: Quantitative decision models and numerous Operations Research techniques have been available for many decades but didn’t find extensive application in business till 70s because of the high cost of distributed data processing facilities and communication infrastructure. Given below are some unrelated examples of these models, which have been used successfully in other departments and can easily be tailored to suit railways’ needs to optimize utilization of resources in the manufacture of unit ton-km.
3.1
3.2 Optimization of Line Capacity: Line capacity is the
valuable resource used in the manufacture of railway products. It has to be
managed optimally in real time otherwise it is lost forever. Any degree of postmortem cannot retrieve a
path lost due to a lapse of driver or guard, or station manager or the section
controller or imposition of a caution order. Optimization of available line
capacity is not feasible without simulation of traffic flows in real time by
the Section Controller.
An analogy with Air Traffic Control System will be
apt to illustrate the point. It uses data from a network of radar stations to
detect the position of all aircraft in the area. The information is fed into high-speed computers via
communication links along with other relevant information on weather, etc. The computer processes all the incoming
positional information and from this calculates the future position of the
aircraft and generates a composite picture of complete air situation. The computer displays the pertinent
information on special oscilloscopes, which are used by the air traffic
controllers for guiding the aircraft in and out of the airport.
Another major real time application of computers for
operational control is monitoring of the power flows on integrated power grids
and achieving the load - generation balance through monitoring of frequency
regime by the Regional Load Dispatch Centers under the Central Electricity
Authority. Hydro-/gas-based power plants are switched on and off as required by
the connected load.
IR can learn a great deal from these organizations
for developing the real time train controlling models for optimization of the
line capacity. The art and science of train controlling has not improved
significantly in the past despite very substantial increase in traffic and the
section controllers are still preparing the control charts with a pencil and
eraser!
3.3 Freight Operation Information System: It is one of the most important initiatives taken by Railways in the Information Technology area. FOIS aims at tracking the rolling stock in real time on the entire IR; It is basically an ‘inventory’ model’. It is possible to get a snap shot picture at any time of the day of the inventory of rolling stock in every RC on the railways which exercises transient ownership rights over the stock on the move. Carrying costs of inventory of rolling stock in various RCs is very high. The opportunity cost of stock idling is still higher. As brought out later focus of FOIS would have to be changed in order to motivate numerous RCs to realize the organizational goal of manufacturing the ton-km as economically as possible by reducing the idle time of the rolling stock.
3.4 Real Time Monitoring Of Punctuality Of Mail And Express
Trains: The
three parties that affect the punctuality of trains are Section Controller,
Station Manager, and driver/guard. They
produce three source documents, viz.,
Control Chart, Train Signal Register, and Driver/Guard Journal. As these are produced at different
locations, it is not possible to do any meaningful analysis of these records at
another location, e.g., Division/Zone/Railway Board in the absence of the
source documents. Since the total volume
of data is very large, any meaningful analysis is feasible only if the data
from the first two source documents is captured in real time by computerization
of train operations. With further advances in technology, data from the third
source may also be captured in real time.
Konkan Railway has attempted computerization of
train operations. The system can be broad based and validated in order to
reduce to some extent the lead-time for implementation of computerized train
operation model.
3.5 On-line Record of the Health of Rolling Stock and Fixed Assets: It will lead to more meaningful analysis of on-line failure of moving assets, rail fractures, etc and initiation of remedial measures. As mentioned before Manual Control Systems were adequate when there were no LWRs and there was only an isolated incident of rail joint failure in the winters. Today when we have spate of failures in one night, on-line database systems for the records of USFD testing, oiling and greasing of rail joints, record of AT welds, past history of failures in the section, whether work was done under block or caution order, name of welder, etc. are required for a meaningful analysis to improve the quality of decision making. Population of welded joints has become so large that manual record in registers is no longer adequate.
3.4
Responsibility cannot be easily fixed for on-line
failures of rolling stock as it is examined and given attention at numerous
RCs. It is not possible to analyze such a record existing at different
geographical locations as a part of on going operational management control
process. Such an exercise is undertaken only in the event of an accident when
the focus is different. Consequently,
reliability of rolling stock continues to be poor.
3.6 Guaranteed Transit Time: Running of the freight trains to a scheduled
time table is not feasible without simulation of traffic flows in real time as
an aid to the section controller who is responsible for optimizing the line
capacity. And without it “guaranteed transit time’ will remain merely a concept
on paper.
3.7 Time Tabled Line Blocks For Maintenance: Planning of time-tabled
maintenance blocks is still alien to railway culture, notwithstanding the
serious adverse effect on-line failure of the fixed assets has on the line
capacity resulting in wastage of resources used in the manufacture of the
railway product. The cost of such wastages does not get highlighted.
Highly capital-intensive on-line track maintenance
and monitoring systems for the modern track require daily line blocks. In the
absence of time tabled line block, quality of work in the field is a major
casualty leading to poor reliability of assets and escalating the manufacturing
costs of ton-km.
4 FINANCIAL ACCOUNTING SYSTEMS AND MANAGERIAL COST ACCOUNTING
4.1 Focus of Financial Accounting Systems Is Historical And
Custodial: Financial
accounting is the reporting of the financial health of the organization to the
outside world. Its main concern is providing information to the stockholders,
governments, creditors, etc. It focuses on whole of the business and relates to
historical and custodial aspects. Financial accounting is mandatory by law.
Presently, financial reports are generated at a very high level of aggregation
for the entire Railways after substantial lapse of time to which they relate
and do not serve any purpose for exercising management control for results.
All the cost and revenue data (pay roll, stores
accounts, traffic accounts, etc.) is generated in numerous RCs and is captured
somewhere in the financial accounting system. These databases have already been
computerized in the Railways. These have to be reoriented to allocate the labor
and material costs to each RC.
4.2 Managerial Cost Accounting Focuses On Executive Planning And Decision Making: The focus of management accounting or managerial cost accounting is to provide information that is useful to management for planning, decision-making and controlling recurring operations. Planning is the selection of objectives and their means of attainment. Control is the implementation of a decision model and the use of the feedback so that objectives are optimally realized. The primary purpose of managerial cost accounting is to provide internal reports to managers for use in planning and controlling operations.
Timely availability of information to managers is the key to taking corrective action at the operating level.
Managerial accounting is the costing of the activities in various RCs and comparing them with normative benchmarks to bring in sharp focus managerial accountability for performance at all levels. It tells managers how well or badly they are doing, tells them what they should look at (e.g., exception reporting) and, of several ways of doing the job, which is preferable.
Managerial cost
accounting is optional. It is therefore, justified only if its value exceeds
the effort required in collecting and processing the data.
4.3 Development of Costing
Models: Monetary valuation is the only way disparate
elements of the manufacturing process can be aggregated over a time period and
across responsibility centers. Managerial cost accounting provides a way for
estimating the manufacturing costs of a ton-km. Costing models will convert the
inter-sectional running time and station loop occupation time of every train
into a monetary value. It will thus be possible to know the cost of resources
used up in the manufacture of a ton-km on a continuous basis. These costs will
be allocated to the RC responsible for controlling them or incurring them.
Similarly, monetary valuation at odd hours
every day of the carrying cost of inventory of rolling stock in various RCs,
which exercise transient ownership control over the stock on the move, will
provide the estimate of the cost of moving capital employed in the manufacture
of unit ton-km. Cost of avoidable detentions to rolling stock will be captured
in the system and it will be allocated to the RC responsible for incurring it.
It would be possible to aggregate these elements of
manufacturing costs over the reporting period and across the span of control to
have quantitative evaluation of the performance of the managers. It will bring
out in the open the cost of action or lack of it by the manager of a RC (yard,
sick line, goods shed, etc.).
Management
accounting systems are designed to encourage goal congruence so that managers
in numerous RCs may act in harmony with the overall objectives of the
organization, e.g., manufacture of a ton-km or passenger-km as economically as
possible. The cost of their action or lack of them cannot remain hidden. For
example, if PWI demands a block and power for unloading a ballast train in the
section and it is denied to him leading to prolonging of a speed restriction,
the cost of such an action will be reflected in the manufacturing cost of the
ton-km and will be allocated to the RC responsible for incurring it. Managerial
accountability at several levels will be sharply brought into focus.
5 MANAGEMENT CONTROL SYSTEMS
5.1 General: Marrying of the quantitative management tools for
decision making with managerial cost accounting provides the foundation for
Operational Management Control (OMC) systems and higher level Management
Control Systems. Managerial cost accounting draws upon the existing financial
accounts database and other database created for quantitative decision making
(simulation, computerization of train operations, maintenance records on the
health of moving and fixed assets, etc) and develops cost standards for each
RC.
It is the supervisors at the grassroots level such
as controller, yardmaster, train examiner, inspector, etc. who exercise
operational management control in real time. Quantitative management tools and
supporting database have to be developed to assist them in decision making as
they are responsible for controlling avoidable detentions to rolling stock (by
scientifically planning movements in a yard and minimizing on-line failures)
and avoiding wastage of resources (line capacity) by controlling failure of
fixed assets (and reducing their efficiency by imposing speed restrictions,
e.g., prolonging line occupation).
On-line Database Systems: The focus in the design of
on-line DBS (database systems) is on operational management control as it is
most crucial for improving the productivity of moving and fixed assets. It
should be linked to various databases as they are developed, e.g., FOIS, train
simulation as aid to section controllers, computerization of train operations,
on-line maintenance record of the health of the moving and fixed assets, etc.
On-line DBS should have a flexible structure on
building block principles so that aggregation of data can take place as
required. Summarized reports are produced over a time period and across various
RCs for exercising higher level management control at DRM/GM level. With the
availability of fast data processing machines and properly designed on-line DBS
such summary reports can be produced without much delay to enable management at
various levels to carry out an objective review of performance in a transparent
manner of the supervisors/managers under their administrative control.
Senior and top level management are not interested
in knowing the inventory of rolling stock in real time as they have no means of
controlling its productivity.
5.3 Characteristics Of Management Control (MC) Systems: MC systems ensure that the
resources are used effectively and efficiently in the realization of corporate
goals within the policy guidelines. It is exercised in a rhythmic manner,
yearly, quarterly, monthly, according to a pre-programmed cycle. It results in
delayed action response because all the information reports relate to
historical period. It focuses on total operations in a RC, Division or Zone and
involves a great deal of management judgment.
The information requirement for management control
is basically the budgets and a capability to report actual against budget for
various RCs. It relies on the database developed for operational management
control Systems and the financial accounting systems. The former usually
involve tremendous amount of detail. For management control purposes, however,
what is needed is a way of aggregating and summarizing the details so as to
show that operations are proceeding satisfactorily, or, if they are not, where
the trouble spots are.
5.4 Characteristics Of Strategic Planning: It is the process of deciding on objectives, outlining the policies
within which the objectives are to be realized and allocation of resources for
the attainment of these objectives. It is a staff function and is carried out
in an unstructured manner due to irregular and unpredictable character of the
problems. It may employ several quantitative decision models and relies on
database systems already existing as a part of the ongoing OMC/MC process in
any organization.
Long Range Decision Support System (LRDS) is a quantitative decision model, which falls in the domain of strategic planning. It is irrational to create a database system at the apex level in the organization solely for long range planning in view of the irregular, non-recurring and unpredictable character of these problems. If the output of the model is affected by every caution order imposed in the field or change of track structure, how can such a database be kept current and updated at the board’s level? It will be like putting cart before horse.
Confusion in regard to hierarchy of controls has resulted in misdirection of efforts in the past in the development of management information systems on the Railways, which improve the managerial effectiveness. In the absence of a clear understanding of these concepts, potential of IT for improving the productivity of moving and fixed assets and bringing in sharp focus managerial accountability cannot be fully exploited.
5.5 Evolution of Management Control Systems: The Management Control Systems follow an evolutionary cycle in any organization under pressures from market, customers, competition and employees (fear of losing good people). Railways have been too insular to the pressures from the environment because of monopoly on rail mode of transportation. This has spawned a feeling of smugness and complacency at various levels of management. Computer savyness and proficiency in the use of quantitative decision models in the management cadres of railway is woefully inadequate. Since Railways have not been subject to pressures from competition, senior and top management have not kept themselves abreast of the advances taking place in the management control systems as a result of application of IT for improving the productivity of assets. Unfortunately IR has been unable to develop a clear vision how potential of IT in the area of real time tracking systems for improving the productivity of assets and controlling the costs of business operations is to be exploited.
In a large organization like IR lack of goal congruence in the very large workforce is to be expected and has to be managed by having quantitative benchmarks of performance.
As
the size of business operations and spans of control in the post-independence
era continued to grow larger, and tenures at the top continued to become
shorter, a feeling of helplessness pervaded the top echelons of management.
Somehow, IR has got bogged down in a management paradigm, which has lost its
validity and relevance.
6 LEVERAGING IT - PROPOSED OPERATIONAL MANAGEMENT CONTROL
SYSTEMS
6.1 Introduce Appropriate Quantitative Decision Models: Operations Research techniques such as simulation, queuing theory, etc. and other quantitative decision models such as regression models for forecasting demand, etc. should be introduced in all spheres of railway’s business operations. Train operations should be completely computerized. Control charts and log of train movement kept in train signal register should be fully automated. Form filling and paper pushing culture must be eliminated. Supervisors must perceive these decision models as helping them do their job better.
On-line database on the health of the moving and fixed assets should be
developed forthwith.
6.2 Introduce
Managerial Cost Accounting: Managerial
cost accounting must be introduced in every RC to gather and analyze the
manufacturing cost of ton-km/passenger-km. Costing models should be developed
which covert the line/station occupation (in units of time) obtained from the
database created for train simulation and train operation into a monetary
value. FOIS should
be reoriented. Snapshot picture of the inventory of the rolling stock at odd
hours (0.00 hours) in every RC should be processed on high-speed computers and
with the help of costing algorithms built into the system its carrying cost
should be estimated. Taking into
account all the factors costing standards should be realistically fixed for
each RC against which the actuals should be reported. It is essential to
develop quantitative benchmarks of performance for every RC.
The costing models should
also capture the cost of on line failures of equipment (moving and fixed
assets) resulting in excessive line/station loop occupation (wastage of resources).
Similarly cost of avoidable detentions to rolling stock in the yards/terminals
should be estimated from the on-line database for the FOIS. All such cost
should be allocated to the RC responsible for incurring them in a transparent
manner. These cost elements provide the basic building block, which can be
aggregated over a time period or across various RCs as required for exercising
OMC, and higher level MC.
Such a system shall produce operating information
reports, which motivate the supervisors and officers at the cutting edge level
to take appropriate action. The appropriate action would be to keep the
inventory of rolling stock as low as possible consistent with the marketing
requirements of the territory. If the holding in any RC exceeded the normative
limits, or, the age break up of the inventory showed aberrations (exception
reporting for stock idling at a way side station or in a sick line for more
than a week/fortnight/month, etc.), it will generate signals for intervention
at the appropriate level of operational management. Appropriate action would
also be to eliminate the speed restrictions and caution order so that
line/station loop occupation in the manufacture of ton-km is minimized.
The idea is not to put any one RC on the spot but to help to him do his job better and to let him know that the cost of his actions or lack of them is being captured somewhere in the system.
Such reports are being produced even today manually
and the field managers at several levels are also taking such actions, but the
volume of transactions and spans of control have become so large that it is not
possible to exercise control by manual systems any longer.
6.3 Human Face Of Automation: Operational control is
required to be exercised at the level closest to the scene of action. The
challenge before IR is to develop costing models, which capture costs of
detention to rolling stock in numerous RCs in a transparent and visible manner
so that field supervisors have confidence in the fairness of the system. It
should help the field level supervisors to do their job more effectively by
cutting out paper work. Then alone they will embrace the system and will be
motivated to keep the data base error free, current and up to date which is of
paramount importance for exercising controls in real time. Moreover,
organization’s goals rather than those of their own department will dictate the
actions of numerous field supervisors who participate in the manufacturing
process of ton-km/ passenger-km.
Operational Management Control Systems must be fair
to ensure willing and cheerful participation of the rank and file of the
organization in this major venture of total computerization of business
operations of Indian Railways. They should perceive it helping them do their
job better, cutting out paperwork and improving their productivity. This is of
crucial importance, as then alone database will be kept current and error-free.
This is of critical importance for exercising controls in real time, otherwise,
you run into the syndrome of GIGO (garbage in garbage out).
7 LEVERAGING IT – PROPOSED MANAGEMENT
CNTROL SYSTEMS
7.1 Management Control
System merely aggregates and summarizes the information from the database developed
for Operational Management Control System and Financial Accounts Systems
developed to meet various statutory requirements. As mentioned before
Management Control Systems are rhythmic in nature and are exercised
monthly/quarterly/yearly.
The data will be aggregated for the desired
time period and across various RCs according to the span of control, be it
middle level, senior level or top level. The emphasis in Management Control
Systems is on the analysis of variance between budget and the actuals and
generation of ‘exception reports’ for managerial intervention at appropriate
level. This will bring in sharp focus performance accountability. More
importantly it will lead to goal congruence of managers in different
departments as the impact of their action or lack of it will be monetarily
evaluated and captured in the system It will not remain hidden as in the
existing manual systems.
7.2 With the availability of fast-distributed data processing facilities, it is now possible to give a concrete shape to such a concept. With fast data communication links between computers installed at various activity centers, and an ability to process large volume of data it has become economically feasible to introduce management control systems in a logical hierarchical pattern.
8 STRATEGIC PLANNING
8.1 Strategic
Planning is a staff function & the database created for Operation
Management Control System & Financial Accounts System will serve its
information needs also. As more and more database become available for managerial
decision making there will be more emphasis on planning and analysis than on
inspections which are becoming increasingly unproductive.
9.1 Feasibility Of Proposed Management Control Systems: Validation of Long Range Decision Support System (LRDSS) has demonstrated the feasibility of tracking the occupation of line in real time and costing algorithms can easily convert it into a monetary value on computers. FOIS is already under implementation for tracking inventory of rolling stock in real time. Only costing algorithms have to be written down to estimate the carrying costs of inventory on a continuing basis. Existing financial accounts database can be reoriented for application of managerial cost accounting models.
These would be refined and made
more scientific as we go along based on the feedback received from the field
managers. This will be an iterative process.
Former CRB, Sri I.I.M.S. Rana had shown
commendable vision by writing to the three IT giants in the country, namely,
Infosys, Wipro and Tata Consultancy Services (TCS) seeking their opinion on the
feasibility of the propposed concept. Infosys has confirmed that such a plan is
feasible and have also shown interest in the project.
If
there is still any diffidence about the viability of the proposed plan, level
of comfort can be improved by having a round table conference of the top
management with the top brass of the IT giants. Ball has already been set
rolling by the former CRB but time is of essence and the momentum already
generated should not be allowed to peter out by referring the matter to
Accounts Reforms Committee, etc. The problems faced by IR today are too
formidable to be tackled by mere cosmetic treatment.
9.2 Development Costs: It is no doubt true that the development cost will be high. No transportation company in the world has scale of operations (number of RCs, wagons, motive power, track, OHE, etc.) or diversity of the product line (goods and passenger trains) comparable to IR. Hence, an Operational Management Control System model is not available off the shelf for adoption by IR. Considerable amount of time and expense would have to be incurred for the development of a real time tracking system of the moving assets and line occupation and associated costing models.
These models would, however, have tremendous export potential for adoption by railway systems in developing countries.
Costs Can Be Kept Low By Outsourcing: On a rough estimate it may
require the effort of about 30 to 35 IT professionals and about half that
number of managerial cost accounting experts and general management consultants
on a sustained basis for a minimum period of five years to design and install
the Operational and Management Control Systems on the IR briefly outlined in
this paper. Such a group of consultants will require the assistance of about 15
to 20 railway experts from different disciplines who will interact with the
outside consultants and educate them about the nuances of railway operations in
various departments. This group will define the information needs of the IR and
explain to the consultants the complexities of the railway product line and the
large number of RCs involved in their manufacture so that the consultants may
design the structure of a flexible data base system to facilitate operational
and management control at various levels in the IR.
9.3 Timeframe For Project Implementation: It will take about five years to implement the project from the date of award of contract. The lead-time can be shortened by bringing the current IT initiatives in different departments under one umbrella.
FOIS is a sanctioned project and is under
implementation for nearly 20 years. It can be easily reoriented for adoption of
Managerial Cost Accounting models.
Computerization of train movement has been attempted on Konkan Railway. It can be broad based and validated for adoption on the entire railway network. LRDSS in board’s office has attempted computer charting of the sectional capacity. Both these initiatives can shorten the lead-time for development of train simulation model in real time as an aid to train controlling.
9.4 Project Organization Structure: It may be appreciated that the required multi-disciplinary expertise in the field of operations Research, Information Technology and communication systems, Cost Accountancy and General Management is not available in-house for the obvious reasons that IR does not require a high degree of specialization in any discipline, least of all in an emerging field such as Information Technology. Hence, it would be futile to even attempt to develop such a system in-house as has become evident from the experience of implementing the FOIS in the last 20 years.
What we are talking about is total computerization of operations in all the disciplines of the IR. This will require a fair amount of change in the skills of railway men and a substantial change in the culture of the railway working. By the time we are through with the project the hardware may be due replacement. Enormity of the project should thus be clear.
A
small team of
officers from different departments, reporting to CRB should be formed to
liaise with the outside consultants. The existing team working on FOIS could
form a part of the consultant’s team for the project, to ensure continuity of
tenures and to have sharper focus.
When introduction of computers in businesses in the
70s became trendy in the United States, it took 5 to 10 years for the computer
culture to take roots in any industrial corporation. IR can compress the period
of implementation of the project only up to a point.
10 CONCLUSIONS
10.1 CHALLENGES BEFORE IR: Implementation
of FOIS is under Traffic department. Financial accounts databases are under
Accounts department. Operations Research and other quantitative management tools will be used
by various departments for executive decision-making. Managerial cost
accounting models for gathering and analysis of manufacturing costs of ton-km
will be developed by cost accountants and information technologists. The two
streams of development must unite and marry in order to implement Operational
Management Control Systems in real time and to have higher level Management
Control Systems. Combining the IT resources and canalizing the development
efforts presently underway in the two departments will be a major challenge
before the Indian Railways.
The project organization
should, therefore, report directly to CRB to be free from any departmental
biases and to infuse a sense of urgency in their mission. It should be manned
by only the officers from various departments who can stick in the organization
for at least 5 years.
10.2 Creation Of A New IT Department: Ultimately,
a new department called IT Department would have to be created by bringing in
all the existing IT resources under different departments under one roof, which
will act as facilitator and service the information and data processing needs
of all the Departments. It will be a lean department, as it will outsource
majority of new developmental work.
10.3 Intensive
Re-training program at Several Levels: An intensive re-training program would have
to be launched in consultation with IITs and IIMs to expose the officers and
staff at several levels in the use of Operations Research techniques and models
for executive decision making, hierarchy of management controls, and pitfalls
to be avoided in the applications of Information Technology in real time.
Computers started finding application in business enterprises in the West in the 70s and even the advanced corporations learned through a painful learning curve that computer culture takes years to take roots in any organization.
10.4 Administrative Will To Change: The
most formidable challenge is the administrative will to change notwithstanding
the short tenures at the top. Broad consensus must be hammered out at the top. If
considered necessary, the proposed concept plan can be debated in a GMs
conference before it is presented to MR.
Whenever an organization perceives a threat from the environment, the first reaction is to do more of what it has been doing in the past. This proves counter-productive as illustrated by frequent safety/punctuality drives and more stress on inspections. Firstly, if what had been done in the past had worked, the organization would not have been in a quandary in the first place. Secondly, such an approach misdirects organizational resources (top management’s attention) to those areas, which have exhausted their potential for yielding further benefits. Einstein once said, “Significant problems mankind faces today cannot be solved at the same level of thinking we were at when we created them”. A paradigm shift is required in order to tackle such problems. Indian Railways have to change their mindset in order to tackle the problems, which have been staring in our face for several decades, and we have chosen to ignore them in the fond belief that they will vanish.
Finally, political commitment must be secured as it is going to be a long gestation, capital-intensive project and there is bound to be opposition from several quarters in the course of project implementation.
Fortunately at this juncture we have a Railway Minister who has
the vision and qualities of leadership for overcoming the roadblocks on the way
provided there is a commitment of the Board to its success and it can be sold
to him as a mission for survival of IR in the new millennium.