Supply alerts for the future

The previous deliverable “Map of disruptions experienced so far by the Rail Supply industry and lessons for the future” (D1.1) developed by the LEADER 2030 project presented - along with a lot of other information - the map of disruptions experienced in these times by a sample of European Railway industries directly surveyed in the past months, mostly from the supply side and a few also from the customer side. This provided a snapshot of what is happening to the European Rail Supply chain at a time when crises of various kinds and durations are affecting the regular flow of raw materials, processed materials and components needed. At a time when - also in the wake of the recovery and resilience aid after the COVID-19 crisis - public investments are high and have very tight deadlines, this represents a trouble the European Rail Supply Industry has to face and manage with the necessary vision.

This Deliverable “Supply alerts for the future” (D1.3) goes into more detail about the type of railway supplies affected by such disruptions, going so far as to list which end products are suffering from these difficulties. The overview confirms fears for future supplies not only of standard products but also for innovative products. The latter are expected - in addition – to suffer from shortcomings at EU level in terms of dependency on foreign advanced technologies where the EU lacks behind. This will be better addressed in following project analysis.

This Deliverable represents therefore a further key contribution to the LEADER 2030 project analysis, as the project ultimate goal is to understand if the innovations resulting from the Europe’s Rail-driven investments will have the necessary materials and components – both hardware and software – to reach the market in the quantity requested by the European Railway system in 2030 and thereafter, and timely.

To give the correct weight to the alerts provided by this analysis document it is important to highlight that, according to the results of the LEADER 2030 survey, company size is not an element that automatically affects the ability to avoid or better resist such disruptions. The ability to manage these difficulties through structured forms of risk management (stockpiling, contingency planning, suppliers’ vulnerability assessment, suppliers’ diversification, …) varies from case to case. The survey results show that (i) large companies have in general more tools to manage this but they are affected by many disruptions in parallel, which can also create and multiply cross-dependencies; (ii) SMEs, being more vertical, are affected by more specific disruptions, but usually resort to stockpiling and continency planning as their main strategy. Substitution of non-EU disrupted supplies with EU ones is not always possible due to the objective lack of closer and more certain alternatives (raw materials and electronics first and foremost), and, whenever possible, the cost difference - on average +30% in the EU - does not make this substitution possible due to the non-acceptance of the ‘cost increase for greater security’ by the end customer. In addition, to date, forms of intra-supply chain circularity are hardly considered at all. If the opportunity until recently was usually read as a ‘contribution to the environment’, for the foreseeable future this should strongly enter into supply chain strategies with a view to ‘anti-disruption resilience’.