BRO_Deutsche_Bahn_Feb2021

Deutsche Bahn Infrastructure – Transforming Procurement IN ASSOCIATION WITH

Deutsche Bahn AG

DIGITAL REPORT 2021

02

Deutsche Bahn Infrastructure – Transforming Procurement

03

www.de ut sc he ba hn.c o m/ k a r r ier e

DEUTSCHE BAHN

Jan Grothe, SVP Procurement Infrastructure at Deutsche Bahn, gives his insight into managing multi–billion–Euro, multi–year rail infrastructure contracts and the importance of digital technology

I

t’s fair to say that most supply chain executives had a metaphorical mountain to climb in 2020 and face an uphill task this year to

achieve the ‘next normal’. The irony is not lost on Jan Grothe, Deutsche Bahn’s Senior Vice President of 04

Procurement Infrastructure, who regularly climbs some of the world’s tallest peaks, and whose career path mirrors his passion.

“I love challenges. I love ambitious goals and I love mountaineering,” says Grothe from the rail and logistics giant’s Berlin headquarters. “So even above 7,000 meters, wherever in the world you are, it’s the same story. You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business.”

The DB Group is one of the world’s leading mobility and logistics companies, employing around 338,000 people around the globe. They design and operate the transport networks of the future, moving people and goods via an increasingly smart and sustainable system.

05

www.de ut sc he ba hn.c o m/ k a r r ier e

Technology and qualified personnel for top level safety and security 40 years of experience combined with permanent R&D-activities qualify CONDOR Group to be one of the leading suppliers of Deutsche Bahn in the field of safety and security service suppliers. Patented safety barriers, the integration of IoT-based Track Warning Systems and high profiled specialists grant workers and engineers on site an excellent level of personal safety.

Additional technologies as temporary noise reduction solutions, newest level crossing technology for work sites and the electronic qualification portal support the regular solutions.

Planning and regular surveillance of the rail-infrastructure with drones become more and more popular for Deutsche Bahn as well as worldwide. In close partnership with the operational railway experts CONDOR-UAV teams developed a wide offer of solutions from indoor drones up to long-distance UAV. Specific payloads, certified trainings and professional after sales service allow industrial use cases.

CONDOR – Safety Professionals on Track.

Secure your safety

Jan Grothe | Intro | Deutsche Bahn CLICK TO WATCH

|

0:57

07 2021 will mark Grothe’s 20th year at

have someone with them with an entre-

Deutsche Bahn, where he has steadily

preneurial approach – bringing things to

risen through the ranks to scale new

an end, making decisions and leading the

heights – both on a personal and com-

way. I had 50 people at that time for this

pany level – and overseen Deutsche

project and we were very successful. So

Bahn’s digital transformation

Deutsche Bahn actually was one of the

in procurement.

first companies in Germany which had

He had previous experience setting up

the full set of e-procurement systems,

platforms as a procurement consultant

e-tender systems, and auction tools. And

and was drafted into Deutsche Bahn to

this was at the very beginning of my time

develop their own procurement platform.

there, so this really was state-of-the-art

“I originally thought that this would be

at that time.”

a two-year project, and then I obviously

Always keen to take on a new chal-

stayed,” says Grothe. “That was because

lenge and push himself higher, it was not

the people were great and they loved to

long before Grothe was moving beyond www.de ut sc he ba hn.c o m/ k a r r ier e

DEUTSCHE BAHN

simply providing procurement platforms.

He found himself responsible for two regions (North and West) and heading up the procurement infrastructure.

“We were procuring something like one billion euros,” he recalls. “That is when I really learned all about these operational processes and supply management in those regions. Shortly after this, I was asked to come back to the central functions and set up a supplier management and quality assurance team.

“That was quite a challenge because we hadn’t had this before. The quality 08

engineers usually didn’t have anything to do with procurement and they weren’t operating as a real team.”

The following challenge facing Grothe was huge. He was tasked with not only

culture of the business and was one of the many initial hurdles he faced.

In 2019 Grothe took over the procure-

heading procurement strategy but also

ment infrastructure department with

implementing IT systems – putting pro-

almost 500 colleagues, facing a huge

curement at Deutsche Bahn through

challenge as the German government

a literal digital transformation.

recognized the importance of rail trans-

Seven years prior to Grothe joining,

port in its fight against climate change.

Deutsche Bahn was formed as a new

The resulting cash injections (currently

legal entity in 1994 out of a merger of the

EU12 billion in 2021 and rising to EU15

eastern and western rail companies. The

billion each year to 2025) mean that

workforce stood at around 500,000 and

a new strategy was developed and

in a drive to increase efficiency, that was

Grothe found himself responsible for

halved by the time Grothe arrived. He

a procurement budget larger than the

says that had a significant impact on the

GDP of Albania.

Needless to say, this was a gamechanger. So where does the money go?

“Mainly, of course, in track and civil construction,” says Grothe. “So, for instance, bridges, stations, tunnels. We also invest heavily into the digitization of our track system, and that means mainly new signaling technology. That will allow us to increase capacity on the track by 20 per cent. And that’s what we need to do if we want to transport passengers and goods on the biggest network in Europe. It is currently operating at 100 per cent capacity on the main corridors, so we need to increase efficiency.

E X E C U T I V E P R O FILE :

Jan Grothe Title: SVP Procurement Infrastructure Company: Deutsche Bahn Industry: Rail

Location: Germany

2021 is Grothe’s 20th year at Deutsche Bahn, where he has steadily risen through the ranks to scale new heights – both on a personal and company level – and overseen Deutsche Bahn’s digital transformation in procurement. He had previous experience setting up platforms as a procurement consultant and was drafted into Deutsche Bahn to develop their own procurement platform.“I originally thought that this would be a two-year project, and then I obviously stayed,” says Grothe. “That was because the people were great and they loved to have someone with them with an entrepreneurial approach – bringing things to an end, making decisions and leading the way.” www.de ut sc he ba hn.c o m/ k a r r ier e

09

DEUTSCHE BAHN

Strong Rail Announced in 2019, DB Group hopes to make a major contribution to Germany meeting its climate change targets.

“Germany will only meet its climate targets if we succeed in shifting traffic to rail on a massive scale over the next decade,” said DB CEO Dr Richard Lutz.

“Germany needs Strong Rail: for the climate, for people, for the economy and not least for Europe.”

The ambitious strategy includes 10 core messages:

10 1. Germany’s climate targets can only be met with Strong Rail.

Deutsche Bahn will achieve 100% of traction power from green sources by 2038, more than a decade ahead of its original target.

4. DB will add one billion new regional and local passengers.

This will be achieved by strengthening local rail services and integrating new forms of mobility. It will also be introducing smart services for transport in cities and in rural regions.

2. Strong Rail focuses on DB’s core business.

DB will assess its shareholdings based on their contribution to Strong Rail. DB Schenker is viewed as providing key support to DB Cargo. DB Arriva has little strategic relevance to building a strong rail network and will be sold.

5. DB Cargo will raise its rail traffic volumes in Germany by 70%.

DB Cargo will increase traffic volumes by 70%, for example by purchasing 300 locomotives. DB Cargo will increase its market share from 18% to 25%.

3. Long-distance transport will double its patronage.

DB’s long-distance transport will double its number of passengers to over 260 million per year. Over 30 major cities will enjoy twice-hourly connections.

6. DB will work with the German government to expand rail network capacity by 30%.

DB will add 350 million train-path kilometres (t-p km), a 30% increase in capacity, to the German rail network. This

11 will be achieved by upgrading the system, utilising tech innovation and digitalisation.

7. DB will enter a new era with Digital Rail for Germany.

DB’s Digital Rail for Germany Group program will improve capacity, quality, reliability and efficiency.

8. DB’s stations will become hubs for stateof-the-art mobility.

Stations will be hubs of multimodal mobility and the centre of life in the city.

The goal is to double station capacity to host up to 40 million guests a day and to create seamless transitions between rail, bike or bus or new mobility services (such as car-sharing, e-scooters).

DB is hiring on a massive scale. Over the next few years, some 100,000 employees will need to be recruited for DB to reach its goals.

10. DB will have more trains and offer more connections than ever before.

DB is aiming to double seating capacity in passenger transport by increasing its longdistance fleet up to 600, with a focus on high-speed trains. Some 80% of the population will have access to the longdistance network.

9. DB will hire 100,000 new employees in the coming years. www.de ut sc he ba hn.c o m/ k a r r ier e

All from one source With more than 6,500 highly qualified employees at 35 locations worldwide and annual sales of around 1.7 billion euros, Max BÜgl is one of the largest construction companies in the German construction industry. Since its foundation in 1929, the company’s history has been characterised both by innovative strength in research and technology - and configurable solutions of high quality and sustainable construction technology.

With forward-looking in-house developments on issues of our day and age such as renewable energies, urbanization, mobility and digitalisation, the Group is already realizing solutions for the megatrends of our globalized world. Based on many years of experience and competence in highprecision precast concrete construction, Max BĂśgl Group also positions itself as an important driving force in the development of innovative products, technologies and construction methods.

The use of BIM, lean management/ production and standardised project management ensure adherence to schedules and cost-effectiveness from the initial concept idea to the finished building product. www.max-boeg.com

Build your progress

Jan Grothe | Digital Transformation | Deutsche Bahn CLICK TO WATCH

|

1:06

13 “And that’s why we are talking about

The railway industry does have a repu-

introducing digital. Digitisation does not

tation for being slow on the uptake when

just affect signaling, we’re talking about

it comes to digitization compared to

IoT sensors e.g. at switches to help

some other industries, and that is partly

monitor and maintain tracks – which will

down to safety concerns. However, sup-

also ultimately reduce costs.”

pliers have also proved slow at moving with the times.

DIGITAL TRANSFORMATION

“When we digitized the interface to the

While Grothe has propelled procurement

suppliers, a significant number of com-

at Deutsche Bahn along its digital trans-

panies were actually not able to access

formation path, he admits that the pace

the platforms or auctions,” he says.

of change within the industry, and slow

“Three per cent said they weren’t able to

uptake of digital, has been a hindrance

work with emails! I couldn’t believe it.”

– with some of their suppliers even struggling with basics such as email.

Branding himself as an eternal optimist, Grothe focuses on the positive www.de ut sc he ba hn.c o m/ k a r r ier e

DEUTSCHE BAHN

aspects of the Covid pandemic when it comes to accelerating the digital transformation that suppliers are finding themselves having to adopt, plus the fact that DB itself was well prepared for a move to the cloud.

“We introduced the digitized processes three years ago and also introduced flexible working at the same time. So, everyone was able to work wherever they wanted and all the processes were digitized. When the lockdown came, we were able to switch 14

from one and a half days of working from home on average to five days a week, so it didn’t affect our productivity at all. That was a good sign. We were well prepared.

that migration at the beginning of 2020,

“We decided as a company four years

so we had no problems scaling up. Our

ago to migrate completely – and I mean

reaction to the situation also saw us

completely – into the cloud. We finished

accelerate some new functions and new

“ You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

ways of working together.”

PRESSURE ON PRODUCTIVITY It’s fair to say that Deutsche Bahn’s revenues have been significantly hit by the Covid-19 pandemic, as passenger numbers were decimated and remain low, while the company is still expected to provide a public service. Fortunately, DB’s worldwide operating freight and

and we did some new things. We set up a rail bridge from Asia to Europe which delivered a lot of essential masks and other PPE. There was a huge demand in Germany for this so we did pivot and freight was not as affected as passenger transport. Rail freight is more or less on the same level as before the Covid crisis.”

One thing is for sure. The economic

€40bn+ Revenue in Euros

fallout of the pandemic will put even greater pressure on CPOs to deliver under extreme budget restrictions and pressures as those companies that emerge look to tighten their belts. Does this inevitably mean that there will be

295,000+ Number of employees

pressure on suppliers to cut their prices?

DB already enjoys a strong position when it comes to procurement thanks to its size and standing, so is there a danger that some suppliers simply will not

logistics arm, DB Schenker, stepped

be able to meet expectations in the

up and experienced higher demand

‘new normal’?

when it came to delivering vital sup-

“Generally speaking, I think there’s

plies – including Personal Protection

a huge pressure on productivity on both

Equipment (PPE).

sides,” says Grothe. “So, on us but on the

“In the freight and logistics sector, DB

suppliers as well. We have to find solu-

Schenker is one of our subsidiaries and,

tions and new contracts to ensure we

in air freight, there was a huge increase in

are in a better position, that’s for sure.

operations,” explains Grothe. “Even with

“You know, sometimes we have to

the rail freight at DB Cargo, it was okay,

give something. We have a very stable www.de ut sc he ba hn.c o m/ k a r r ier e

15

SPITZKE is a leading innovator for rail mobility.

With our areas of expertise – track, technology, equipment/ electrical engineering, large-scale projects/structural engineering, logistics and production – we are already creating the future of railway infrastructure. We develop and connect our business segments systematically to ensure that sustainable mobility remains permanently available. www.spitzke.com/en/home

“ When we digitised the interface to the suppliers ... three per cent said they weren’t able to work with emails! I couldn’t believe it” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

one reason why Grothe prefers to work with long-term strategic partners. In the last few years, 80 per cent of DB’s business is procured from just 500 suppliers – whereas it was previously more than 3,000.

Grothe makes dealing with thousands of suppliers sound straightforward, and while it is clear he cannot handle them all personally, he does like to get hands-on

company and people like to do business

and ensure everything is on track and

with us because we always pay – and in

meeting the high standards set by DB.

times like these, that is quite valuable. So,

“I really like to see and meet personally

we have started initiatives to renegotiate

from time to time,” he says. “Once a year,

contracts that will work for us and

I do a whole day, spending time working

the suppliers.”

with a key supplier. This may be on

“This certainty is very valuable for a lot

a construction site, on a safety issue, or in

of suppliers right now and as some of our contracts last up to eight years, that can provide suppliers with perspective. With huge volumes, of course, they are in a position to lower (their) prices.

“On the other hand, the solution is innovation on both sides, so we do not just have to procure the same thing for a lower price. I would ask the suppliers to introduce better solutions for the same function.”

DB has roughly 20,000 suppliers, which creates its own challenges, and is www.de ut sc he ba hn.c o m/ k a r r ier e

17

DEUTSCHE BAHN

“ There’s an amazing energy in the room right now.

Suppliers who have been slow to adapt to digital, we can push them right now” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

ACHIEVING WORLD-CLASS PROCUREMENT This hands-on approach and attention to detail are key factors in Deutsche Bahn achieving World Class Procurement status. In order to do that Grothe had to first recognize that benchmarking was essential to measure success, adapt strategy and meet ambitions.

He started looking into existing

a planning office. This is most valuable

measurement systems – not just in

as sometimes you don’t get the full

rail operators but the best procure-

picture. It’s always good to know how it

ment departments in the world – and

really works.”

came across the German consultancy

Digital Interlocking Systems www.inosig.de

Jan Grothe | Future of Deutsche Bahn | Deutsche Bahn CLICK TO WATCH

|

1:14

19 company h&z. This kind of transparency is

systems, the supply management and

a leap of faith for any organization as you

the people, and then we worked on

never know how highly you are going to

the biggest gaps that we could make

be rated, but Grothe was convinced it was

improvements on,” he says.

the right way forward and a starting point.

“We did another assessment in 2016

Marked out of 20 points on the h&z

and 2019 and it was great, good news

scale, and based on interviews with five

for the whole team. There’s still a way to

subdivisions, anything between 11 and 15

go because this is a moving target. You

is considered ‘professional’ while above

compare yourself to others and they do

that is ‘world-class’. Grothe, as well as

not stand still, they keep improving, so

the whole DB procurement team, was

we have to do that as well.”

happy to achieve professional status

In the latest assessment, DB ranked

from the first assessment in 2015 but

World Class in three out of the five cat-

was keen to improve.

egories, with the other two registering

“We looked at the processes, the IT

high scores in the Professional tier. www.de ut sc he ba hn.c o m/ k a r r ier e

DEUTSCHE BAHN

Trusted Partners Grothe provides insight into some of DB’s strategic partners.

20

Spitzke – a leading railway infrastructure company that carries out new build, revitalization and repair work on railway systems, stations and bridges.

the new hybrid bridge system and learning with them, together. The idea is to save a lot of time and capacity, while also building which in the end makes savings as well.”

“Spitzke is one of our strategic partners trackside and was infrastructure supplier of the year in 2018. “What makes them special is whenever we see a strategic demand for adapting processes or introducing new technology, they will invest, learn quickly and adapt. They are agile and a very reliable supplier.”

Condor Multicopter & Drones – specialists in providing drone solutions for industry and critical infrastructure.

Max Bögl – one of the largest construction, technology and service companies in the German construction industry.

“Max Bögl handled mainly civil works for us and is a very reliable and innovative longterm partner. They are willing to drive innovations in order to achieve win-win situations. We are just about implementing

“When it comes to safety solutions, Condor has not only been reliable over the last 10 years that we have worked together but also very innovative. Condor is always thinking beyond today and we are testing various drone services with them at the moment – for safety checks, for instance.”

Scheidt & Bachmann – one of the most successful manufacturers with more than 130 years of experience in signalling technology.

“Scheidt & Bachmann have always met the highest of expectations. Over the last couple

21

“ We initiated a whole transformation from a traditional procurement department to a procurement department which became awardwinning” — Jan Grothe, SVP Procurement Infrastructure, Deutsche Bahn

of years and during the Covid-19 pandemic, they stepped up at their own risk to always deliver for us on time. They are willing to invest heavily in supporting us in digitizing signaling technology, which is great.”

InoSig – provides signaling services for the rail technology industry.

“InoSig has been playing a minor role so far in terms of signalling, but we really appreciate them helping us reach our digital goals at track side and this is excellent, this endurance of the partnership. We love it all.” www.de ut sc he ba hn.c o m/ k a r r ier e

DEUTSCHE BAHN

THE FUTURE

six billion euros over the next two

It is impossible to consider what the

years. So, this is something like 12 bil-

immediate future may hold without

lion euros in losses compared to the

reflecting on 2020’s disruption. With

plan we had in 2019. We will be quite

so much turmoil and negative impact

happy if we get back to that level first

on revenue, it’s almost inevitable to see

and then talk about new plans,”

a return to ‘normal’ as being a significant

says Grothe.

achievement. And when you heard the

“But, we strongly believe that the

numbers involved for a company like

number of passengers and commut-

Deutsche Bahn, it’s easy to understand

ers will increase rapidly by 2030. This

why a return to status quo would be a win.

is still our assumption, and that’s why

“We expect to make a loss around

we invest heavily in our track and we

six billion euros [for 2020] and another

invest heavily in our rolling stock.

YOUR SYSTEM INTEGRATOR FOR DIGITAL SIGNALLING SOLUTIONS

Command and control, interlocking and level crossing solutions for railways in a digital age LEARN MORE

“There’s an amazing energy in the room right now. Suppliers who have been slow to adapt to digital, we can push them right now. I expect this to boost productivity. We can use that energy and when the crisis is managed, we want to focus on what I call responsible procurement,” he says.

“This means corporate social responsibility (CSR) from us and our strategic suppliers.”

Grothe admits that he has personally invested a lot into DB’s culture because he wants to make procurement the place to be within the company. So whereas just 10 years ago, no one really wanted to work in the procurement department because it was mainly seen as boring – just writing orders all day – the culture has shifted.

“I think we as a procurement management team have already made this “It will probably take us two years to

a great place to be,” Grothe concludes.

get back where we started but we

“We are close to world-class and people

expect everything to increase as pro-

are proud to work here.”

jected before.”

Grothe firmly believes that this is also an opportunity to learn and adapt, and to use Covid to push for even greater digitalization. www.de ut sc he ba hn.c o m/ k a r r ier e

23

DEUTSCHE BAHN AG BERLIN GERMANY www.deutschebahn.com/akarriere

P0WERED BY