Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
quire complementary changes to procurement strategies, similar to the strategy
for divesting materials and manufacturing. Figure 5.5 suggests processes for
restructuring: (i) activities that can be readily outsourced to competitive suppliers;
or (ii) activities that embody core or rare competencies that can be retained
and improved within the core railway.
Retained activities require further evaluation and upgrading. All large organizations
find it difficult to maintain pressures and incentives for high performance
in units shielded from daily contact with external customers or competing suppliers.
Figure 5.5 suggests strategies to strengthen incentives, including ‘internal
pricing’ and external benchmarking through partial external procurement.
5.6.4 Extended businesses
The final category of non core activities includes three types of businesses that
extend railways services beyond passenger travel or freight transport. Here they
are treated, prima facie, as non core but sometimes they are not, as discussed below.
Ancillary passenger businesses
Ancillary businesses widen the range of passenger services to include station car
parks, railway hotels and bars, train catering, and left luggage offices, among others.
On-board services are restricted to rail travelers but the other businesses developed
as an adjunct to passenger marketing or an opportunistic commercial
venture, supported by regular passenger flows that provide customer turnover.
The World Bank Page 93