Indian Railways is looking to get cheaper products by developing committed relationship with industry by having long-term procurement plans of over two years. At present, procurement is being done based on annual production plan of the rolling stock.

“The long-term plan is only for high value items needed for production of new coaches and high power locomotives spares, which will be procured by production units of the Indian Railways,” AK Goel, DG-Stores, told BusinessLine .

This is being done to provide assurance to the industry and help them plan in advance about the expected demand conditions. “The move will also help railways derive benefits from economies of scale,” Goel said.

To deal with potential change in demand situations, these long-term contracts will also have a 30 per cent variation clause.

Production units of the Railways include rail coach factory at Kapurthala and modern coach factory at Rae Bareli, integrated coach factory at Chennai and locomotive units at Varanasi and Chittaranjan.

Going digital

As a part of its move to manage procurement of about ₹ 50,000-crore goods annually, Railways has digitised its supply chain with an e-procurement process in place.

Its online procurement accounts for almost 65 per cet of the total government procurement.

The internal management is also now done digitally, with bill payment, submissions, receipts, inspection certificates being submitted and processed online.

“Except for local imprest and petty purchases that include stationary like pen, papers, all goods supply are e-procured,” Goel said.

Indian Railways has been going for online auction of scrap disposal, and earns almost ₹ 3,000 crore through online auction process in a year.

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