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A CN train on Red Pass, B.C. Image courtesy of CN.
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Canadian National Railway’s work locations aren’t like your typical business—they stretch for thousands of miles across the U.S. and Canada. That means when an extra job pops up over the course of maintaining railroads, it’s tough to have a formal process for procuring a temporary worker.
“For bigger contracts, we have a formal process—the top 20 to 25 vendors (out of around 1,000),” says Denis Latreille, senior manager of disbursement at Canadian National Railway Company or CN as the transcontinental railroad refers to itself. “For the rest, we might have a track supervisor in Louisiana that needs someone to dig a hole. He could look in the yellow pages or, if he is close to a farm, he could go to the farmer and say he needs him and his backhoe to dig.”
With situations like this happening all along the railroads, it’s easy to see why CN, an ASUG member, saw the need for a vendor management system (VMS)—especially considering that the company is spending almost CA$1 billion per year on contractors, Latreille estimates.
CN was keenly aware that its contractor spending lacked consistency, with supervisors across the organization paying different rates for the same services. The railroad knew it needed software to fix the problem. CN eventually found Fieldglass, but first the company wanted to identify what exactly it needed VMS software to do.
“We spent about eight months before even engaging Fieldglass, defining what we were looking for in a solution,” says Remo Santarossa, director of financial planning at CN. He explains that the railroad’s business team sat in a room with their peers in IT to hammer out requirements. The teams chose Fieldglass service modules just before SAP acquired the VMS company in 2014.
That move was fortuitous, as CN is an SAP ERP shop, currently running ECC 6.0 enhancement pack 7. Bringing in Fieldglass requires 10 different integration points with the SAP system, Latreille says.
Integration Challenges, Successes
Fieldglass has had SAP customers for years, so SAP integrations already existed for many of the touch points that CN required. However, one connection in particular has given the railroad the most trouble through the process, and it has to do with invoicing.
CN was having issues reconciling Canadian tax law—the integration didn’t come pre-built with the correct tax information.
“The standard BAPI [business application programming interface] connector wasn’t going to support anything,” Latreille says. So Fieldglass had to help build a new connector for CN, and testing this connector is the last step in the implementation process. Latreille expects to go live in a matter of weeks.
Other areas where CN has unique requirements haven’t been nearly as difficult. In recoverables, for example, the railroad needed a unique report for situations when it repairs infrastructure located on city property and the government reimburses them for that work. This process requires attaching different documents, including daily worksheets and handwritten reports.
To handle this process, Fieldglass built new functionality which allows CN to provide a custom invoice, and created a connector enabling the company to attach documents.
“There were no issues there. It was a challenge, but a great success,” says Santarossa. “Fieldglass generated exactly what we needed to process into ECC.”
A CN train in Manchac, La. Image courtesy of CN.
This was a CFO-sponsored project, so CN is certainly expecting to cut into some of that nearly CA$1 billion contract spend by implementing Fieldglass. Where does the railroad hope to realize return on investment? By analyzing the data CN will receive through Fieldglass, the company will then gain greater visibility into its contract work.
Rate negotiation by comparing vendor benchmarks is one way Santarossa sees CN achieving ROI. “If one guy is installing 10 [railroad] ties per hour in Calgary, and a guy in Memphis is doing only eight [ties] with the same process, we can say 10 is the new benchmark,” he says. “We can also track time, and manage unproductive time.”
Santarossa adds there are a number of errors in CN’s vendor management process currently, and Fieldglass will help the railroad resolve those errors, validate rates, and make sure CN is paying the right price for the right contract job.
Going Forward—More Modules, Location-Based Contracting
While this initial rollout only targets the contract workers in the field, Latreille says there are plans to adopt Fieldglass in other areas of CN’s business—such as IT and HR. The field workers were the largest group, so they got first pass on the new VMS software.
Fieldglass has location-based contracting services, but CN is waiting to build up more data on its contractors before turning that option on. “The challenge for us versus other industries is that we don’t have plants—it’s a continuous railroad,” says Santarossa. “It’s not as specific as you think—maybe a guy in Memphis can go to New Orleans, or maybe you can get a guy in New Orleans who goes all the way to Memphis.”
With more industries planning to rely more heavily on contract workers, it’s likely many ASUG members will be taking a very similar integration ERP and Fieldglass journey to CN in the coming years. So I asked what advice Santarossa and Latreille have for their counterparts.
First, Santarossa is very glad CN took the time to define what it needed in a vendor management system before even looking at the offerings on the market. That work was key to getting executive-level sponsorship.
“You need to have buy-in from the top guys—we were changing a lot of business processes,” Santarossa explains. That eight-month preparation process ensured that there would be a good argument and a clear business case for purchasing a new system.
Latreille says the only thing he would have done differently is make sure to identify all the various integration scenarios up front. In that way, CN could have avoided redoing integration work by detecting earlier on in the process that the BAPI connector wasn’t going to cut it.
Overall, Latreille was happy with the work from Fieldglass on the project. “SAP [support] would have been an escalation factor, but we didn’t need to do that,” he says. “Fieldglass has been good to work with.”