LC International managing director, Mark Worrall, explains how businesses can effectively manage their supply chain, despite the current challenges facing the sector.
In construction, and in virtually every other sector for that matter, the supply chain is under immense pressure. Throughout the industry, businesses are struggling with the limited availability of materials, a spike in product costs, and an often significant increase in lead times.
Why? There have been a whole range of contributing factors. But arguably the most significant has been COVID. Last year, the pandemic shut down the biggest economies on Earth, creating enormous knock-on impacts that we’re still feeling now, like widespread shortages of skilled people and essential goods.
With not nearly enough materials to meet demand and difficulties with shipments, it’s meant that, in 2021, UK construction has been under unprecedented strain.
But despite the often bewildering array of difficulties organisations currently face, there are still ways around them. It might sound simple, but enhanced supply chain management can have a colossal positive impact on your business – and here’s how.
Getting to grips with your supply chain
As a high percentage of construction project costs link back to the products and services provided by the supply chain, it’s essential to make sure it’s fully functioning to avoid unnecessary financial losses.
To do that, firstly you need to really understand who you’re working with and how they fit with your business goals. Few businesses take the time to go through their suppliers and value streams with a fine-tooth comb, but it’s hugely valuable.
In fact, we’d recommend thoroughly assessing each of the businesses you work with. Are they a strategic, tactical or commodity supplier? Rank them in terms of how skilled and easy to work with the people are, and then review their process capabilities and performance against a set criteria. Also consider how important the product they provide is to your organisation or the project you’re currently working on.
From there, it’s simple – focus on building stronger collaborative relationships with your A-rated suppliers. Embed them in a structured way so they become an integral part of your supply chain – which, over time, will make you a preferred client of theirs.
As those partnerships build, they can offer you even better service, as well as valuable opportunities to innovate and improve. When two businesses comprehensively assess how they work together, they can identify performance gaps and areas to improve.
The construction industry isn’t exactly known for doing this kind of thing – but by stepping back, and looking critically at who’s bringing you the most benefit, and who’s causing you the most pain, you can quickly drive huge improvements in business and project performance.
Working more productively and eliminating waste
Focusing on value, not cost is an ethos that’s totally transformed other sectors – but its impact in construction has so far been limited at best.
Essentially, taking an overall value stream approach ensures that every delivery, installation and project phase takes place exactly when it needs to with appropriate quality products, thereby eliminating costly delays and maximising productivity.
If that sounds like common sense, that’s because it is – but it’s remarkable how little it’s applied in our sector.
As an example, we were called in to work on a project that was being held up by some of its suppliers. When looking at the production performance we found that it was taking the supplier 29 days to manufacture a plenum.
But when we analysed what they were doing, we found that across that 29-day period, there were only people physically working on the product and adding value for nine hours in total.
In other words, the manufacturing process could have been made radically more efficient – and if you build a culture where everyone is encouraged to identify these kinds of obstacles to productivity, quality or overall improvements, the collective impact can be huge.
So work to drive efficiency, and thereby quality and safety, in every aspect of the supply chain, feeding the projects you work on. Minimise manufacturing times, synchronise deliveries so they only arrive exactly when needed, reduce stock to free up valuable floorspace – and use the resulting savings to offer more competitive prices to your customers.
Resilient supply chains matter
If the last 18 months has taught us anything, it’s that resilience is key. Knowing what stock is where and having value streams and supply chains that can quickly adapt and respond to those unplanned and unpredictable events is what the construction industry needs. Unfortunately, it’s not there yet.
At LC International, we’re dedicated to changing that. We’ve helped dozens of world-leading businesses assess the suitability, capability and performance of their suppliers, introduce a value not cost philosophy throughout their supply chain, and achieve incredible improvements in overall efficiency.
If you’d like to learn how we can help you do the same, don’t hesitate to get in touch.