Supply Chain Management- Shackling Choice or Securing Success?
Choice – We all want it, we all expect it, from choice of lifestyle to coffee, choice is considered a fundamental freedom and when we perceive it to be limited or restricted we don’t like it.
And yet we recognise that in society we need rules to regulate the range of choices we can make, to protect us from making bad ones or becoming casualties of the bad choices of others.
As main contractors one of the most important choices we make on a regular basis, is the selection of the subcontractors we will be working alongside on site to deliver our value proposition to our customers.
The competencies of these subcontractors directly impact on project safety, quality, cost and time, so it is little wonder that any perceived restriction of subcontractor choice raises considerable concerns within our project management teams.
I guess one of the problems with pitching the subcontractor selection process solely at project team level is that we need the support of subcontractors much earlier than when we get to site and long after completion of the construction phase.
Our Bid Managers will need early advice from key subcontractors on programme and logistics of potential projects.
Our Estimators require multiple tenders for each package for market testing, so that we compile a credible tender for our potential customers.
Our Subcontract Buyers will further challenge the supply chain as they endeavour to let subcontracts below the EDF budget allowances set by the QS.
Post PC our Aftercare Team need responsive subcontractors to help meet our warranty and defects period commitments.
We must also consider the supply chain members themselves, what motivates them, what they want from their customer relationships and what will elevate Osborne to be their ‘preferred’ customer.
The challenge is to develop relationships with subcontractors with the capacity and capability to meet our respective service requirements and this is the primary objective of the Supply Chain Management function.
To ensure that supply chain development is informed by our functional stakeholders (including Commercial, Operations, Pre-construction, Design and Aftercare) we have formed a cross functional Trade Management Panel (TMP) who are the final arbiters of adds and omits to our Subcontractor database.
By profiling subcontractor business capability, collating performance feedback from our business and our Subcontractors, the Supply Chain Manager works with the TMP to populate our subcontractor database with particular focus on promotions and relegations between our ‘Preferred’ and ‘Approved’ categories.
Our 44 ‘Preferred’ category subcontractors covering 15 trades represent our most trusted and reliable partners, but such positions are a privilege not a right and subject to continual performance measurement to validate them for ALL parties.
Our ‘Preferred’ subcontractor performance statistics demonstrate that our Supply Chain Management regime is delivering significant improvements:
• Builders Profile compliance for subcontractors working on our sites has improved from 39% in March 2015 to 93% in August 2016
• Tender return rate for Preferred subcontractors at 95% compared to the overall average of 63%
• Performance scores by projects averaging 75% for Preferred Subcontractors compared to overall average of 63%
• Aftercare reporting significantly better response rate to service calls by Preferred Subcontractors
• Our Supply Chain Management team is self funded by our Trading Agreement Management Fees.
Supply chain management is a continuous journey on which the Supply Chain Manager is the navigator but it’s the stakeholders at the helm.
So we can be passengers and see where the journey takes us, or we can place our hands on the wheel by contributing to the process and determine our supply chain destination.
Surely that choice is an easy one?
John Robeson is the Supply Chain Director for Construction at Osborne.