Smarter Supply Chains- Engaging From the Start
“In 2016 it was reported in the press that subcontractors said that main contractors needed to do more to make procurement and contracts simpler. And this was the response, from the contractors – “it’s not us, it’s the client – it’s just the way it is”
The construction sector is characterised by high upfront costs, and for this reason unpaid work and debts that cannot be recovered are serious issues for both contractors and subcontractors. If unresolved it then impacts businesses cash flow, which has the knock on effect of preventing subcontractors and their subcontractors from being paid. The risk is that it causes a ripple effect and in some cases serious repercussions throughout the supply chain, not just for the project but for future involvement with the supply chain and perhaps leads to increased cost.
We often talk about early engagement with our customers, but do we pay enough attention to our supply chain partners and engage them from the start?
It could be said that there are two things we, as an industry need to focus on more. Firstly, the need for all tier 2 and 3 supply chain partners to engage early, involve customers at the start of contracts to get the best project outcomes. The second is to build trusted relationships and be able to have honest, open and sometimes difficult conversations. Engagement is the name of the game here.
Why would supply chain partners want to work with us?
Hopefully its not just about competitive prices but more about the valued working relationships, visible and continued work stream and fair trading conditions which comes from trust and honesty- the hardest thing to build, but the quickest thing to lose.
To us, all our supply chain partners mean more than just buying a service, it’s about valuing their specialist skills and engaging them at the earliest opportunity to deliver the very best project outcomes for our customers, whether that’s a building or an infrastructure scheme.
Carrot rather than stick?
As we move up the tiers – does our reward culture need to take the form of a bonus style, rather than a penalty style? If so lets work to build it into contracts early on and build in separate KPI’s into their delivery.
The thinking is that if we get this right at the beginning of the process, we could evaluate how much time and money we have saved the customer and ourselves at the end of a contract.”
Mike Todd is the Lead Business Development Manager for Infrastructure at Osborne.