Your reputation depends on your supply chain – so how do you get the best from it?
We don’t own them, we often don’t know who their people are, and yet our performance will be judged based on their activities. Subcontractors and suppliers are two of the key constituents of any project, but how well and how much does the main contractor and its team know about these vital ingredients?
At Simons we have been trying to achieve a cultural shift in the way that our teams work with subcontractors and suppliers. We are trying to get away from the “Oh, that’s the subcontractor’s fault” mentality, as if they are not part of our team. We are trying to get the suppliers to really buy into the working method that each client or product sector requires, and not just think that all clients and contractors are the same. We are also trying to make clear that clients and consultants view the performance of subcontractors and suppliers as part of our overall service. In other words, if they fail, we fail, and if they succeed, we should succeed. So is there a magic recipe that can deliver this kind of understanding?
Of course, if you are working in a limited geographical area, you tend to build links with suppliers that have helped you successfully deliver projects, whatever the skill – M&E, specialist joinery, plant or, on larger projects, cladding, specialist floors or painting and so on. Getting to know the supplier is easier if they are local, but it still does not guarantee your team knows them well. It may be worth asking how often they have visited your suppliers’ offices, seen what their systems look like (not on site, but back at the ranch) and checked out their latest financial status. From our experience, it’s surprising how many conversations start with: “Do you know, you are only the second contractor to visit us this year!”
That’s OK for local suppliers and contractors, but what about when you are working in unfamiliar parts of the country? We try to do lots of work for a few national clients, which takes us up and down the country from Scotland to Cornwall. We have developed a group of partnered suppliers with which we work closely and are flagged up as the “first choice” for our teams to use – as long as their geographical coverage matches our project requirement. But it’s not just being able to cover the patch that’s important. We need to know that they have the capacity and the experience of working successfully, preferably with that client (if not within that product area), and that they have a team we know can deliver. And then, of course, we need to know that their price will fit the project plan.
That’s all very well from the main contractor’s point of view, looking at the supplier. But what about the other way round? What do your suppliers really think about working with you? Have you ever asked them? If so, did you really listen, or just assume that their comments and criticisms were the normal whinges of the supply chain? Have you ever benchmarked your performance against your competitors’, and found out from your suppliers who they really do want to supply in a push? How honest do you want to be with your team and yourself?
We are trying to get away from the ‘Oh, that’s the subcontractor’s fault’ mentality, as if they are not part of our team
We recently held our fifth annual supplier day. One of the key charts we show is how well our suppliers think we have done in the past 12 months, and then how our teams think the suppliers will answer is superimposed on the chart. It is always interesting to see where our team members think the supplier team members will be. But if you don’t ask, and are not set up to listen, you will never learn.
All of these supply-chain techniques are well understood in a lot of other industries. Go to any repeat-order or manufacturing-focused business and explain this method of improvement – they’ll look at you as if you’ve just arrived from another planet: “Don’t you do all of this already? We’ve been doing it for 20 years!” But better late than never …
What is the prize that awaits those companies prepared to put the time, effort and investment into really understanding their supply chain?
The answer must be more control, more predictability and better risk management.
Paul Hodgkinson is chairman and chief executive of the Simons Group.