Bigger or better? - taking the supply chain with you
The client is a £76m construction company bouncing back from a financial crisis. Pre-crisis turnover had dropped from £80m to £44m and the company had gone through the associated pain of that transition. Management and revenues had now recovered and the company were on target to deliver sales of £120m in the current year.
The plan is to expand the business to £250m and the company had recently been split to 3 separate divisions, each with their own MD and associated senior teams, in order to facilitate this ambition.
The company had recently experienced a number of problems and required assistance with the identification of their root and contributory causes and thereafter the implementation of practices and procedures to ensure the problems didn’t recur.
The problems included:
- Contract risks not being properly identified prior to tendering
- Site risks not being identified and properly managed
- Poor management of sub-contractor delivery performance.
The approach and the solution
Over a period of 4 months Statius consultants worked with the senior team to:
- Devise a series of short workshops, attended by the three MDs and associated staff, to review the current tender adjudication, site risk and supplier management processes
- Analyse the frequencies and costs of the “problem issues” encountered, prioritise them and plan for their elimination
- Make the required process changes
- Train staff where required
- Review the changes at 3 and 6 month intervals to review their effectiveness
A variety of changes were made to current practices and procedures which included:
- A review of the current sub-contractors identifying those with the capacity to grow alongside the company
- As a result, the development of a structured sub-contractor system where each contactor was rigorously assessed and categorised as either; partnered, preferred or authorised
- The introduction of additional, and more robustly applied, controls into the sub-contractor approval processes
- The introduction of a more robust end of job review process to assess and apply company and sub-contractor “lessons learnt” which fed back into the supplier evaluation processes
- The introduction of an IT solution to capture, record assess and share sub-contractor monitoring information
- The implementation of a sub-contractor academy to support partners and assist in their growth
As a result a number of benefits were derived from the project, for instance:
- The previously adversarial culture was replaced with a more mutually beneficial approach
- A more holistic view of the sub-contractors’ current workloads was developed eliminating “overloading” and the associated performance issues that had previously been arisen
- A significant reduction in sub-contractor “surprises” along with an increase in margin for the company and the partnered sub contract base.
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