This whitepaper talks about the supply chain challenges in the construction sector and how TVS Supply Chain Solutions can support your transformation.
Efficiency Unleashed: A Blueprint for Transforming the Construction Supply Chain
Issued: Autumn 2023
www.tvsscs.com
Contents
Supply Chain Transformation For The Construction Sector: What Could Good Look Like?...............................................................2
How Can The Supply Chain Be Improved In The Construction Sector?.............................................................................6
Can Adopting a Transformational Approach to your Supply Chain in the Construction Sector Provide Growth?.............14
Supply Chain Transformation For The Construction Sector: What Could Good Look Like?
The UK construction sector faces significant challenges that impact its growth and operations. These are many, varied and include:
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Skilled labour shortages The construction industry struggles to attract and retain skilled workers including carpenters, electricians, plumbers and other specialised tradespeople. As older workers retire, there is a lack of younger workers entering the industry leading to a scarcity of this experienced qualified resource. Cost overruns and project delays Construction projects are notorious for exceeding their budgets and timelines. Factors such as unexpected site conditions, supply chain disruptions, regulatory changes and design alterations can lead to increased costs and delayed completion. Economic and market fluctuations The construction sector is sensitive to economic fluctuations, and, during times of economic downturn, demand for new projects decreases causing financial strain for companies in the industry.
Material cost and availability Fluctuations in the cost and availability of construction materials such as steel, timber and concrete can impact project budgets and schedules.
Regulatory and planning challenges Obtaining necessary permits and navigating complex planning regulations can be time-consuming and costly. Delays in obtaining permits can result in further impact to project programmes.
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Sustainability and environmental concerns There is an increasing focus on sustainable building practices and the need to reduce environmental impact. Meeting stricter environmental standards can require additional investments and changes to traditional construction methods. Technology adoption There is a growing trend of integrating technology in construction processes such as Building Information Modelling (BIM), drones and automation. Some companies struggle to adopt new technologies due to cost, lack of expertise or resistance to change. Safety and health risks Construction sites are hazardous environments and ensuring the safety and well-being of workers is a priority. It can be a challenge to implement safety protocols and maintain compliance with safety regulations. Quality control and project management Maintaining consistent quality across various projects and managing multiple projects simultaneously can be demanding. Poor project management leads to cost overruns and delays.
Infrastructure funding Inadequate funding for infrastructure projects at the local, regional or national level can hinder the development of much-needed public infrastructure.
Global events and pandemics Unforeseen events like natural disasters, geopolitical tensions or pandemics can disrupt construction activities, supply chains and workforce availability.
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To address these difficulties, the construction sector must adapt to changing circumstances, invest in technology and training, improve project management practices and foster collaboration between stakeholders to create a more sustainable and resilient industry. In short, the supply chain needs transformation.
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How Can The Supply Chain Be Improved In The Construction Sector?
Transformation of construction sector supply chains would lead to increased efficiency, reduced costs and better project outcomes. There are numerous strategies to achieve this. As an expert in the field, at TVS Supply Chain Solutions we utilise our knowledge to deliver improvement and efficiency through a combination of the following:
Collaborative Planning Encouraging better collaboration between all stakeholders including contractors, suppliers, designers and project owners. Involve them early in the planning process to identify potential bottlenecks and optimise the supply chain from the outset. (Project Management) Through our consultancy services, we provide a wide range of experts in Project Management who can work in support of your Project Management Office (PMO), or can actually become your PMO, bringing in expertise, best practice and innovation from other business sectors.
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Digitalisation and Data Integration Implementing technology solutions such as Building Information Modelling (BIM) to facilitate better communication, coordination and data sharing between project stakeholders. This helps in streamlining processes and reducing errors. TVS SCS has a dedicated team of individuals focused on product data management, controlling and managing data and images, and providing technical publications. This is wrapped around IT functionality to provide a customer friendly, simple to use e-commerce solution. Essentially online procurement with an ‘Amazon-style’ shopping experience. Spend can be limited and controlled though the portal and full visibility of management data analytics mean that informed decisions can be made about changing needs. TVS SCS are a global provider of outsourced supply chain management services. We deliver real outcomes for our clients in the form of innovative solutions focused on reduced operating costs through a series of value-added services. We focus on a wider holistic view of ‘total cost of supply’. We use a suite of in-house IT systems to deliver a fully integrated supply chain. Our Supplier Information Portal (SIP) is designed with the upstream supply chain in mind. It enables us to trade efficiently and flexibly with an extensive supply base across the globe and enables suppliers to share key supply chain information with us, and vice versa. The net result is up to date, real-time delivery information from each supplier – available at the touch of a button.
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Supplier Relationship Management and Expert Procurement Practitioners
Strong relationships with reliable suppliers are essential. Long- term partnerships can lead to better negotiation of price, more favourable terms and improved trust in the supply chain. Expert procurement support, whether in-house or outsourced, will improve your relationship with your supply chain. We use a category management approach to identify the optimum sourcing solution and drive the most competitive price and high- quality products. We understand and effectively manage products as a core capability, driving down cost throughout the supply chain for our customer’s benefit. This involves negotiation, supply chain review, product substitutions and rationalisation, OEM parts conversions, and product standardisation, with a continued focus on supplier rationalisation. Before any new items are introduced, they are subject to rigorous inspection by our engineering team, and approval by our customer. We are supplier agnostic, with no product range or suppliers forced on to a customer. Strong supplier relationship management ensures a partnership approach with the suppliers. This fosters a culture of continuous value delivery and continuous improvement and means that we not only offer our customer the specific products required, but also can identify alternative products that provide the same high quality, but at a lower cost.
Demand Forecasting
Employ data analytics and historical project data to forecast material and equipment demand accurately. This helps prevent shortages and overstock situations, minimising waste and cost fluctuations. We have our own in house demand forecast planning system – Msys.DFP. Our dedicated team of experts ensures that we manage our customers inventory needs in the most efficient way. We use a combination of systems and expert knowledge to accurately predict future inventory demand, to guide production, inventory management and business decisions. We use historical data and techniques including qualitative and quantitative methods to estimate future demand. Challenges include data quality, changing market conditions, and the need to account for seasonality and causal factors. Our advanced techniques, such as machine learning and improved data analytics, help us enhance accuracy. Our goal is to shrink inventory levels while improving inventory availability.
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Supply Chains and Inventory Management
We optimise inventory levels by using ‘ Just Right ’ principles. This means that materials are delivered when they are needed, reducing the need for excessive storage space and potential material wastage. The impact of Covid-19, the war in Ukraine and Brexit show that supply chain resilience is a strategic not tactical issue that affects not just customers and suppliers – but the whole industry and the wider economy. Logistics and supplier survival came to the forefront of the industry when suppliers could not meet their contract requirements due to material shortages or delayed delivery. This disruption is becoming the new normal and emphasises the importance of proactive supply chain management and collaboration. The supply chain needs to be able to rapidly react to volatility, uncertainty, complexity, and ambiguity. We help our customers to move the balance from ‘Just in Time’ to ‘Just Right’ . Relying on a small number of specialist suppliers of approved products and materials, many of which have been in use for decades, can lead to critical points of failure that affect impact the programmes and costs of large projects. The ‘Just Right’ challenge has brought the following to the forefront of the industry: • Management and mitigation of supply chain risk • Whole-supply chain collaboration • Demand forecasting and transparency • Contract management
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Standardisation and Modularisation
It is important to encourage the use of standardised components and modular supply chain techniques. This simplifies the procurement process and reduces the number of different materials needed for various projects. One way that we can support in key areas such as site mobilisation and demobilisation is by accurate planning ahead of a project go live. We use proven PMO principles to ensure the right inventory and materials are planned to arrive on the required on site date – and this is just part of the process. We have developed a site storage cube system, utilising steel containers that act as mini stores, stocked with a wide variety of essential items such as tools, light plant, PPE and even office equipment. We use our Mobile Stock Management system (Msys.MSM), to control the use of this material and replenish critical inventory direct to site throughout the duration of the project. We clean the storage cubes and restock them for a final time before they are put back in to service at the next project, reducing transport costs and CO 2 emissions.
Local Sourcing:
Whenever feasible, we source materials from local suppliers to reduce transportation costs and support the local economy. We have implemented new supply chains for our customers following damaging global issues such as Brexit, the Ukraine war and the blockage of the Suez canal. These issues had huge impact on traditional global sourcing, demonstrating the importance of providing alternative sources of products and material closer to our shores within Europe, and within the UK, so we can better offset the potential for further disruptions.
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Transportation and Logistics Optimisation
We optimise transportation routes and schedules to minimise delivery times and reduce the environmental impact of construction activities. We operate a control tower transport planning operation for many customers which can include inbound product and material management from suppliers overseas or the management of a variety of vehicle fleets across the UK. The benefit is a clear overview of the immediate requirements of a project and the future requirements. This allows us to source and implement the best transport solution at key project milestones. Ultimately, the efficient use of the transport resource supports better cost control and sustainability objectives.
Risk Management
We identify potential risks in the supply chain such as delays in material deliveries and we develop contingency plans to mitigate their impact on the project. Our Supplier Information Portal supports risk mitigation as it facilities open and timely communication with the supply chain and gives us forward visibility of any potential issues. Another critical area of our PMO solution is identifying and managing all areas of potential risk, at a local micro level and at a global macro level. ‘What if’ scenario planning early in the process means we can develop risk management strategies. We communicate these across all areas of the project so alternative plans can be adopted swiftly when needed, to minimise downtime or delay in transportation or purchasing.
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Sustainability and Green Procurement:
We emphasise sustainable and eco-friendly procurement practices by choosing materials and suppliers with strong environmental credentials. Across our diverse customer base, sustainability is becoming an increasingly important issue. We are committed to becoming a more sustainability-centred organisation and have taken positive steps to reduce carbon emissions. We have invested in solar energy for our buildings, encouraged the use of hybrid and Battery Electric Vehicles (BEVs) across our company vehicle fleet, and signed up to science based targets. We support our customers on their sustainability journey by working closely with them to make positive changes such as removing single use plastics from their supply chain.
Pre-qualification and Vetting
Establish a pre-qualification process for suppliers to ensure they meet certain standards in terms of quality, reliability and financial stability. Our supplier management programme ensures we only appoint quality suppliers who have the appropriate accreditation, capacity, financial stability and technical capability to meet the needs of our customers’ demands. We follow a robust methodology to identify potential suppliers and product which meets the fit, form and function requirement. We select the most appropriate supplier for each product at the outset to mitigate the risk of product quality and service performance issues arising.
Supplier Relationship & Performance Management
We use a supplier scorecard to objectively measure supplier performance against a pre-agreed set of KPIs. We then monitor their performance through a rolling programme of performance, service and quality reviews. We keep in regular contact with our suppliers, holding quarterly meetings to maintain a robust supply chain. We also flow down our use of continuous improvement methodology to the supply chain to drive innovation and better service levels.
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The strategies we use, outlined here, would bring a more efficient and robust supply chain to the construction sector. In turn, this would result in smoother project delivery and improved overall performance.
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Can Adopting a Transformational Approach to your Supply Chain in the Construction Sector Provide Growth?
Yes, transforming supply chains in the construction sector will certainly provide significant growth opportunities for the industry. By optimising and improving the supply chain, contractors can experience significant benefits that will contribute to overall growth and success, including:
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Cost Savings An efficient supply chain helps reduce material wastage, inventory holding and transportation cost. This leads to overall cost savings for construction projects, making them more financially viable and ultimately profitable. Time Savings Streamlining the supply chain can reduce project lead times, leading to faster completion. Timely delivery protects the contractor’s reputation and increases customer satisfaction, leading to more business opportunities. Improved Productivity A well-organised supply chain increases a contractor’s productivity. Materials and equipment are readily available when needed, reducing downtime and ensuring smooth project execution. Enhanced Competitiveness Contractors with efficient supply chains win more business. They gain a competitive advantage by proposing tighter construction programmes and more attractive cost structures.
Risk Mitigation A well-managed supply chain can help mitigate risks associated with material shortages, delays, and cost overruns. Predictability is increased and the likelihood of unexpected disruptions is reduced. involves innovation. Embracing new technologies can lead to process improvements and open up opportunities for further growth and development. Sustainability and Corporate Responsibility A transformed supply chain supports sustainable and environmentally friendly practices. As sustainability becomes more critical to clients and regulators, companies with green supply chains may attract more business. Innovation and Technology Adoption Supply chain transformation often
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Adaptability to market changes A flexible, agile supply chain adapts to market changes and economic fluctuation more effectively, allowing contractors to weather challenges and capitalise on emerging opportunities.
Market expansion By optimising the supply chain, contractors can potentially take on more projects simultaneously and expand into new markets, thereby increasing their revenue streams. Increased collaboration Supply chain transformation encourages collaboration between stakeholders. This strengthens relationships and leads to potential joint ventures or partnerships that drive growth. Value chain integration Integrating the supply chain with other parts of the construction value chain (e.g., design, engineering, maintenance) creates synergies and additional revenue opportunities.
We are uniquely placed to transform the supply chain in the construction sector. This can provide substantial growth opportunities for businesses in the industry. By optimising processes, embracing technology, and fostering collaboration, contractors can position themselves for sustainable growth, improved profitability, and increased market share.
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+44 (0)1257 265531 info@tvsscs.com
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