4 Steps to Reducing Risk in Your Construction Supply Chain

Topics: Supply Chain Management
 

Peel the lid off many a construction firm and you are likely to find a myriad of software applications working alongside the unreliable excel spreadsheet to ‘manage’ the supply chain. But in a world where industry experts are telling us to expect record amounts of restructuring, especially in the lower tiers of the supply-chain, is that good enough? Here are our 4 steps to reducing risk in your construction supply chain.

What is Supplier Management? 

The Chartered Institute of Procurement & Supply (CIPS) say “to manage a supplier is to assess their capability to meet your contractual needs and to measure their performance during the contracting period” but how does this translate into day-to-day activity and how do you ensure you choose a software partner that empowers you to finally get rid of those risky spreadsheets?

Elements of Supplier Management

1. Sourcing

Whether you need to find a supplier to replace an under performer or a firm that has failed, or to meet bid requirements that ask for a local or small to medium enterprise workforce, the process can be time consuming.

Choosing an industry specific software provider who already has a large community of construction supply-chain members is a must. This will ensure you can easily source by trade, location, contract or company size meaning you can quickly find the right partners to progress to the next stage of assessment.

2. Onboarding and Pre-Qualification Assessment

Ok, so you have found some firms that look like they match your requirements.

This is where the serious part starts in which you need to ensure they are really ‘fit to supply’.

Most companies in construction have adopted Build UK’s construction industry standard question set – the Common Assessment Standard. If you choose the right software provider, their pre-qualifying questionnaire will already be aligned with this, which means you can be assured that you are capturing the right information. Even better, they will have partnerships with these 3rd parties to pull data from their assessments into an overarching supplier management portal.

Many companies tell us they ask for more project or trade specific information than their outsourced providers offer, and this is often held outside of the system they use for initial checks. Make sure your provider allows you to tailor your questions by adding in the things that are important to you, or, if the trade is deemed low risk (like a soft-services provider), give them a shortened questionnaire that is pertinent to their business.

It is also important to ensure that any supplier management software that you bring into your business has built-in workflows so you can easily collate approvals from other departments in one central system. This will ensure that all members of your procurement team have full visibility of the status of supply-chain members, helping you to avoid rogue or risky spend.

3. Ongoing Risk Management

So now your supplier is onboard, how do you ensure everything remains up to date?

With the number of seven-figure fines handed out for health and safety contraventions over the last 18 months having soared, the risks associated with having a supplier on site without insurance or the relevant health and safety accreditation or knowledge is huge.

The ability to automate chasing time-bound documents like insurances, health and safety accreditations and trade associated qualifications is essential. It is paramount that the software provider partner you choose automatically prompts suppliers to update and upload their new documentation, as well as automating reports to alert business operations of any potential risks with out-of-date information.

4. Performance Reviews

And finally, all too often performance reviews are overlooked as there is no central way of storing information that can be shared both within your business and with the wider construction supply-chain.

Whether it’s a problem on site, lack of communication or outstanding documents, a breakdown in relationships can lead to the loss of a good supplier which is costly and time-consuming to replace.

By using these performance scores when searching for suppliers for new projects, you will be assured that you are selecting the best performing suppliers for each job.

Any supplier management software package that you choose should also allow you to schedule performance reviews, whether that be on-site via a mobile app or in the office (or at home!) at your desktop, providing full visibility and transparency across your business.

You can have it all

As you can see, there are many elements involved in supply chain management and many construction firms choose multiple software providers to assist them at each stage, whether that be sourcing, pre-qualifying, or managing performance.

But, if you choose wisely, you can have all of those things in one solution which allows you to:

  • Search your own supply chain as well as the wider industry's.
  • Combine 3rd party assessors’ data with your own.
  • Manage performance and cycle that back into sourcing and selection strategies to drive performance across your supply chain.

Causeway's Supplier Management solution empowers you to do all of the above and more, helping you to to improve the efficiency and reduce the risk of accrediting and managing a supply chain, whilst helping to select the best accredited suppliers. Watch our OnDemand supplier management webinar to learn more

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