Supply chain collaboration is a must-have

Improved management and performance of supply chains are central to the growth and prosperity of the UK construction sector in a period of expansion

It’s not all bikes and daisies. Chains come in many forms, with many applications. For business, the thinking that puts the “chain” in supply chain varies greatly depending on perspective. Associations range from positive to negative: from value and security, custody and command, to gangs and modern slavery.

For the construction industry, the one word that has not traditionally been mentioned in the same sentence as supply chains is “collaboration”. However, change is in the air and currently on the lips of clients and contractors.

Behind this cultural shift towards more collaborative behaviours, sit a number of underlying factors, explains Carillion chief sustainability officer David Picton. “It is partly, as the economy starts to pick up, that workloads increase and capacity gets squeezed, partly a positive drive from clients and government, and partly a clear recognition of the benefits of sustainable, responsible business,” he says.

There is, though, still a lot more talk than walk, according to Shaun McCarthy, chairman of the Supply Chain Sustainability School, with formal agreements proving part of the problem. He says: “If I had a magic wand I would tear up all the forms of contract we have in the industry now and start again. I would draft something similar to the Heathrow Terminal 5 agreement that allocates collective responsibility, risk and reward to all the businesses contributing to a project. This would require collaborative behaviours. What you contract for is what you get.”

Construction statistics

Mr McCarthy can, however, identify two potential agents for change. “Properly implemented and with training for all players, building information modelling could be a game-changer,” he says. “I would hope this would lead to greater efficiency and enable collaboration between partners delivering a project around a common dataset.

“The other big change is building off-site. The move to creating most of a building or piece of infrastructure in a factory should make us radically rethink everything. Planning and integration of a closely aligned supply chain will be critical to success.”

Interactive technology, data sharing, knowledge transfer and sector-wide training are all key components of a new integrated and industrialised business model for construction, as championed by the Supply Chain School. With more than 8,000 member companies, plus 19 of the top 20 contractors as partners, the school itself is evidence of a positive attitude and approach to collaborative working that simply did not exist in the sector ten or even five years ago.

Critical to this spirit of openness and sharing is transparency. Transparency and supply chain traceability go hand in hand and form foundations of corporate social responsibility (CSR) strategies, both within construction and among its clients.

Professor Jacqueline Glass, who leads on the Action Programme for Responsible Sourcing (APRES) at Loughborough University, sees ethical sourcing as an emerging trend, powered by accountability demands made on and by global construction companies. “We are a little way off ethical sourcing being business as usual, but there are signs,” she says. “It is an appropriate risk management strategy for companies with complex, extended global supply chains. They see ethical sourcing as a talisman for the CSR agenda. It is definitely a hot topic.”

In response, APRES is developing An Ethical and Social responsibility Portfolio for construction professionals (AESOP). This groundbreaking supply chain initiative will both publish an Ethical Design Guide and host a multi-stakeholder “hackathon” to co-create a Manifesto for Ethical Sourcing in Construction.

Professor Glass is realistic about the scale of the ethical challenge facing firms, whether world players or local traders. “While you could point the finger at major companies, simply on a volume basis, the unquestioning purchasing going on every day in builders’ merchants is a hotspot. The lack of labelling and product information means tradespeople can’t actually make an informed decision. Merchants and their suppliers need to step up their game,” she says.

For Ian Nicholson, managing director of Responsible Solutions, lead authors for the Ethical Design Guide, it is a question of turning good intentions into better specification. “Ethical sourcing within construction has to date been led by major contractors seeking to protect their reputations. They currently do this with one arm tied behind their back because the topic has not yet made it into mainstream specification writing,” he says.

A commitment to ethical sourcing will surely strengthen tender bids – it will be a differentiator

This specification gap introduces a disconnect between the worlds of architecture and supply chain management, both of which he sees as still having a lot to learn. “Ethical sourcing has so far only really tackled products with short supply chains,” he says. “The journey started with bulk products, such as stone and steel. I believe there are much greater risks in the more complex mechanical and electrical supply chains, and these have not yet been met head on.”

In the wake of lessons learnt in the fashion industry from the tragic events of the Rana Plaza factory collapse, there are concerns within construction that it could take a comparable, high-profile and fatal breach in supply chain operations to shock the industry into action.

There are, however, many good lessons to be learnt as well from expertise in other sectors, explains Plan A project manager Lydia Hopton, who heads up ethical sourcing in property and store development at Marks and Spencer. She says: “There are sectors where ethical sourcing has been top of the agenda for decades, and we are working in collaboration with our colleagues in general merchandise and food to ensure we learn from their experiences.”

Ms Hopton is also open about direct business benefits in prospect for supply chain contractors and suppliers. “It is clearly an opportunity and, as the industry develops in this field, it will become even more robust and attractive to new business and talent. A commitment to ethical sourcing will surely strengthen tender bids – it will be a differentiator,” she says.

As can be inferred from key industry initiatives on sourcing and design – a manifesto and a guide – the construction supply chain is still very much at the start of its ethical journey. However, the direction of travel is plain for all to see. As Professor Glass is wont to say: “The only way is ethics!”