PowerPoint Presentation

Supply Chain Development

John Clement / Ian Widdrington (CFW Consultants)Iwan Duoll (Partner Berry Smith LLP)6th October 2015

Sourcing Requirements and DefinitionsDeveloping and Managing your Current Supply ChainAwareness of Contractual issues in Supply ChainsWorking on a Project or Framework based Supply ChainPerformance Measurement in the Supply ChainCustomer ValueAgenda

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Supply Chain Development

Construction Excellence Model

In simple terms:

the sequence of processes involved in the production and distribution of a commodity.

Supply Chains

Schematic Supply ChainGroundworksFabricationBuildM&EFinishesFacilities ManagementBrickworkModular / Off Site / MMCArchitectsStructural EngineersSite ManagementSecurityEtc.

DesignMaterialsFabricator/WeldersFinishers e.g. GalvanisersCraneErectors

UBUC AnglesFlatsBolts SheetingPrecast ComponentsWelding ConsumablesPowerPPEetc

Client Main Contractor

Sub-Contractors and Suppliers

The Fundamental Building BlockSUPPLIERCUSTOMER

ANTICIPATERESPONSEOUTPUTREQUIREMENTS

ExerciseWho Are your Suppliers?

How did you Recruit them?

(In table groups for 10 minutes)

The Supply Chain

Internal Supply Chain

Dont Forger Your Company - Internal Customers and SuppliersYour Company

Needs and Pressures In Supply Chains

SafetyCompetitive PriceCompetenceComplianceReliabilityResponsivenessEnvironmental AwarenessCI & InnovationPayment OTIFSafe Working EnvironmentFuture Business

PressuresClient DemandsFinancialDelaysOther SuppliersProject Slippageetc PressuresSpec ChangesFinancialDelaysT#2 SuppliersUnforeseen Snagsetc Contract

..+ Collaborative RelationshipsSUPPLIERCUSTOMER

OUTPUTREQUIREMENTSNeeds and Pressures in Supply Chains

Service Levels In Supply Chains

Trade Off Between Stock and Service

WorkforceOr StockServiceLevel Issues

Profit

WorkforceOr Stock Trade Off Between Stock and Service

ServiceLevel IssuesProfit

WorkforceOr Stock Trade Off Between Stock and Service

ServiceLevel IssuesProfit

Labour Lean Mater ial Inventory

Overhead

Payment

LoansTank of FundsClient ProjectsCash FlowDiagram

Client ControlYour Control

< 30 WorkingDays

Cost Reduction InitiativesBest In Class:82% accuracy in forward planning beyond 3 months97% of orders are OTIFCash Out Cash In 26 Days2x more likely to collaborate with Customers on a strategic levelUnderstand trade off between Stock and Service Level

Construction ContractsCost Plus Reimbursable/Re-measurableLump Sum ContractsDesign and BuildTurnkeyDesign and Build and Operate

Increased Supplier Pressure Usually: NECJCT

Carillion Video

Sourcing and Measurement

Potential Supplier SourcesCurrent SuppliersSales RepresentativesConstruction Futures Wales Meet the Buyer & EventsInformation databasesExperienceTrade Journals / AssociationsTrade DirectoriesIndustrial Trade Shows / ExhibitionsSecond-Party or Indirect Information (CIOB, Linkedin etc.)Internal sources or external contactsInternet Searches

ExerciseDo you currently measure supplier performance?What measures do you have?What does good look like?Do you use your findings?Do your customers measure your performance?

Measuring Supplier PerformanceQuality Cost DeliverySafetyEnvironmentInnovationResponsive To ChangeAccreditationsCommunity Benefits

An enterprise should measure supplier performance because:

You cant manage what you dont measure. If you measure suppliers, they will improve. You can uncover and remove hidden waste and cost drivers in the supply chain. You can facilitate supplier performance improvement. You can increase competitiveness by shrinking order cycle times and inventory levels. You can make informed business decisions that impact the enterprise.Why Measure Supplier Performance?

Chartered Institute of Procurement and Supply (CIPS)

SafetyQualityCostDeliveryCompletionEnvironmentMoraleAccreditationsReal Time By Model CostingKPI Design

Importance to CompanyAnnual SpendItems used in products which contribute greatly to sales or profitItems used in a large number of productsItems used on a bottleneck resourceItems used in a new product, which is vital to future growthCost of non availability is highOthers?

Supply ComplexityItem is in scarce supplyThe pace of technology change is highImpossible to use an alternativeBarriers for a new supplier to enter the market are highLogistics cost of buying item is highSupply RiskLength of supply chainSpend with supplier is low

ComplexityHighLowHighLowNon-Critical

Handle EfficientlyBottleneck

Ensure SupplyStrategic

CooperateImportance(, Critical, Scarce)Supply Chain Risk EvaluationLeverage

Exploit Market Potential

Recognise Need For Supplier SelectionPurchase Order Received/Won ContractNew Product Development/IntroductionDont have skills or amount of resource requiredCurrent Supplier not supportive of your companyPoor Supplier Quality or DeliveryReduce RiskReduce Cost

Vetting SuppliersEOIPQQFinancial StatusCapability to do the jobQualifications / AccreditationsExamples of workSupply Chain for this ProjectSupply Chain for 3-5 Years+

Methods of Supplier EvaluationCompetitive tenderingEvaluation of supplier provided informationUse of initial surveySupplier visitsUse of cross functional teamUse of preferred suppliersCurrent performance dataExternal or third-party informationE.g. Dunn and BradstreetEvaluation of sample products

Key Supplier Evaluation CriteriaManagement CapabilityPersonnel capabilitiesCost structureTotal quality performance, systems and philosophyProcess and technology capabilityEnvironmental regulation complianceFinancial stability and capabilityDelivery performance and planning systemsE-commerce capabilitySupplier purchasing strategiesLong term relationship potential

Collaboration in Supply Chains

Exercise Toxic WasteRulesTo Safely Transport the Toxic Waste from Point A to the Decontamination Zone B.Use the given Removal DeviceDue to toxicity dont get too close, hold string 6 (150mm) from the endIf you drop the Toxic Waste go back to the startPlan and work collaboratively to complete the task as quickly and safely as possible

Supplier Development

WorkshopsValue Stream MappingCost DownLeanContinuous ImprovementCollaborative working / TeamworkAssisting Supply Chain to achieve Certification/ Accreditations

Customer Value

Building Customer ValueTwo Faces of Customer ValueValue of Companyto CustomerValue from Customerto Company

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Customer Value

Building Customer ValueValue of Companyto Customer

Value of Products & ServicesQualityCost (Parts, UK Landed)Flexibility & SpeedComplete Business SolutionValue of RelationshipTrustKnowledge & ExpertiseResponsivenessConvenienceValue of the BrandConfidence (Investors, Suppliers & Customers)Deliver PerformanceImprove Processes & SystemsMaterial Control & CD programmePromote C.I.Develop Organisation

Foster Customer RelationsProfessionalism & DeliveryUse All Resource & Develop more

Protect the BrandChoose the Right CustomerChoose the Right ProjectsPriorities

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Value from Customerto Company

Cash InHealthy Balance SheetInvestment for the FutureGrow Company ValueSupport Local Economy Customer ImpactKnowledge Gained from CustomerCustomers Influence on OthersRecommendationsCustomer Lifetime ValueLong Term PartnershipsDrives Continuous ImprovementAppropriate MarginsOnly Value Adding CustomersDisinvest when NecessaryPromote Our After-Sales ServicesFocus on Existing ClientsInnovate Products & ServicesMarketing by Customer Case StudiesActively Seek Referrals

Formalise Assessment MethodManage / Influence Product LifeUse Data to Drive C.I. Programme

Building Customer Value

Priorities

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Workshop Close

Any Questions?

John 07795 623189john.clement@enterprise.uk.comIan 07717 862797ian.widdrington@enterprise.uk.com

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