Many organisations now have as much as 80% of their turnover that rely on buying in goods and services (CIPS: Positions on Practice). Even in the Construction Consultancy Services environment the reliance of sub-consultants can be as high as 60%. This demonstrates the vital role that effective supply chain management (SCM) has on ensuring commercial success. However, its actual impact and importance is often misunderstood and underestimated. It’s often oversimplified and described as buying what you need for when you need it and at the best price but it’s so much more than this.
Effective SCM provides assurance and reduces risk for a business and their clients. By regularly pre-assessing sub-consultants in critical areas such as finance, legal, quality, health and safety and the environment, there is a reduced risk of failure or poor performance during project delivery. SCM ensures that new legislation including compliance to the Modern Slavery Act and Cyber security risk are picked up earlier and managed effectively. Failure to comply with legislation could prove very costly for businesses for example, under proposed new laws for Cyber Essentials, organisations could be fined up to £17m, or 4% of their global turnover for having poor cyber security.
As well as supply chain professionals ensuring existing guidelines are adhered to, they also keep abreast of legislation changes and flag up anything which could impact on the supply chain, thereby reducing risks and ensuring compliance proactively rather than reactively.
An effective Supply Chain Management function encourages and promotes collaboration, not only between buyer and supplier but also throughout the entire supply chain
Performance management reviews are another key role of the supply chain function. Key performance indicators (KPI’s) are set and measured by the supply chain manager as part of the Service Level Agreement in buyer and supplier contracts. KPI’s include the standard measurements of time, cost and quality but can also include subjective measures such as innovation and cost saving initiatives. Underperformance of the supply chain affects not only project performance but also damages the reputation of the contracting organisation.
An effective SCM function encourages and promotes collaboration, not only between buyer and supplier but also throughout the entire supply chain. The supply chain manager, as part of the supply chain audit function, shares best practice across the whole of the supply chain network. Along with collaboration, this creates an environment for continuous improvement. To further deepen and strengthen the relationship between all parties, the sharing of organisational strategies and visions are encouraged and as a result, alignment of targets and objectives often occurs so all parties end up working towards one common goal.
Best Practice Supply Chain Management
Faithful+Gould work with a supply chain of over 400 organisations who offer full design capability and provide national coverage with regional delivery. The supply chain consists of a mixture of organisation sizes including SME’s and micro businesses. Given the complexity and size of our supply chain it’s important that the relationship is managed effectively to maximise the benefits to both parties. Faithful+ Gould has a CIPS approved supply chain team that has developed a SCM process that incorporates tools and systems to meet the supply chain demands of any organisation. These systems and tools ensure improvements in the following ways:
Information – They provide reliable and real-time data to develop and manage category strategy plans.
Resource – Having the most accurate information to hand ensures that the supply chain and procurement teams work effectively to create time and cost savings alongside exceptional quality levels.
Process – This is all backed up with commercial and best practice documents and proven processes to minimise risk and provide assurance.
All these element raise awareness, create trust and ensure greater reliance on the SCM teams.