Supply chain management is used by many businesses to improve the value they deliver to their end clients. But, how relevant are the tools and techniques of supply chain management to estimators?
Supply chain management is defined by Constructing Excellence as “the streamlining of a business's supply-side activities to maximise customer value and to gain a competitive advantage in the marketplace”.
As an MEP contractor or consultant, decisions you make early in the process affect purchasing decisions further down the line. Although many decisions are made up-stream as part of specifications activities, ultimately who you buy products and services from is determined at first cut by the estimator.
Secondly, many decisions about whether work will be done by your own workforce, or will be subcontracted to other companies will be made firstly by the estimator. This places a lot of day-to-day supply chain management and control responsibility in the hands of those doing the estimating within your company.
Many companies already engage in activities that help them to improve value within their estimates and value engineering activities are commonplace in successful organisations. Supply chain management is more than this though. It is about companies working together to engineer the best value they can for the end customer. It is not necessarily just about price. It can be about service and delivery too.
Supply chain management is about linking companies together on projects for a common single end client. Each company working in the chain has a client, but the overall project also has a common single client whose interests they work towards.
In a more traditional setup, there is no real driver for a supplier to work for the end client. As long as they sell things to their clients at a profit then that is considered business success. Considered over a more long-term situation though, there is little motivation for a client to work with a given supplier on an ongoing basis, other than price. In an environment where supply chain management techniques are being used clients and suppliers develop a long-term relationship that financially benefits everyone in the chain and delivers increased end-client value. In turn this means end-clients are more likely to return with repeat business.
So how do you begin? You can’t do it all at once so start with those suppliers and subcontractors who are instrumental in helping you to provide high quality products for your clients at good prices. Check that they are also keen to develop long-term relationships and begin from there.
As you start to establish deeper relationships, check that the companies you are working with are committed to continually improving the way they work and the service they give to you and the end user.
At the end of the day, the aim of supply chain management is to deliver better value to the end client than competing companies/supply chains. There are always ways in which processes can be improved to improve profit and those between companies are often full of opportunity.
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