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The Supply Chain: Chain Reaction
“A supply chain is like a tree full of monkeys: if you are at the top you look down on smiling faces; if you are at the bottom, however, the view is not so encouraging.” This lovely simile enlivened the latest forum of Collaborating for the Built Environment (“Be”), which met to discuss the supply chain as seen from the lower branches. We heard much to convince any client, consultant or contractor that we pay a very high price for our culture of tendering after design is done; the highest building costs in Europe in fact.
If only we chose our suppliers before detailed design and collaborated with them, we would be getting their good ideas while they could still make a difference. Suppliers often have a better solution to a specifier’s need than the consultant’s proposal, but there is little point in suggesting it as the savings could not be realised by the time they are asked. The supplied items could very well be more economically sized, bought in bulk at baseload costs and transactions handled electronically. Poor site-level procurement often wastes half the cost of each order from merchants by buying at the last minute in penny numbers, causing wasteful journeys and paperwork.
The fully integrated supply chain management message, complete with electronic collaboration tools, offers to cut deeply into the internal costs of design, documentation, materials and overheads, saving energy, cutting waste, reducing defects and increasing profits while potentially increasing design quality.
Why don’t we do it then? Discussion groups in the Be forum came up with long lists of barriers to supply chain collaboration: lack of recognition of the business case; inability to perceive value and therefore waste; lack of trust; short-termism; professional rivalry; threat to the specifiers’ position; lack of hard data; lack of team continuity; perverse incentives; the list goes on.
We called for better information to make the case, for publicity for the few examples of good practice, for a code of conduct for Be members when working together in a supply chain. We also called on ourselves to give a lead.
One obvious action to get out of the rut is to stop treating all customers equally. At present good customers subsidise bad ones. Good ones don’t get the discounts they deserve for saving their suppliers’ money. Bad ones don’t pay the costs of their wasteful tendering, changes of mind and poor ordering. The notional fee scale is as much to blame as the formal price list. Goods and services should be priced to suit the quality of the buyer, with poor customers penalised or avoided. Lean design and construction relies on established supply networks and good practice: why let poor customers push you back into inefficient ways? Yet most architects continue to welcome poor customers who offer profitless turnover for us and buy badly but aggressively from construction. We fear losing these monsters to rivals and having nothing to do. We are all buyers or sellers to someone.
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