SUMMARY OF THE "HARNESSING THE POWER OF SUPPLY CHAINS" WORKSHOP

Couple of months ago I attended a one-day workshop organised by ECI (European Construction Institute) to discuss how the three key actors in EPCM (Engineering Procurement and Construction Management) supply-chains (clients, contractors and specialist subcontractors) can work together to improve overall supply chain performance, productivity, relationships and value aspects of their inter-firm supply chain engagement. The workshop was attended by 26 delegates where equal number of professionals from client, contractor and sub-contractor groups were present. Majority of attendees were senior level executives, regional/company directors who had a background in Petrochemical, Oil and Gas, Nuclear and Energy Industry operations.

After introductory speech by Clive Winkler of ECI, the workshop kicked-off with a number of presentations about how to improve productivity and gaining competitive advantage through better aligned supply chains.  Chris Bird who is the Operations Director of Endeavour Energy started the presentations by discussing how to reduce risk and cost over-runs in projects and improve value through good working relationships in supply-chains. Steven Johnson who is Supply Chain Manager of AMEC Europe gave insights into AMEC’s approach to engaging with their selected suppliers and getting them involved earlier in the project and the benefits they derived from such good practices such as reduced workload in engineering and procurement, added-value, reduced risk and end-user satisfaction. Mark Armstrong gave his viewpoints on subcontractor productivity improvement areas, underlining wide range of factors that drive productivity for his team at Tolent Construction. Another subcontractor presentation was delivered by Darren Smith of Zenith Structural Access Solutions who shared their approach to building and maintaining trust-based relationships with their customers. Last presentation of the day was given by Harry Peers Steelwork Ltd’s David J Perkins who outlined how they respond to customer requirements through the use of better specification, Building Information Modelling and modular off-site construction techniques.

The second half of the workshop involved an interactive exercise between the delegates in the client, contractor and specialist subcontractors groups where each group discussed their most important priorities in terms of risk management, contract arrangement and relationships. In general, the delegates in the contractor and client groups had a less agreement amongst themselves on what their priorities should be. This was probably due to the fact every client and contractor organisation employed a unique approach to their operations and supply chain engagement strategy. Also, as argued by the delegates, majority of supply chain engagement strategy were dependant on the contextual factors such as the type of the project, stage of the project and complexity of the project.

Contractors' priorities for their clients generally revolved around meeting the performance targets of projects; setting up better cash-flow mechanisms for payments; building reputation with clients for repeat business. With regards to their downstream supply chains contractors pointed to the need for integrated teams; collaborative relationship and company culture; better in-house capability and post-completion support.

Clients on the other hand demanded safety, quality and environmental aspects of projects to be met and complied fully by the contractors and subcontractors. The technical experience and expertise of two groups of supply chains (contractor and downstream supply chains), partnering with selected suppliers, management structure of firms and collaborative approach to projects were the highest priorities for the delegates in the client group.

The delegates in the specialist sub-contractor group had a more united view on what their priorities are and what they expected from their clients and contractors. Early involvement, environment and safety concerns of projects and complying with certain quality standards were on the agenda of many delegates. There was a lot of emphasis and demand for contractors to honour their agreed payment terms on time and without any unfair encounters.

In summary, the discussion by the delegates in client, contractor and specialist subcontractor groups indicates that there are different priorities for supply chain engagement amongst these three groups. This was also reflected within each group where delegates had a different approach for engaging with their upstream and downstream supply chain firms. Although delegates agree that there needs to be a common understanding and agreement on project goals, the inter-group discussion by the delegates reveal that each group has different agenda inherently embedded into their own business goals and strategies. This suggests a serious issue with alignment of supply chains as it would be very difficult to integrate and unite supply chains if each group has a diverse set of priorities. Perhaps a discussion on what are the commercial, social and technical mechanisms that drive supply chain integration is one of the questions that could be explored in future workshops?