Local contractors are employed by Skanska around the country
Local contractors are employed by Skanska around the country

Case study: How Skanska works with small suppliers

Changing some pre-qualification processes opened up access to local SME skills and innovation

You will find Skanska construction contractors all around the UK, working on projects that range from upgrading Croydon’s street lights to digging a tunnel under the River Humber for a gas pipeline replacement. And these contractors are just as likely to be small business suppliers as one of Skanska’s top 250 supply chain companies.

Aware of a lack of skills in a growing construction industry, the UK procurement department of the Swedish-headquartered construction firm looked to expand its supply chain in scope and coverage, particularly through small companies – while still complying with the strict due diligence of its supply chain.

“In specific traditional trades, such as brickwork, there are fewer tradesmen than there were 15-20 years ago, and in a growing market we need to look further afield to continue to be a sustainable business,” says Dale Turner, UK director of procurement and supply chain. “A lot of the skills we needed were in small companies.” This applies to SMEs and micro-businesses with fewer than five employees.

When procuring on each bid and tender submission, Skanska looks not just at costs but at all aspects of sustainability, says Turner. It focuses on diversity and inclusivity in its supply chain, with a pre-qualification process covering health and safety, ethical sourcing, equality, diversity and inclusion, environmental management and green sourcing, best value and quality management. A rigorous scorecard assesses whether suppliers meet the company requirements. While large businesses have the resources to complete the process, the same could not be said for all small firms, particularly micro-businesses.

Following a recommendation from CIPS, which investigated the diversity of Skanska’s supply chain as part of its CIPS Corporate Certification, Turner and his team looked into its pre-qualification process, and in 2015 created a two-tier approach. This removed some of the previous barriers to small businesses working with Skanska.

“For our critical suppliers, we undertake a two-day audit every year,” says Turner, but where there is low risk, such as the finishing packages like painting cleaning of a school or hospital, this may not be necessary. “We have a risk-based approach to make sure the level of due diligence is appropriate for the product or service that is being procured.”

In doing so, it has increased the portion of its 5,750 suppliers and subcontractors from 57% of SMEs in 2015 to 78%, and the share of its £1.35bn supply chain spend with SMEs from 45% to 65%.

Now, with a wider pool of approved suppliers, the company can achieve greater diversity in its supply chain, which has opened up greater innovation. One small supplier brought new surfacing technology to highways to reduce skidding. And on a major highways scheme around Cambridge, Turner was able to target local communities to search for new suppliers.

“It’s fantastic to follow the successes Skanska continues to deliver following CIPS Corporate Certification and we look forward to continuing to work with them,” says CIPS director Duncan Brock.

“Diversity and inclusion are core values for our clients. Most people think about employees, but not about the supply perspective. It’s important to have the right mix there too,” adds Turner.

School for supply chains

A few years ago Skanska set up an online supply chain sustainability school to educate suppliers and sub-contractors about competencies needed to deliver to the construction industry. The school now operates across 64 industry partners, and has almost 22,000 registered users. It offers online toolkits, training workshops and supplier days that cover everything from tackling modern slavery in the facilities management sector to meeting client timber requirements, and marketing and business development advice.

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