Challenges for Procurement Teams as Lockdown Eases Post Covid-19
The construction sector has never faced a more dramatic supply challenge – but as it begins to reopen post covid-19, procurement teams are coming to the fore.
The infrastructure side of the UK’s construction sector has had to innovate rapidly during coronavirus,, with buyers going further afield to source materials. Due to the high level of furloughing, as well as manufacturers and suppliers working at reduced capacity, or in some cases stopped production altogether, construction materials have been in short supply, particularly timber plasterboard, bricks and quarry aggregates.
The new normal
In the immediate wake of the lockdown announcement, construction went through a period of uncertainty around the continuity of operations and supplies as sites considered how to implement Covid-19 health and safety measures put forward by the government. However, it was less clear for manufacturers who supplied into the sector and many furloughed their staff and reduced or stopped production.
Critical worker status was given to employees and subcontractors working for the likes of Network Rail, Thames Water and National Grid. The wider challenges are about ensuring procurement teams can secure the correct supplies and services to maintain productive operation rates at infrastructure sites, from building materials to haulage drivers and PPE, as the industry returns to a high level of activity..
Existing problems with procuring quarry products have been exacerbated by coronavirus, resulting in some UK construction businesses working directly with smaller independent quarry companies, instead of larger national brokers.
“Quarry products have been a massive struggle because it's a product that's driven by geography. Trying to keep supply going has been challenging because it becomes uneconomical the further you haul it,” says Ben McCluskey, head of central procurement at construction firm J.Murphy & Sons. Firms will need to increase risk planning accordingly, particularly if ongoing, major projects such as HS2 are located across the country. McCluskey suggests working directly with lower tier suppliers. "We've now expanded our supply chain to look at some bigger independents that have more than one quarry in certain areas where we know we're struggling,” he says.
Dealing with shortfalls
With some supply chains only working at around 50% to 60% of capacity, firms have focused on trying to make up for the shortfall by utilising advance requisition and lead time procedures, making the most of long-term relationships, collaborating and communicating effectively with suppliers.
McCluskey says: “Sourcing basic items has taken a lot longer, so there’s had to be clear communication with key stakeholders explaining that due to pressures, some just-in-time, next day products would only be available in three to five days because we need to be able to procure it and then it’s on an extended lead time on top of that.”
These challenges are reflected in the fact that, as a whole, the sector has experienced its fastest decline in 23 years, led by areas including house building, commercial activity and civil engineering.
PPE healthy sites
Construction has purchased a large number of PPE supplies to protect site staff through coronavirus,, including surgical masks, hand sanitiser stations and signage, as well as increased volumes of gloves and antibacterial wipes. Social distancing has been put in place and various ways of working have been changed to accommodate this, including signs and markings. With workers needing to wear precautionary protection, there is still the question of who will pay for the extra supplies; experts suspect the added cost is likely to fall on clients, but this will form part of new considerations in contract negotiations.
Beware of fakes
Like many other sectors, procurement has become a target for fraudulent suppliers, with teams being preyed on through emails and LinkedIn as they are offered bogus products relating to Covid-19. Firms from fencing suppliers to stationers claim to sell equipment, says McCluskey, adding: “If it looks too good to be true, then it probably is.”
The sector warns that during these desperate times, procurement teams need to be especially stringent with quality and assurance procedures and follow the correct specification requirements advised by Public Health England, always buying from trusted suppliers.
Facing the future
The main challenges for the sector revolve around the rapid execution of safe office environments and the balanced management of supply and demand, including labour, products, and available delivery vehicles. As full capacity returns to the market, supply demand is likely to increase further, making risk mitigation, demand planning, efficient resource usage and collaborative relationships even more important.
For more on how the construction sector is tackling the coronavirus and how companies are preparing to open up the sector, watch the CIPS Coronavirus impact on construction webinar, featuring procurement leaders, Laura Hobbs from Royal Bam Group, Malcolm Dare from Highways England, and Dale Turner from Skanska.