Heroes of Procurement


We Forged a Stronger Relationship With Our Largest Supplier

CIPS 8 June 2020

Construction company J Murphy & Sons Ltd worked closely with a key supplier to ensure critical sites could continue operations.

Following the catalytic UK Covid-19 lockdown announcement, a cloud of uncertainty shrouded the construction sector as a large proportion of builders merchants closed or reduced service hours. In this time of crisis, supplier relationships became even more valuable to ensuring the continuity of UK civil engineering and infrastructure operations.

For civil engineering and construction company J Murphy & Sons Ltd (Murphy), one supplier was incremental in securing provisions and preventing further disruptions to major projects. Keyline, a subsidiary of the Travis Perkins Group, supported Murphy, as well as other major clients, by continuing to supply priority materials to critical sites, as per existing contracts.

 Contents

  1. Supply Priority
  2. Dealing With Shortfalls
  3. Extended Lead Times
  4. Construction Planning

Image: ©Murphy

Keyline has been working alongside Murphy for the last decade. As Murphy’s biggest supplier, it takes between £7-8m spend a year towards procuring thousands of civil engineering materials, including plastic drainage, concrete drainage, hard landscaping, timber, valves, and aggregate.

When Keyline initially closed (for one day, in line with the Travis Perkins Group), the supplier’s importance to Murphy’s operations became clear. Ben McCluskey, head of central procurement at Murphy, said setting up an alternative supplier on the system in the same way as Keyline would have taken a great deal of manpower and effort, so finding a viable way to continue working together was preferred.

Concerned, the Murphy procurement team reached out to its supplier, and was able to negotiate continued service on a reduced capacity basis.

 Supply Priority

Since then, Murphy has been in regular conversations with Keyline’s national accounts manager, Holly Winder, to coordinate provisions on a priority basis. Keyline has processed all orders directly through Winder, due to reduced staff numbers while the supplier was coming back up to capacity.

For Keyline to provide for infrastructure projects, Winder prioritised stock based on the most critical sites and what products each required. Once identified, stock levels were assessed and they worked alongside their branches, as well as external suppliers, to pull in that stock. Winder says, sometimes, putting more stock on the ground than was requested, in anticipation of higher demand, helped to alleviate the situation.

These joint efforts have enabled supplies to be ramped up over the weeks, from delivering to a handful of depots – with reduced hours and a skeleton staff serving critical infrastructure sites, including rail, water, national grid and gas – to providing supplies for all Murphy sites. This degree of support has helped Murphy to maintain the pace of production with no major issues, such as missed materials or key milestone dates. Construction sites have been at approximately 80% operational capacity, with 20% of projects closed and not operating, while Murphy’s supply chain has been at approximately 50%-60% operational capacity, said McCluskey.

“We've succeeded by having a close, collaborative relationship in our supply chain. Without that, we wouldn’t have been able to do half the things we've done. We've certainly pulled in a lot of favours and used a lot of the rapport and relationships we've built over a period of time to our advantage. Had we not had that closeness and understanding of our supply chain, we probably wouldn't have been able to get through this crisis,” he adds.

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 Dealing With Shortfalls

Due to the overall shortage in the supply chain, Murphy has had to diversify heavily to acquire other products, such as quarry materials and aggregates. McCluskey says trying to resolve the shortfall was very difficult as the Covid-19 crisis has simply exacerbated the shortage of certain goods that were already low.

To resolve aggregate and quarry shortages, Murphy has been working with more independents - a direct approach which the company found proved faster and more economical than competing with the heavy demand on brokers.

McCluskey says: “We've now expanded that to bigger independents that have more than one quarry in certain areas where we know we're struggling. It's part of looking further downstream the supply chain.”

Similarly, in the area of logistics, the availability of delivery vehicles and drivers has been one of the biggest issues at operational quarries and batching plants. During the pandemic, there has been uncertainty in the job market as a lot of drivers are self-employed or driving vehicles that are owner-operated, resulting in fewer people willing to work consistently across the UK in accredited vehicles.

Working to overcome this has revolved around diversification again, says McCluskey. “Whether that's bringing in vehicles from some of our depots or leaning on our subcontractor supply chain. It’s about playing with that blend to make it work effectively. It was and continues to be a problem in peak areas of activity, such as the midlands and the southeast.”

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Image: ©Murphy

Women in PPE overlooking train tracks

 Extended Lead Times

As sourcing certain items has taken longer due to Covid-19, regular communications with key stakeholders, suppliers and stringent, extended lead processes have been essential for maintaining operations. As such, some just-in-time, next-day products have only been available for delivery in three to five days.

While extended lead time processes have always been in place, Murphy’s procurement team has been utilising these more often recently – for instance, seven days in advance requisitions have been crucial so they can improve procurement of items. Keyline has also adapted lead times to suit the unprecedented supply demand and, together, they have worked to ensure this doesn’t have knock-back effects on construction sites.

McCluskey highlights: “Time is the biggest asset you can have in procurement. And the more time you've got the more value you can add, whether that be looking for alternatives, looking for innovation, or simply looking into your the best price.”

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 Construction Planning

The role in procurement of planning ahead and controlling risk to the downstream supply chain is more important now than ever. McCluskey says the crisis has shown that procurement professionals need to better understand the tiers in the supply chain and try to map out vulnerable suppliers to mitigate similar issues in the future.

As the demand for PPE supplies, especially from China, has caused bottlenecks during transport, other products such as natural stone, could become a high-risk product now. Forecasting demand and ensuring your lower tier supplier chain is reliable will help towards counteracting these impacts.

McCLuskey says, going forward in the construction sector, “managing supply and demand is going to be difficult, whether it's down to labour, products, or available delivery vehicles - that's the biggest thing right now, and it will be a balancing act between the two”.

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Image: ©Murphy

Murphy van at the airport

 


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