The Covid-19 pandemic could be an opportunity to shine a light on the construction sector’s lower supply chain tiers.
Ben McCluskey, head of central procurement at construction firm J. Murphy & Sons Ltd, told SM that just as every crisis provided an opportunity for positive change, coronavirus could prompt an in-depth look at lower tier suppliers.
“I think a long-lasting impact for construction will be trying to understand the tiers in the supply chain better and trying to map that out – a crisis like this has consolidated that. You look at the horse meat scandal, in terms of how it changed retail and food forever, but I don’t think that properly touched the likes of construction. However, the pandemic has taught us an awful lot and will perhaps be the one to change the industry,” said McCluskey.
As this month’s all-time low UK construction PMI has demonstrated, Covid-19 has exacerbated supply shortages. As a result more construction firms have diversified their supply chain to meet demand. However, the same issues may arise if new suppliers are sourcing from the same disrupted tier three and four suppliers, said McCluskey.
J. Murphy & Sons has become less solely reliant on national brokers, working directly with independent quarry companies that own several quarries, as procuring quarry materials from brokers has been particularly difficult during this period.
Logistical bottlenecks, caused by pressure on airports and seaports due to PPE supplies coming in from China and Europe, have meant negative knock-on effects for construction materials procured overseas, such as natural stone from China. Thus it is prime time to understand where supplies ultimately come from so procurement teams can effectively prepare for such consequences, said McCluskey.
“The whole trade balance isn’t currently working at the moment. You’re still struggling even if the product has nothing to do with Covid-19, you’ll still be at the back of the queue,” he added.
He emphasised the importance of planning ahead during this time and using essential lead-time processes to ensure your procurement team can operate. “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 the best price.”
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