The decision to streamline the supply chain is a growing business trend. David Elliott, Commercial Manager at Integrated Services, looks at the reasons why.
According to a recent report from risk management association Airmic1, many companies are now finding it increasingly difficult to manage their vendor base as a result of a complex supply chain. Recession or no recession, businesses are constantly under pressure to keep their costs low – and the first port of call is usually their supply chain. However, supply chains are complex, and are under contant pressure to perform to stricter deadlines. However, whilst it’s tempting to outsource small parts of the supply chain, consolidating your whole supply chain could actually be the answer.
The fact is, many organisations haver increased the number of supply chain partners in a bid to satisfy growing cost pressures, and are now struggling to keep an eye on their network of vendors. This means companies may be completely unaware of who their suppliers are subcontracting to, while the pressure to save money can lead to some businesses compromising on product quality and ethics to meet stricter budget requirements.
One of the most effective means of realising significant cost savings and delivering improved service efficiencies can be achieved by consolidating the supply base. Collaborating with a trusted and experienced partner for all supply needs can lead to more effective business processes, which can be tailored to meet the needs of individual customer requirements. The benefits of this include lower costs and reduced time spent on adminstration, as well as greater operational efficiencies and smarter purchasing decisions. Meanwhile, many companies are unaware of the money that is being wasted on unnecessary resouces. Having a dedicated supplier means products and services are more trackable and can be managed more easily.
Use of smart procurement and sourcing can provide significant supply chain efficiencies and savings for many companies. The supply chain itself has also seen a few changes in recent years that have allowed a more streamlined approach to take place.
Like most things in life, it is easier and usually cheaper to source everything you need from one place. A supermarket, for example, which stocks the full range of foods and household goods eliminates the process of vistiing other retailers for other items we may want. The term “one-stop-shop” has become rather over-used, but not only does this method save us time, because we are only visiting one store, it also saves money because we benefit from the buying power of the supermarket to get the best price.
For many other organisations, this works in exactly the same way. Hospitals, schools, local authorities and large residential housing associations are all examples of organisations that have benefitted from working in this way.
Undoubtedly, there has never been more focus on cutting costs from the construction supply chain, both in the public and private sectors. Integrated solutions providers have gained vast experience in this area and can make significant efficiencies on the cost of materials supply for their customers, particularly if involved in the early stages of the process.
The original concept of using an integrated supplier was to take the headache out of large, complex construction projects where materials were being delivered from multiple sources, adding to both the financial and environmental cost. By operating a single source supply model, it means that the products customers need are supplied where they want them, when they want them – effectively like a just-in-time manufacturing strategy for construction sites. This means that there is less product wastage and no need to store large quantities of stock on site.
Key to any such operation is ease of availability; it is important that customers are able to get the products and services they need, when and where they need them. Time spent picking up equipment is an important consideration for those keeping an eye on tight budgets, and delays in getting required products can prove to be costly.
Additionally, the impact on the environment and the overall carbon footprint of a project is becoming an increasingly important consideration for many nowadays. With the environmental impact continuing to be at the top of the agenda, many integrated providers are taking whatever steps possible to offer sustainable supply solutions and to put the environment first. This is not only down to meeting any legal requirements, but also for ethical reasons and an on-going desire to ‘do the right thing’.
At the end of the day, working with an integrated systems supplier is a collaborative partnership so you need to make sure you have a provider that has the right synergy with your organisation. The combined expertise, efficiencies, knowledge and skills of the two parties working together, should be greater than that of the two parties working independently. In other words, outsourcing shouldn’t just give you the same service you already had for a slightly cheaper price. It needs to add value to your supply chain by giving you flexibility, specialist knowledge and expertise, as well as creating cost and business efficiencies by leveraging economies of scale and reducing administration.
Wolseley UK’s Integrated Services division has been helping organisations cut building, maintenance and repair costs through smarter procurement and supply chain efficiencies for over a decade. Today it operates from 39 locations throughout the UK.
1 Airmic, ‘Why companies are struggling to manage their supply chains’, 11th June 2013, http://www.airmic.com/about/press-releases/why-companies-are-struggling-manage-their-supply-chains