Supply chain focus: delivering exceptional performance
Ask not what your supply chain can do for you, but what you can do for your supply chain.
In many regions, it’s a seller’s market: the supply chain has a degree of choice in selecting the major programmes it works on and who it works for.
The best performers are choosing their work from a global selection of major infrastructure projects and programmes across multiple sectors. Projects such as Sydney’s £4.9bn North West Rail Link and major airport programmes in Abu Dhabi, Dubai, Muscat and Doha are all competing to secure a world-class supply chain from a pool that has slimmed down significantly during the years that followed the global economic downturn.
Clients must think in a radically different way about all aspects of asset investment, delivery and operation. Many clients will need to redefine how they engage, work with and drive sustainable performance from the supply chain. Simply procuring a first-tier supplier with an intelligent commercial model is unlikely to be enough. So what must clients do?
Create the currency
The best of the world’s supply chain partners will be looking to work on programmes that will enhance their reputation and help them develop capability in order to position them to win more prestigious work in the future. This is the currency of a successful programme. To create that currency, a client must make itself attractive to the market. Defining and positioning its brand, and its values, will help. A client must engage the market so that it brings the whole supply chain together to achieve those goals.
Create the environment for your supply chain to innovate so that they can be rewarded for the value they create.
Ensure that the supply chain understands your business and enable them to bring in new ideas to help you become more efficient. Some infrastructure owners are procuring based on innovative solutions developed during bidding.
A major metro owner, for example, successfully asked contractors to provide station upgrade designs, with one showing how higher passenger flows could be achieved and journey times reduced through an intelligent approach to design. While a larger capital investment may have been needed, the whole-life solution and subsequent value generated for the operator was far greater. The contractor understood the client’s business and was successful.
- US $2.7 trillion Yearly global infrastructure spend
- US $9 trillion Predicted yearly global infrastructure spend by 2025
Extract value from the sub-tier
Create long-term relationships with manufacturers, small and medium- sized enterprises and suppliers who can genuinely unlock value. This could mean working with first-tier suppliers who can enable these relationships with the lower tiers or, if you can’t find the right fit with a major contractor, consider bypassing the tier-one suppliers altogether.
The intelligent client is the informed client. Too many spend time and money substantiating a position with their supply chain, or to a regulator or a third party, because they are not informed. Investment in data makes subjective conversations objective, allowing time to be productively used to examine ways to improve performance in collaboration with others, rather than to back up an argument or negotiation.
An informed client knows the ‘should cost’ without going out to the market. Industry collaboration and benchmarking can be a powerful way to optimise costs across a whole sector.
Clearly communicate what ‘exceptional’ looks like
Work with your supply chain to define what exceptional performance looks like and engage them effectively to ensure that they align their approach to deliver your longterm objectives. For example, this may include enhanced customer or end-user satisfaction, the ability to demonstrate best value to funders, and world-class health, safety and environmental performance.
Attracting the best tier-one suppliers is not enough. Clients must measure performance and outputs and use that data intelligently. Only then can they establish where value is added and how the whole supply chain’s performance can be progressively enhanced.