By Rodney Heying
Director of Supply Chain
U.S. Engineering Company Holdings
Since March 2020 supply chain has been a hot topic in the United States, in commercial manufacturing, in digital commerce and even in residential life (toilet paper?). The coronavirus outbreak caused production, delivery and supply disruptions globally, forcing many companies to scramble to acquire the products and parts they need to do their jobs. As the dust settles over the coming months, many companies are realizing their supply chain processes could use an upgrade. A strong supply chain not only reduces chaos in times of crisis, but it also produces efficiencies that save organizations time and money.
A supply chain, of course, is the process by which a company manages the movement of materials and information from customer requests to the design and build stages of operations. A successful supply chain uses planning, scheduling and risk analysis to determine optimal paths and outcomes. It’s often a complicated series of progressions and relationships that aim to get the right materials from the right groups into the hands of the right people in the right place and time.
To maximize efficiency and reduce waste, the goal of every organization when it comes to supply chain should be to streamline the workflow, which will go a long way toward improving efficiency and protecting against disruptions. How? Pay closer attention to risk management and forecasting. While no one can be completely prepared for a disruption on the scale of a worldwide pandemic, companies can take steps to help reduce risk and improve forecasting.
Here are 4 steps to strengthening supply chain.
Reduce the number of steps you take from supplier to project completion. In many companies’ supply chains, there are too many physical checkpoints and transactions.
In mechanical systems construction, a design may get sent to a super or a PM; they look it over and say yes or no to all the elements into the design; the design goes back to VC for reconstruction; it gets uploaded into a spreadsheet; the spreadsheet may go to purchasing, or it goes back to the PMs; and suddenly it’s days or weeks later. Reducing the number of those transactions leads to efficiency, saving time and making a project more profitable.
One way to reduce transactions is to automate. Collect data on everything, from vendor performance, to materials, to delivery methods. While collecting that data, invest in analytics and PO process software. That software will automatically load bill materials into designs and invoices, cutting out manual processes and handoffs that tend to add time to (and decreasing profitability from) a project.
The AEC industry is notorious for ever-changing scopes and customer demands, making forecasting, or demand planning, seem more of an art than a science. But with analytics, these processes become more predictable. Again, gather data. As more like or similar projects come online—hospitals, data centers, government buildings—you can begin to understand the demand of recurring materials.
And here again is where PO processing software will save you time. Not only will it reduce the number of manual transactions needed to get from start to finish, but it will make forecasting more accurate for both cost and materials. Ultimately when you embrace analytics and improve forecasting, your days of multi-transactional processes disappear. And forecasting will help you better weather the storm when variables hit the market.
This step is about risk analysis. Look closely at the performance results of your vendor base. Use analytics to determine whether you will make future buys with whom and to determine which commodities vendors are best at. Basically perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis on each of your vendors to figure out which ones may pose the most risk to your business. Who is at risk for shuttering their facilities, and how much of a supply impact has the crisis taken on them?
I look at three key aspects when it comes to assessing vendors: quality, cost and delivery. The vendor has to perform in all three of those categories for the supply chain to succeed. Those are the driving forces to creating a strong partnership between vendors and the businesses who rely on them.
Resourcefulness is key. When normal supply avenues are blocked, companies must think outside the box to find ways to work around that blockage. Always look at different approaches to material hurdles.An excellent place to start is in your community, not only for solutions to your blockage problem, but also to find ways you can help your neighbors get around theirs.
A great example of creativity and community happened a couple months ago when I was scrolling on Facebook. J. Reiger & Co., a Kansas City distiller, posted about how they were shifting their operations temporarily from making whiskey, gin and vodka to making hand sanitizer, which we all know was in high demand and short supply for a while. We desperately needed hand sanitizer to support our teams in the field who were deemed essential. So I forwarded the post to our safety and management teams, and it turns out our company has connections to J. Reiger. We reached out and bought hand sanitizer directly from someone in our own backyard. This neighbor provided for us, and in turn, we were able to help them build revenue during a period when, according to their Facebook post, nearly all of their normal revenue stream was disrupted.
On another recent job, U.S. Engineering Construction was performing a lightning-speed retrofit for The University of Kansas Health System (TUKHS), transforming a locker room into a state-of-the-art COVID-19 testing lab. With a very tight deadline amid the outbreak, TUKHS wasn’t able to source the specialty lab tables needed to support current operations. So our Metalworks team built them the vibration-free lab tables they needed in just three days. TUKHS thought creatively and looked to their community to overcome a supply chain challenge.
The past few months certainly have been challenging to supply chains everywhere. Ripples in the pond have created waves. As you review your processes and look to prepare for future predicaments, remember to simplify, improve your forecasting, check your vendors and be creative and community minded. We can’t prepare for everything, but we can improve the ways we move materials across a project’s finish line.