Supply chain relationship management has come a long way from the simple transaction-based focus of the past, to the more sophisticated collaborative approach of strategic partnerships that we see today. In industries such as fast-moving consumer goods, supplier relationships are often about driving down prices, but in the construction industry – where cost is just one element within a complex web of factors that influence purchasing decisions – what exactly does true supply chain collaboration look like?
A WIN-WIN SITUATION
Put simply, the goal of supply chain collaboration is to develop mutually beneficial relationships that allows each company to get its job done more effectively, while delivering benefits and advantages to both - such as improving customer satisfaction, market share, or business performance. The most successful collaborations between companies – i.e. joint initiatives that go beyond the normal course of day-to-day business – have the fundamental aim of delivering significant improvements over the long term.
In this model, the supplier becomes a true strategic partner to the buying organisation however, like all partnerships, this does not happen overnight. Meaningful partnerships develop over time by building trust and require conscientious effort on both sides of the relationship. There must be a commitment between the companies to establish the necessary foundation for the relationship to be mutually productive and valuable.
To give a non-construction example, over the past 13 years, UK supermarket chain Sainsbury’s has been investing in its dairy supply chain to ensure it has a sustainable source for the future. With some retailers paying less than the cost of production for milk and thus forcing many farmers out of business, Sainsbury’s realised that it needed to take action and develop a more collaborative approach.
As well as committing to paying a fair price, the Sainsbury’s Dairy Development Group works closely with farmers to improve animal welfare standards and the quality of the milk they produce. Farms are scored on a variety of metrics and are supported in working towards improvements. With a secure income stream, farmers are able to invest in their businesses and become more productive, providing Sainsbury’s with a better long-term supply of high-quality products – truly a win-win situation for all.
COSTAIN: DEFINING BLUE
Within the construction industry – particularly on large infrastructure projects, such as the A14 major road project, Crossrail and HS2 – companies must perform across a variety of in-depth and interlinked factors. Technical considerations, budget, logistics, sustainability and health and safety all play an important role in successful project delivery.
Costain, one of the UK’s leading infrastructure solutions providers, recognises that the best way to improve standards across all of these aspects is by taking a collaborative approach with its supply partners, while encouraging and supporting them to achieve ever-higher levels of performance.
This is embedded within the Defining Blue performance initiative, which is structured to drive suppliers’ scores up across key metrics including people, time, quality, safety, health and environment. The ratings are: red, significant issues; amber, under performance; green, acceptable performance; blue, exceptional. To achieve the prestigious Costain Blue status, companies must score in excess of 800 points out of 1,000. Those that achieve Blue standard on the same project over two consecutive quarters are recognised with a performance certificate – which is no mean feat.
The whole process refers to the support Costain provides in helping organisations raise their performance to blue standard and is done by clearly articulating the performance levels expected to meet this high standard. As in the Sainsbury’s example earlier, by helping its supply chain reach higher standards, Costain is better able to achieve its own business objectives – a mutually beneficial outcome for all concerned.
Speaking about the initiative, Christopher Campbell, Senior Buyer at Costain, commented: “Costain sets itself and its supply chain very high standards of performance. Consequently, it has a mature and robust performance reporting process where the supply chain is challenged to strive for the highest benchmark, ‘Costain Blue’, which – if obtained – indicates exemplar performance.”
KEYLINE RECEIVES COSTAIN BLUE STATUS
Keyline has worked closely with Costain for a number of years and recently, was proud to reach Costain Blue status for the collaborative supply approach on the Crossrail Bond Street project.
Adhering to procurement and delivery processes is particularly crucial when it comes to inner city rail projects, as access routes can be heavily restricted. Throughout this and other projects, Keyline’s team have immersed themselves in Costain’s delivery processes; investing in driver training and ensuring all vehicles are fully compliant to be certain that requirements are met safely and effectively. Building trust and demonstrating reliability, as well as constant communication between both companies, has been key to achieving this.
Christopher Campbell went on to say: “Excellent business relationships and collaboration with Keyline Account Managers over the years has been very important. We are in regular communication, be that in more formal meetings where corporate and strategic issues are discussed and important information is shared, or through more informal catch-up meetings. This is very important for the smooth running of the relationship and has resulted in better overall performance outcomes for both Keyline and Costain.”
Achieving true collaboration is the pinnacle of supply chain relationship management and is fundamental to how we approach business, by providing expert advice and high-quality customer service.
To find out more about working with Keyline, please contact your nearest branch: https://www.keyline.co.uk/branch-locator