EXEL's MIKE HOLLEY turns his attention to construction
If a logistics professional were to manage materials rather than a site manager, there would be staggering savings. Expect a 50% cut in the materials wastage and productivity loss caused by poor logistics, and 10% out of transport costs and then halve the capital tied up in inventory.
These are the claims of Mike Holley, general manager of Exel,who is now targeting construction. Supply chain visibility and data integrity are fundamental to good logistics, says Holley. In other words, everyone involved in a project must be able to see what quantities of materials are needed, where and when, and those details must always be accurate and up to date.
Manufacturers, for example, have to know how much material to supply; if the programme changes, they need to know immediately how it affects them. Likewise, the site manager needs to know what's been shipped, what hasn't been shipped, and whether the quantities delivered are correct.
Timing counts
IT is crucial to making information available to the right people at the right time. Exel deploys a battery of computer systems, some written in-house, some bought in, and some developed in partnership with software houses. An inventory system controls the movement of materials from production to delivery at the point of installation (not just the site gates) and can be plugged into Exel's main enterprise resource software.
Holley believes Exel can work successfully in construction by understanding how its supply chain works and adapting to it. Construction is unusual in that each project is one-off operation involving myriad contractors, all of whom handle and dismantle their own supply chains.
Counting the cost
The result of having so many unique supply chains is that wastage takes on heroic proportions in construction. Somewhere between 20% and 30% of materials ends up in skips - damaged or over-ordered - or grows legs and walks off-site.
And the BRE estimates that sites lose between 10% and 40% of skilled labour productivity through poor materials management. Finding stuff, waiting for it to arrive or moving it out of the way. Holley is sceptical of the 40% figure, but says Exel's own experience is that poor logistics impose a 15% to 20% downtime penalty.
How can Holley be sure Exel can deliver? "We can't, but it's what we've done in other industries."
Exel analyses the demand, availability, lead time and supply base for the materials required by a project, and then draws up a just-in-time schedule which avoids unnecessary movements and warehousing. It tries to get involved in projects at the planning stage as that's the best time to structure the supply chain most efficiently. The company's targeting of construction comes at a time of growing recognition in the industry that supply efficiency is crucial to profitability.
"After the Accelerating Change report," says Holley, "the key players now understand the real cost of supply chain inefficiencies: projects finishing late and contractors overspending."
Enquiry number 200
Give paperwork the push
According to the simplistic arithmetic of the software houses鈥� well-oiled marketing departments, electronic procurement should leave construction rolling in it. Paper invoices can cost anything up to 拢2.50 apiece, they say, once you factor in the administration and the four or five other documents spawned by each invoice, such as delivery notes and call-offs. All the big contractors and suppliers run financial software that tracks invoices and payments but it makes little difference to the amount of paperwork that flies around between head office, supplier and building site. The problem is, those ever-so-clever programs can鈥檛 actually swap data between each other. A contractor creates a purchase order in their IT system 鈥� and then typically prints it out and faxes, posts or phones it through. But now there is an adaptor that plugs your system into your partner鈥檚. Tim Cole works for IT company Causeway, which runs electronic trading platform Tradex, which lets suppliers and contractors use incompatible systems without paying the high costs of system integration. Causeway writes a program for each subscriber that converts its data into Tradex鈥檚 format and vice versa, allowing suppliers and contractors to communicate directly via Causeway鈥檚 central hub. Users can view orders online, and receive email alerts when a supplier doesn鈥檛 respond to an order. There鈥檚 a one-off connection charge for the middleware (the data conversion code), plus a small transaction charge. Cole says subscribers 鈥� and there are six major contractors and 20 major suppliers using Tradex 鈥� can count on a return on investment in a year. But saving the price of a stamp on an invoice isn鈥檛 what whets Colin Richardson鈥檚 whistle. Richardson is head of customer relationship management at Tradex subscriber Hanson Brick and he says the big gains come from the smoothness and ease that flow from a transparent supply chain and benefit contractors in particular. 鈥淚nvoices are just the thin end of the wedge,鈥� he says. 鈥淥nce you鈥檝e captured information about a job or an invoice, other useful things spin off: receipt of goods, alarm bells ringing when material doesn鈥檛 arrive on site.鈥� MIRACLE CURE?
So is Tradex the IT miracleware that will actually work, allowing contractors to squeeze costs and streamline the supply chain? 鈥淭here鈥檚 a lot of hype about electronic procurement, but Tradex is actually out there doing it,鈥� says Richardson. 鈥淚t鈥檚 got to get the numbers up if we鈥檙e to sustain our investment in it, but this sort of service is the right way to go. Shuffling paper adds no value to the customer at all.鈥� Enquiry number 201
ProjectsOnline: bringing firms together
Put a bit in and get a lot out... and save a small fortuneFor Phil Sims it was a no-brainer. Rough calculations showed that even with Rok Llewelyn paying 拢30,000 of the 拢95,000 cost for BuildOnline鈥檚 ProjectsOnline software, and the outlay for hardware, he would still save money on the 拢28.5m social housing job. Not that saving money was the reason why Sims, who is overseeing the project for Llewelyn, and client St Martin鈥檚 Community Partnership were considering ProjectsOnline. That had more to do with the fear of just how all the drawings, subbies and consultants would come together on the refurbishment of 1,000 homes in 74 blocks from the 鈥�50s, 鈥�60s and 鈥�70s. 鈥淲e went with BuildOnline in order to communicate fast with people and respond quickly. You can鈥檛 rely on the post,鈥� says Sims. CLEAR BENEFITS
The specialist contractors, says Sims, after consultation signed up for the idea. 鈥淭hey were not necessarily geared up for it but they saw it as a benefit and it has given them a boost as to coming up to speed with IT.鈥� Specialists and consultants also contributed towards the cost of ProjectsOnline, including stumping up for additional hardware. Accessed via the internet, partners arrive at the 鈥榩roject dashboard鈥� or homepage and select one of a series of options. The two most useful on this job have been 鈥楩iling cabinet鈥� which allows drawings and documents access and 鈥榩rocess manager鈥� which controls the internal email system and provides audit trails. The downside is that because broadband was not around when they set the job up in early 2002, the ISDN connections made it feel slow. Sims says: 鈥淲hen you think of the alternative: getting up, going to the filing cabinet, photocopying a letter, it is still much quicker.鈥� The upside of the package, says Sims, is BuildOnline鈥檚 customer service: training and taking on board suggestions for improving how ProjectsOnline works. Enquiry number 202
Knowledge is power
When knowledge equals power, it鈥檚 only human to keep your hard-earned secrets to yourself. But another, equally powerful human instinct has helped Taylor Woodrow鈥檚 Cathy Blake develop a knowledge capture and dissemination system. 鈥淧eople also like to show off their successes,鈥� she says. Every month, Taylor Woodrow emails a technical bulletin to all project and head office staff: engineers, site managers, project managers. Among other information, the two-page email contains 50 top tips, each with a hotlink to the topic on the company intranet and contact details of experts. The tips come from project reviews, recurrent helpdesk enquiries, and the technical experts who visit sites to see what鈥檚 going on. But around half come directly from the project teams themselves, and are added to the email at the rate of around two a month. Clicking on a top tip takes the browser to Taylor Woodrow鈥檚 Knowledge Channel intranet, which gets around 10,000 hits and 700 unique visitors a month. REAPING REWARDS
Designer Kevin Hibbs is one of those who鈥檚 clicked on the top tip links. He was doing an apartment block in Cardiff and wanted to check the deflection detailing to make sure it would work according to the life design requirements. The top tip took Hibbs to Taylor Woodrow鈥檚 cladding technology expert, who worked up the detailing with the supplier for technical compliance. 鈥淜nowledge management gave us access to a large catchment of knowledge,鈥� he says. 鈥淲ithout it, we鈥檇 have had to go to suppliers and people who鈥檇 worked with them: just targeting individuals.鈥� Enquiry number 203
From online to on-site in minutes
The only fault with Internet-based recruitment service Subbies.com, says Tom Westlake, is that he doesn鈥檛 use it enough. Westlake is an estimator for the Midlands office of McCarthy & Stone, a speculative builder of retirement homes. His patch stretches from Norfolk to the Welsh border and many of his sites lie hundreds of miles away from his office in Coventry, often in places where his little black book doesn鈥檛 quite reach. While McCarthy & Stone has region-wide agreements covering main trades like groundworks and bricklaying, finding local specialists such as mastic pointers or asphalt roofers for the remoter sites is hard. Add skills shortages to lack of local knowledge and you can see why Westlake can end up spending all his time with the Yellow Pages. TIME SAVER
鈥淩inging around 20-odd tradesmen is fine, but it鈥檚 a lot of messing around,鈥� he says. 鈥淭he time you spend on getting someone spirals, which ultimately makes it expensive for the company.鈥� In areas where there鈥檚 plenty of work, such as Hull, not only is it hard to attract tenders, it鈥檚 also hard to get a straight yes or no, as tradesmen are reluctant to prejudice potential future work by turning a contractor down straightaway. And in areas without much building activity, there may be no-one listed at all in the Yellow Pages. For the last six months, though, Westlake has been using Subbies.com. When he鈥檚 looking for those elusive dryliners or mastic pointers in Llandudno, say, he logs onto the service and searches its database for them. He types details about the job 鈥� trade required, location, start date, end date, number of workers required on site, and so on, as well as his own number 鈥� into a dialog which Subbies.com sends as a text message to the mobiles of the subbies he鈥檚 selected. Those interested in tendering contact him. It鈥檚 not like using a recruitment agency. Subbies.com simply provides a list of interested subbies; the contractor then takes over the selection process, phoning subbies, winnowing out the unsuitable and taking up references himself. Some contractors like the extra control over the process Subbies.com gives them, but the real advantage is that you鈥檙e ringing subbies serious about a job rather than people who have got more work than they can handle. Enquiry number 204
Source
Construction Manager
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