Sector - Housing
Delivering for the UK construction industry
Despite being something of a tumultuous year, with June’s Brexit vote and the subsequent change of leadership at No. 10, 2016 has left the long-term prospects for the UK construction market looking distinctly positive.
In his Autumn Statement, the Chancellor delivered encouraging news for the sector, with a commitment to significant investment in new housing and local transport networks. The deal with Hinkley Point C is also now complete and other major infrastructure projects, including HS2 and the third runway at Heathrow, look set to follow suit.
There is a cloud on the horizon, however, as forecast by Cast CEO Mark Farmer in his recent government-commissioned report on the UK Construction Labour Model.
In his hard-hitting analysis, Farmer declared that the construction industry needs to take “radical” steps to avoid “inexorable decline” – and soon. As part of his diagnosis, he argues that the adoption of optimisation techniques commonly used in other industries has been slow; periods of under-utilisation frequently offset longer-term structural margins, and there now exists an almost accepted perception that many businesses in the sector are unable to accurately deliver to plan.
However, the many challenges Farmer raises are not insurmountable and, in my view, Third Party Logistics (3PLs) providers can deliver several immediate solutions.
I lead a team responsible for delivering more than 400,000 loads to construction and building sites across the UK every year. We deliver everything from bricks and mortar to heavy machinery and tools. My role isn’t just limited to construction, however, and I also oversee logistics operations across industrial, manufacturing, energy and defence industries.
By working across a wide range of businesses and sectors, 3PLs are ideally placed to facilitate collaboration and integration across supply chains. We’re also an increasingly valued source of guidance for our customers; helping them to improve the cost to serve and implement new, more advantageous supply chain practices.
One way we can do this is by identifying customers that can benefit from sharing assets – even if those customers are competitors.
In construction, because so much of the market doesn’t operate in a 24/7 cycle, there are huge benefits to this approach; not least of all, by countering the negative effects of under-utilisation noted by Farmer.
Ultimately, the concept of a construction business owning high levels of its own fleet, resourced to peak, is being challenged. Whilst many construction businesses maintain a core fleet of their own, our customers increasingly expect the costs and scale of their logistics solution to be able to flex in-line with demand. This is where a 3PL can really add value to the sector.
By enabling new ways of collaborating to address periods of equipment under-utilisation and providing truly flexible logistics solutions, 3PLs can help construction businesses protect their margins and increase the profitability of their operations.
Addressing planning accuracy
A staggering 70% of delays on construction sites are caused by non-availability of essential materials. It’s these delays that push up costs and eat into profits. Unfortunately, the situation is only going to become more complex as the trend towards wide-scale use of sub-contracting and tiered transactional interfaces becomes more commonplace.
It’s time, perhaps, for construction to target a smarter, more joined-up way of working and building the logistics strategy into a project at the concept stage is the way forward. Unfortunately, too often logistics solutions are added on at a later stage, almost as an afterthought.
Having a single company overseeing project logistics from the very start can make all the difference and, as projects become more complex, one way to minimise on-site delays is to use consolidation centres.
These offer a faster, smarter, greener way of working with multiple suppliers, providing a centrally located facility that manages the delivery and fulfilment of building materials to nearby sites.
Virtually all the materials needed for a project arrive straight into the consolidation centre and are then delivered in smaller quantities to sites on a ‘just-in-time’ basis – with materials being centrally checked to ensure they’re on-spec and damage-free. As a result, unnecessary delays are minimised and site teams can be assured that all building materials delivered are immediately available as required and fit-for-purpose.
The benefits are far reaching, not just in terms of speed and efficiency, but also carbon and cost savings. In our own experience, we’ve seen delivery reliability rise to 97% from an average of 50% and expensive downtime has been minimised as construction workers have exactly what they need, when they need it.
I’ve seen first-hand the benefits of closer collaboration to delivering construction projects. I also know the key role 3PLs can play in bringing all parties together. By targeting best practice with minimal down time, and pitch perfect delivery to a well-defined plan, many of the challenges raised by Farmer’s Review can be tackled and all involved can look forward to a brighter future.
Chris Fenton, Managing Director, Industrial and Transport, Wincanton PLC
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