Your supplier and you are doing the same work! Graybar, a Fortune 500 company that specializes in supply chain management services and a North American distributor of high-quality components, equipment and materials for a number of industries, has found that 25% of all the work we do in construction related to material handling is redundant. How do we reduce this duplicated work? Talk with your supplier. You and they need to spend some time together observing the flow of material from your order to their picking, packaging and delivery and including your install and commission. Look for the following opportunities to only do work once:
· Kitting: Have them assemble the material rather than order it in bulk and your workers put it together on the jobsite. They can label and deliver it by your specified install sequence.
· Material staging:Storing material on the jobsite for very long periods runs the risk of being moved (usually several times) and damaged. Work with your suppliers to figure just when they should deliver (just-in-time or just-near-in-time) the material.
A contractor found that one of their suppliers always claimed a six weeks lead-time on some products. The contractor ordered the material as needed, six weeks in advance. However the supplier would deliver the material the week after it was ordered. This created a storage problem. You need to order when needed accounting for lead-times and the supplier needs to provide realistic lead-time estimates.
· On-site services:Your suppliers can do kitting and can also do assembly off site. There may be other services they can provide. Consider this case study of ordering material: The foreman places a material order with the supplier by filling out a material order and faxing it to the supplier. The supplier pulls the material order and enters the information from paper into their computer. The material, as ordered, is delivered to the jobsite and a hardcopy receipt is left with field supervision. The paper receipt is sent to the contractor’s accounts payable. The material order information is entered into the contractor’s computer. The supplier mails (hard copy) or faxes an invoice, for the material ordered, to the contractor. The invoice information is compared to the materials receipt sheet and original material order/purchase order. How much paper handling and data entry take place in the previous example? This can be simplified by working with your supplier.
· Project trailers: Maybe you don’t need a large fleet of jobsite trailers, including some that sit empty much of the year. Ask your supplier what storage options hopefully offsite they can provide.
· Customized delivery options: There may be opportunities for different suppliers to work together to further kit and package material to meet your needs and reduce field labor.
· Customized warehousing: You want to avoid storing any material at the jobsite or in the shop for very long, but if material must be stored, your supplier may provide alternative storage options.
· On-site storage: Never allow material to rest on the ground. Put it on wheels, pallets, carts or anything easily moved. Your supplier can supply many different options for keeping material mobile.
· Kanban refills: You want to maintain enough consumable material on the job to never run out, but not store an excessive amount. Your supplier can help you apply Kanban ideas to manage your inventory levels (or they can manage it for you). A contract had its supplier provide stocked parts at its shop and warehouse. The vendor would refill the material regularly. The problem was that it was feast or famine. They either had too much material on the shelves or ran out. The contractor implemented a min – max Kanban system. When the parts reached a specified minimum such as three valves then they would contact the vendor to come refill the bin. The supplier would stock the parts up to the designated maximum. This approach stopped the stockouts and also the overflowing of parts.
· Unpackaging material: When material is uncrated or taken out of its packaging boxes, scrap is generated. This adds to the clutter on the jobsite and impacts worker efficiency. Have your supplier unwrap the material and bring it to the jobsite ready to install. You will need to work with them to sequence it correctly. They may even do some assembly of the parts.
· Inventory management: Your suppliers can provide various levels of inventory control from basic restocking, to consignment ordering to full inventory control and record keeping. Some contractors have found that a parts vending machine works real well to manage tools and material that always seems to be disappearing.
Don’t get caught up in technology. Employ simple working systems first, then computerize them. Some companies invest much time and dollars designing complex, do all, computerized material management systems that never seemed to work as designed. Only use proven systems.
A trusting relationship with your supplier must either be developed or already exist. To develop trust you must lead the way. They need to know they can trust you. Using the late Stephen Covey’s analogy,trust grows as you make deposits to the relationship trust account. Avoid withdrawals, and if they happen recover quickly.
Be open to experiment. Not every new idea works perfectly on the first try; actually few do. Test and experiment and be willing to modify and try again. Your supplier can be a partner in helping to deliver greater value to your customer. You can start the conversation and ask to cut the sales lingo and instead share ideas and discuss possibilities.
Dennis Sowards is an industry consultant and guest writer for Contractor Magazine. He is the author of the Lean Construction Pocket Guide: Ideas and Tools for Applying Lean in Construction. His company is Quality Support Services Inc. He is currently serving an 18 month mission in Thailand for the LDS church. He may be contacted at [email protected].