Take a leaf from Japanese book of good practice, says Martin Reid
Recently I read a very interesting interview piece by Alastair Wylie, the chief executive of major construction company CCG who was explaining how his company had weathered the recession and had come out of the other side. He was quite rightly very positive about how they were moving forward but I was interested to note that he made mention that working closely with his sub-contractors had been a key reason for the company moving forward.
The idea of working closely with sub-contractors is nothing new and indeed the Japanese turned the supply chain into somewhat of an art form as Toyota implemented their “Just in Time” (JIT) production methodology. This involved minimising waste throughout the whole process (Kaizen) and importantly, keeping both the customer and the supply chain close at all times. For some suppliers, this meant physically re-locating their businesses onto the Toyota production site in order to aid face-to-face discussion and problem solving.
The relationship between the client and main contractor hinges on the performance of the supply chain, particularly in the relationship between the main contractor and the hauliers who they employ as sub-contractors. We have seen that the most productive examples of this relationship within the haulage industry are where both parties identify and agree the correct service levels required and review them regularly. The Japanese worked out that the best time to eliminate waste was at the design stage, and so it became essential to have the sub-contractors on board at the earliest stage to collaboratively “design out” anything within the process that could be construed as waste.
Hauliers have been operating JIT systems for years but the bite of recession has meant an even greater sharpening of the pencil; only stocking the exact requirements of the contract, carrying no spare stock and no spare capacity because there is no future order book to fulfil.
Clients and main contractors looking for new hauliers to sub-contact work to may be fishing in a diminishing pool. The cost of new vehicles and the high cost of fuel mean that barriers to entry are considerable and this is reflected in the falling numbers of hauliers in the UK today. In 1970 there were 545,000 lorries on the road in the UK but by 2013 that number was 386,000. When you think that 85 per cent of all deliveries are done by road then finding sub-contractors becomes problematic, and this problem may become further exacerbated as some of the older drivers will retire when the requirements for driver Certificate of Personal Competence go live in September this year.
Over the past few weeks I have been visiting member companies and finding out more about how they are dealing with their suppliers and haulage sub-contractors. Although they have concerns about the Driver CPC legislation influencing older drivers to leave the industry, potentially reducing the pool of sub-contractors further, they all see the value of keeping the supply chain close and encourage regular dialogue. To this effect the RHA has been encouraged by the amount of requests by companies who would like us to conduct our ISO 9001 accredited Systems Compliance and Procedure audit of their businesses. We are delighted that one of our larger members in England has said they would like us to carry out an audit on their 100 sub-contractors. Essentially, they see the value of gaining an intimate knowledge of their sub-contractor’s capabilities, strengths and weaknesses as essential in potentially getting the most out of their sub- contracted hauliers, eliminating waste as well as reducing risk for them as main contractors. All part of the best Kaizen traditions.
There is little doubt that Britain is moving out of recession but profitability remains an issue. The old adage says that it is easier to save a pound than to earn it and that rings very true today. One of the best ways to save money is through the elimination of wasteful practices and the best way to do that is to foster closer relationships with your supply chain. The UK haulage industry is full of resourceful and forward-thinking people. Consult with them, keep them informed and pay them on time and you will find your goods will get to where you want them to be when you want them. Your relationship with your haulier can enhance your company’s reputation. Sub-contractors are getting thinner on the ground. Look after your hauliers and give them a fair deal because new ones may be difficult to find.
• Martin Reid is director of the Road Haulage Association www.rha.uk.net