As the house building industry is challenged by ever-increasing regulation, more demanding planners, a shortage of labour and customers whose expectations have transformed, the costs to your business continue to rise while the price you can sell your stock for doesn’t.
With a strategy based on continual price growth no longer viable, it’s those house builders who control their costs and reduce their time to build that will be the winners over the next 5 years.
Having spent decades working with house builders, construction firms and building material providers to help them dramatically reduce their costs – in one case identifying over £100m of savings for one house builder – we know where you should be looking and what you can do to quickly and effectively improve your operations to reduce cost and speed up your build. Ultimately improving your bottom line.
In this 4-part series, we break down the four key improvement areas that you should be focusing on to help you improve the performance of your sites, reducing costs and improving your time to build.
In part one we looked at Rework, part two focussed on Site Protection and part three was all about Plot Utilisation. In today’s blog we look at the final of our four key improvement areas, Material Availability and how you can make some simple changes to your processes remove the critical bottle necks on your sites.
In this series so far we’ve focused on the issues that happen during the build, now we’re going to talk about an issue that occurs before all of these and one that has a huge unseen cost on your build – bottle necks in your supply chain.
The supply chain to sites is a well-established and a much-maligned source of delays to build progress.
It is often highly complex, involving multiple suppliers and transport companies to get your materials where they need to be. This can be an ever-moving target for your operations teams as suppliers run out of stock, restock and then run out again.
What we often find is that these supply chains are managed inconsistently with relationships held locally at site or product level. This often results in a lack of clarity over the end to end supply chain and a lack of contingency plans for when things go wrong.
On smaller scale, simpler builds, this isn’t a problem, but when you’re managing multi-phase, multi-site projects this can be a real issue.
Without an end to end understanding of your supply chain it becomes almost impossible to plan effectively for contingencies – like when a supplier runs out of material – or respond to changes in the build schedule.
These delays can cause serious knock on issues on your sites and result in trades sitting around with nothing to do, or worse, going to work on a competitor’s site. Adding both cost and delays to your build.
By fixing these issues you can make significant savings. Using data collected from a study for a UK house builder we identified over £10 million of benefit that could be obtained through addressing their supply chain.
There are three primary reasons that cause these supply chain problems for you:
Poor material management processes: ineffective material planning can often lead to too much or too little being delivered to site. This leaves your team either struggling to find the right materials for their job or having to deal with where to put the overflow.
Ineffective measures: with most sites focused on build speed and quality, we often find that the measurement around materials is either limited or non-existent. As a result, it’s almost impossible to get an accurate site specific or regional view of where potential material shortages are likely to arise or where there is an excess of materials that could be shared cross sites.
Incorrect equipment to move supplies: while your supplier may be able to deliver the materials to your site, they often won’t take it further than the drop off point. Without the correct equipment available to safely move the supplies they sit dormant, unable to be used until they can be taken to the correct store or unit.
Before you can identify which of these causes is the largest contributor to your problems you need to understand your supply chain.
You’ll want to map out the high-level supply chain and analyse the performance data for your sites.
Once you’ve done that, you’ll be able to see where your biggest problems are and start to understand which element of your supply chain these relate to.
The next step is to select a group of sample sites, ideally sites that use the same suppliers, and begin to measure your materials in detail – what’s coming in on time, is it the right quantity and is it to the right quality. Armed with this data you will then be able to go supplier by supplier and where required either work with them to improve their service to you or begin the process to find a new supplier who will better suit your requirements.
You can fix many of the problems on your sites but if you can’t get the materials where they need to be, when they need to be there, you’ll continue having issues.
These are issues that you can fix by taking a more holistic approach to procuring materials, firstly looking site wide and then region wide to help respond to shortfalls and minimise the instances of materials sitting idle.
By ensuring that you are ordering your materials effectively, measuring performance and have the right equipment on hand to deal with consignments as they come in, you’ll be able to improve the flow of materials to your plots and speed up your build process.
So there you have it, having read through each of the blogs in this series you will now have a clear view of each of the four issues that you will want to address to help you save millions of pounds across your sites and dramatically improve your bottom line.
If you don’t want to wait until next week you can download our detailed ‘Weathering The Storm’ eBook where we explain the tried and tested approaches that we’ve used to help firms across the industry dramatically improve the efficiency of their build programmes and increase their bottom line.
Download our Weathering the Storm eBook today!
If having read this blog, you want to take action but don’t have the knowledge or capacity to do so then that’s where PMI can help.
We have a strong heritage of working with house builders to help them understand where the issues are hiding on their sites and put in place effective improvements to turn their business goals in to results.
If you want to find out more please get in touch with our Managing Partner, Rich Seddon: Rich.Seddon@pmi.co.uk
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