Construction is one of the UK’s largest industries. Contributing 10% to the UK’s GDP its output is three times that of agriculture and larger than any single manufacturing industry. It also has the largest workforce – employing more than two million people.
However, despite the significant advances in design, product and process innovation by a vanguard of enlightened companies, the majority of the UK construction industry – particularly at grass roots level – retains many inefficient and outdated practices, which have long since disappeared in other industry sectors.
One of the biggest challenges facing the sector – at a time when skilled labour is increasingly rare and expensive – is the need to ensure that when labour is available it is used productively to increase project efficiency. That means getting materials to the right place at the right time.
The report of the “Rethinking Construction” Task Force, published in July 1998, highlighted logistics and supply chain management as one of many areas where the UK construction industry could improve, particularly by taking note of and learning from, the ways in which other industry sectors operate. The report cited ‘lean’ processes, as used in the car industry, as a vital means of obtaining sustained improvements in performance and bringing the construction sector up to the standards being achieved in many other areas of industry.
Six years on, there is still much work to do. Inefficiency and waste remain barriers to improved performance for many in the construction supply chain.
Wolseley UK, one of the largest distributors of construction, heating and plumbing materials – is one of the enlightened companies within construction which has seen that sophisticated logistics practices and robust supply chain management are essential to achieving sustainable improvement. Garry Flanagan (below) is director of logistics at Wolseley UK. He sees the company’s role as being the ‘lynchpin’ in the supply chain, which brings materials from the manufacturers to the sites where they are needed.
Flanagan says: “As a sophisticated merchant at the hub of the supply chain, Wolseley UK can eliminate inefficiency and waste in a number of ways. With a national network of distribution centres and branches, we are ideally placed to distribute materials efficiently and provide valuable, local storage capacity. This eliminates the problem of leaving materials on-site, vulnerable to damage and shrinkage and taking up valuable site space.”
He continues: “The use of a sophisticated logistics system can ensure that materials are delivered on site at exactly the right time. In the most successful cases, a carefully managed merchant-contractor relationship can make it possible to deliver to 30-minute windows into brownfield construction sites in urban areas. The close relationship merchants have with contractors and sub-contractors and their logistics and supply chain systems mean that they can provide the right supply solution for each client. We are able to provide our customers with an integrated solution and offer a hassle free one-stop-shop for our customers’ procurement teams. Our sophisticated IT systems including the use of XDA handheld computers means that we can use forecast information to ensure that materials are available on time, and track their delivery to site and re-order products quickly and efficiently.”
Efficiency gains
Wolseley UK’s highly sophisticated hub and spoke network of distribution centres across the UK plays a crucial role, enabling fast delivery of most of its vast range of products as well as rapid replenishment of stocks across its 1,500-plus branches. The distribution centre (DC) at Melmerby, North Yorkshire, is the company’s newest facility.
With a comprehensive product range and a highly automated operation, the Melmerby DC is an extremely efficient operation, which is setting standards for the rest of the UK. The automation provided by VanDerLande Industries is controlled by a computerised system linked to the warehouse management system which, in turn, is linked to the host stock file, and ordering and replenishment system.
Wolseley UK has also used its extensive distribution network to take cost out of the extended supply chain (the combined supplier-Wolseley UK supply chain). This is done by integrating suppliers’ and Wolseley UK’s supply lines to share the benefit of the resulting efficiency gains.
Flanagan continues: “Our national network of distribution centre and branches enables us to provide an unrivalled delivery promise and nationwide access to our products and services. We provide our customers with a variety of added-value services, and ensure a tailored approach to their needs including direct delivery from our distribution centres and off-site prefabrication. The Wolseley UK trade park initiatives and express high street branches also offer customers even greater accessibility to our products and a higher level of convenience.”
A £100M investment was recently announced to further increase the capacity of Wolseley UK’s distribution network, to meet growing demand while improving customer service. Plans have been submitted for a 31,620sq m national distribution centre in Leamington Spa – on a site adjacent to the company’s new UK headquarters – which will serve all of Wolseley UK’s brands and work alongside the regional distribution centres in Melmerby, Worcester and Marston Gate (near Milton Keynes).
This marks a continuation of Wolseley UK’s restructure and re-brand, announced in March 2004, which is streamlining the company’s operations and maximising the efficiencies across all seven of its operating brands – Plumb Center, Build Center, Hire Center, Climate Center, Parts Center, Pipe Center and Drain Center.
Wolseley UK and Taylor Woodrow are piloting a partnership scheme on a housing development at Breme Park, Bromsgrove. The 104-dwelling development is a mixture of three-storey apartments as well as two-, three-and four-bedroom houses. It is the first time a partnership of this kind has been undertaken with a house builder. The company has a mini-branch on site manned full-time by Andy King, a Wolseley UK employee with more than 20 years’ experience in the construction industry. Through close liaison with the site manager and links to both Wolseley UK and Taylor Woodrow’s IT systems on-site, King manages all of the ordering and delivery of materials on Taylor Woodrow’s behalf.
King’s understanding of the build process, combined with knowing exactly which stage of construction each unit has reached, radically improves efficiency. The only materials brought on site are those that are needed.
Wolseley’s bulk distribution sites at Dudley and Northampton package the materials for each specific unit and they are either delivered direct to the plot or held in an on-site compound ready for delivery the following day. Smaller items are assembled into plot lots on site.
Reduced costs
The main challenge that Wolseley and Taylor Woodrow have faced is the resistance to change, which is ingrained in the culture of the industry. This resistance means it can take a lot of effort and a long time to make progress, reach agreement and establish terms and conditions.
However, having seen the partnership in action this resistance is melting away, but it has taken absolute proof of the benefits to convince people that the old method of procurement was not necessarily the best.
With materials taken care of, the site manager is free to concentrate on the build programme. Having more time to spend working with sub-contractors means problems can be identified and overcome quickly which leads to improved quality and less snagging at the end of the build phase, which reduces costs and avoids tying up skilled labour for longer than is absolutely necessary.
Before the pilot, the site manager spent 60% of his time chasing materials and managing deliveries. This has been reduced by 50% and when the pilot moves to phase two, where all subcontractors also buy through Wolseley UK this will reduce further.
The project is currently ahead of schedule and in the interests of continuous improvement, Wolseley and Taylor Woodrow are working to establish and measure the financial savings, time savings and the increase in productivity that have resulted from this collaboration.
It is clear that Wolseley UK is making great strides in improving efficiency and leading the way in developing supply chain solutions to meet customers’ needs. In the industry at large, however, a significant step change is still required to bring logistics and supply chain management up to the standards of many other commercial and industrial sectors.
Flanagan comments: “The only way that the industry can make any real progress is by developing close partnerships between suppliers and customers and for supply chain integration to become part of the culture of construction. At Wolseley we are aiming to create more awareness of the issues of supply chain management within construction and are constantly reviewing our own supply chain. We will be investing further in our infrastructure, processes and systems and most importantly our supply chain staff.”
He continues: “Our team of supply chain professionals will focus on taking our supply chain to the next stage of development across warehousing, transport, demand and supply planning. We also have a supply chain development team, which will design and implement the strategy for Wolseley UK over the coming years. We are also focused on sharing best practice across the Wolseley group and beyond through a supply chain committee and we aim to achieve a results-based culture through key performance indicators and rewarding individuals and teams on the basis of their performance.”
Through working with its supply base and customers, Wolseley UK will continue to take advantage of integration and collaboration opportunities to drive down cost and offer unrivalled service.
Flanagan concludes: “Supply chain expertise is a core competency to us. Ultimately, we are a distribution company. Great facilities, modern systems and automated materials handling solutions are essential, but beyond that there are other initiatives we are developing to ensure that we can accelerate the benefits achievable through our best-in-industry supply chain. We aim to use our national scale and supplier collaboration to plan efficiently at a national level whilst delivering great customer service locally. We are currently developing a category management approach to build on our commitment to getting products to the right place at the right time.
“Collaboration and supply chain integration is the key to the successful future of construction logistics. Partnership with our suppliers enables us to share demand data to improve product availability and successfully bring new products to market. Partnership with our customers allows us to better understand their needs and provide a tailored end-to-end solution to their needs.”
THE WOLSELEY FACT FILE
- It is the largest distributor of construction products in the UK.
- Wolseley UK’s sales were £1.2Bn up to July 31, 2004.
- The company has 139,500sq m of warehousing – the equivalent of 19 full size football pitches.
- Wolseley employs more than 11,000 staff in the UK.
- It can supply every single product and material needed to build an entire housing estate.
