Build Magazine April 2016

Build Magazine 48 By Lee Brunsden, BuildingConfidence Community Manager for Achilles The construction sector has proven itself to be no place for the faint hearted – seemingly never-ending challenges, from skill shortages, to financial failure of suppliers, low margins and pressure on cash flow. But perhaps even more troubling is that new research not only exposes a ‘melting pot’ of potential issues – which threaten the reputa- tion and future of construction firm – but also highlights how unprepared many firms are to cope. Independent research consultancy IFF inter- viewed 117 construction companies across the UK, USA, Spain, Brazil, Australia, South Africa, the Nordics and the Middle East, which identified three key risks associated with suppliers – lack of information, lack of audits and lack of visibility. Following the top three tips below will help prevent any supply chain risks. Challenges obtaining supplier information: Research from IFF found that 39% of con- struction businesses across the globe do not or do not intend to have a plan in place to find out who is in their supply chain. This presents a fundamental problem, as by not knowing who you’re doing business with, construction businesses are leaving themselves open to un- ethical practices, illegal trading or reputational damage. The research also highlighted that 25% of construction businesses across the globe are awarding contracts or tenders to main suppliers without first having an anti-bribery and corruption policy in place. If a quarter of construction businesses are not doing this basic risk prevention measure with their main suppliers, it makes you wonder what could be happening further down the supply chain. All this signals that construction supply chains are under more pressure than ever before. Not only do they span multiple continents, they go deeper than previously with more tiers, as contractors look to increase their supplier base, to achieve cost savings or to obtain the materials needed. If you don’t know who is in your supply chain, you can’t ensure compliance. With mounting legislation such as the Modern Slavery Act, construction companies are under pressure to establish chains of custody for core materials such as timber, demonstrating where it has come from and whether it’s sustainable – from sapling to sale. With construction companies facing issues around sourcing materials, it has never been more vital to ensure they are from a reputable source. If materials are bought from an unethical supplier, buyers are coming up against a series of risk factors which could impact repu- tation and finances – a potentially lethal combination. Steps have been taken by the Government through its Modern Slavery Act to clampdown on these illegal practices, but there is a moral onus on construction businesses to take action and not fall foul of the law. The Modern Slavery Act, introduced last year, requires any organisation operating a business or part of a business in the UK, with a turnover of £36+ million, to produce a slavery and human trafficking report each financial year. This statement must confirm steps have been taken to guarantee that no slavery or human trafficking offences are happening in the supply chain. Alternatively, businesses can declare that no steps to confirm the existence of slavery or trafficking have been taken. With penalties resulting in a public shaming for businesses who fail to comply or being taken to the High Court, construction businesses will not want to risk reputational damage. Challenges auditing suppliers Only through auditing the supply chain thoroughly, and rigorously checking supplier details through every tier will construction companies be truly confi- dent of ethically sourced materials or not falling foul of legislation. When it comes core materials such as ethically sourced timber, each log is coded, so buyers know they have sourced their materials from a legal and well managed forest. Not using ethically sourced materials results in forests being destroyed. It also results in communities losing their natural re- sources, such as food or fuel, and aren’t being compensated in return for the loss. Therefore, construction businesses, big and small, have a moral duty to comply, as their actions could have catastrophic consequences. Mapping supply chains isn’t just about compliance. Knowing who you are Construction Businesses Can Shore up Their Supply Chains by Removing Risk Construction