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Gear Up RockyBusiness Readiness

Video 4 Booklet

Framework for Building Supply Chain Capability and Capacity

Gear Up Rocky - Business Readiness Video Series

CONTENTS

1. FRAMEWORK FOR BUILDING SUPPLY CHAIN CAPABILITY & CAPACITY.....................................................3

1.1. Framework Overview...................................................................................................................................3

1.2. Developing Capability by Responding to Trends.........................................................................................4

1.3. Tender-Ready Activities..............................................................................................................................7

2. NEXT STEPS........................................................................................................................................................... 7

APPENDIX A: TENDER-READY EVALUATION.............................................................................................................8

APPENDIX B: TENDER-READY ACTION PLAN EXAMPLE..........................................................................................9


1. FRAMEWORK FOR BUILDING SUPPLY CHAIN CAPABILITY & CAPACITY

1.1. Framework OverviewParticipating successfully in major projects supply chains can be achieved by implementing LSC Solutions Pty Ltd’s Framework for Building Supply Chain Capability & Capacity which is outlined in the diagram below.

Framework for Building Supply Chain Capability & Capacity

Source: LSC Solutions Pty Ltd’s agency Supply Chain Manager® http://www.supplychainmanager.com.au/solutions/

Strategic Business Plan: Participating in major projects supply chains requires a strategic approach. It is a strategic decision, requires strategic planning and needs to be incorporated into your Strategic Business Plan.

Supply Chain Performance Management: What is not measured, is not managed. The performance of each supply chain segment from source to origin (e.g. supplier to customer) needs a balanced set of performance targets that align with the Strategic Business Plan (e.g. reliability, responsiveness, cost etc.). Improvement opportunities need to be identified and prioritised.

Leading companies identify the performance requirements of their key customers, major supply chains, shareholders and key stakeholders, and then configure their supply chain network, processes and resources to

achieve these requirements.

Supply Chain Strategy: Your Supply Chain Strategy identifies how your business and its supply chains will deliver your Strategic Business Plan to achieve your strategic performance targets, and provides a roadmap for the development of your supply chain network, processes and resources to world-class standards.

Supply Chain Network Management: Your supply chain network (domestic and international supply, logistics infrastructure, company operations and distribution) needs to be configured, optimised and managed in accordance with the requirements of your Supply Chain Strategy – to ensure goods and services flow efficiently from supplier to customer (per supply chain segment) to achieve performance targets.

Supply Chain Process Management: Your supply chain processes need to be designed to best practice standards and in compliance with the operational and performance requirements of your Supply Chain Network. Policies, rules, processes and procedures need to be current, proven, optimised and integrated to performance targets.

Supply Chain Resources Management: Your supply chain resources (people, materials, finished goods, parts, tools, equipment, technology and budget) need to be sufficient, optimised and capable of supporting your Supply Chain Processes and the Supply Chain Network to achieve performance targets.

Strategic Business Plan

Set Strategic Direction & Strategic Targets

Supply Chain Performance

Develop & Manage Performance Scorecard

Supply Chain Strategy

Develop Roadmap to deliver Strategic Business Plan

Supply Chain Network

Configure Network to deliver Supply Chain Strategy

Supply Chain Processes

Implement Best Practices to organise & control Supply Chain Network

Supply Chain Resources

Optimal resources to support Processes and Network

http://www.supplychainmanager.com.au/solutions/


1.2. Developing Capability by Responding to TrendsTo assist suppliers, the former Heavy Engineering Industry Reference Group (HEIRG) identified that local and national suppliers need to be responding to trends through the following strategies:

Ensuring that they are up to date with the latest technologies. Forming supply chain linkages to secure work in the major projects market. This includes networking and forming

bidding teams to better target these opportunities. Investment in systems to ensure that firms are compliant with regulatory and project system requirements. Attraction and retention of workers and developing skills. Having the capacity to meet regulatory and project requirements. Improving quality. Differentiating capabilities, products and services – focusing on a value-added positioning. Improving value and competitiveness. Addressing environmental priorities including energy reduction, effective environmental systems and recycling. Improving productivity. Expanding capacity or size. A stronger customer focus and building responsiveness to customer needs. Improving performance.

Source: Former Heavy Engineering Industry Reference Group

1.2.1. Tier 1 SuppliersA world class supplier to a major contractor and Tier 1 contractors, needs to be proficient in the following areas:

Customer focus Technical capabilities expertise Capacity Innovation and responsiveness Technology and productivity Systems Performance track record Value for money.


1.2.2. Tier 2-5 Supplier DevelopmentHEIRG developed a profile of requirements for each Supplier Tier from Tier 2 to Tier 5, covering each of the above areas of proficiency, so that these profiles may be used as a guide to develop capability and capacity.

The qualities required are ranked in three levels: Core or assumed capability – 3 stars Important capability requirement – 2 stars Desirable capability – 1 star.


Theme Attributes Tier 2 Firm – World Class

Tier 3 Network – World Class

Tier 3 Firm – Good Performer



Customer focus

Understands relationships and has the capacity to build and sustain long-term, positive supplier relationships.

Strong customer focus – responsive, understands customer needs and has the flexibility to respond to these needs.


Theme Attributes Tier 2 Firm – World Class

Tier 3 Network – World Class




Customer focus

con’t

Has a good understanding of the major projects environment and has a good specific understanding of the current project

Has a good working understanding of the project development pathway and where the supplier’s own firm fits in this pathway

Typically has a successful past relationship with a tier 1, tier 2 or tier 3 supplier to major projects.

Regarded as being easy to work with

Open, transparent and has integrity.

Strong focus on collaboration – working with clients on shared goals and objectives. Able to align with project values and drivers.

Technical capabilities and

expertise

Has strong technical, design and innovation skills at management level, senior operational and at tradesperson/operational level.

Capacity to supply products and services valued by major projects.

The supplier will typically be well known within their local region as a solid, strong performer in their area of supply or activities.

Diversity of product/service offering – providing a range of needed capabilities.

Capacity to understand project KPIs, align management systems to KPIs and monitor KPIs.

The firm has a commitment to building skills. This includes succession planning for key positions, lead team stability and attraction, retention and skilling of staff.

Strong track record in managing industrial relations issues.

Understands the major projects market and performance expectations of this market.

Ability to manage their own work to the standard expected by the next tier – managing upwards.

Capacity Significant capacity to produce and/or the ability to expand production through subcontracting networks.

Financial capacity to undertake significant work packages

Innovation and responsiveness

Track record of innovation and problem solving.

Value adding to exceed customer expectations.

Flexibility and responsiveness are a hallmark of the firm’s approach.

Good ability to deal with unexpected issues.

Capacity to provide follow up service and product/work support.

Theme Attributes Tier 2 Firm – Tier 3 Network – Tier 3 Firm – Tier 4 Firm – Tier 5 Firm –


World Class World Class Good Performer Good Performer Good PerformerTechnology

and productivity

Significant investment in technology and information technology.

Continuous improvement focus including productivity improvement.

Significant design capabilities.

Systems Has a quality control system or is quality assured.

Has management systems to manage work on the firm’s premises and on site.

Has a safety management system (upper tier) or procedures in place to comply with site safety requirements.

Has an environmental management system. Focus on energy, water and resource use reduction.

Has strong document control e.g. invoicing, project documentation, handover documentation.

Actively monitors costs and controls costs.

Has effective project reporting systems – clear, easy to understand.

Capacity to understand, respond to and proactively manage compliance issues.

Competent tendering skills.

Track record of delivery on time.

Performance track record

Consistent, high quality performance on projects.

Strong budget management and cost control.

Good communication.

Known for reliability.

Manages risk effectively

Competes successfully in a range of markets. May be an exporter.

Has a focus on delivering value for money.

Value for money

Aims to understand client drivers for value.

Balanced approach to cost variations. Where possible resolves issues rather than resorting to contractual variations.

Competitiveness is a driver and uses innovation and technology to improve productivity and reduce the cost profile.


1.3. Tender-Ready Activities Go to Appendix A and complete the Tender-Ready Evaluation for Framework for Building Supply Chain Capability &

Capacity.


Go to Appendix B and use the Tender-Ready Action Plan example for this topic to develop your own Action Plan.

2. NEXT STEPS Become an Advance Rockhampton Member and keep up to date with the latest news and business opportunities

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Explore the Advance Rockhampton website for new developments, events and support

www.advancerockhampton.com.au

Explore the next Video: Expanding Your Business to Seize Opportunities

For more information contact the Regional Development Team:Phone: 07 4932 9000Email: [email protected] Webpage: www.advancerockhampton.com.au/

http://www.advancerockhampton.com.au/

mailto:[email protected]

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APPENDIX A: TENDER-READY EVALUATION

Framework for Building Supply Chain Capability & Capacity

Y: Yes

N: No

U: Unsure

S: Satisfactory

NI: Needs Improvement

NA: Not Applicable

Does your business have a Strategic Business Plan; and does it incorporate your strategic approach to participating in major projects supply chains?

Does your business have and manage a Supply Chain Performance Scorecard; and are targets aligned with and driven by your Strategic Business Plan?

Does your business have a Supply Chain Strategy and Roadmap for establishing your supply chain network, processes and resources to world-class standards to deliver your Strategic Business Plan?

Is your businesses’ supply chain network optimised and managed in accordance with the requirements of your Supply Chain Strategy; allowing goods and services to flow efficiently from supplier to customer to achieve performance targets?

Are your supply chain processes designed to best practice standards and in compliance with the operational and performance requirements of your Supply Chain Network to achieve performance targets?

Are your supply chain resources (people, materials, finished goods, parts, tools, equipment, technology and budget) sufficient, optimised and capable of supporting your Supply Chain Processes and the Supply Chain Network to achieve performance targets?

Has your business identified its Supplier Development requirements in alignment with the requirements of its Supplier Tier?


APPENDIX B: TENDER-READY ACTION PLAN EXAMPLEDevelop your own Action Plan to increase your chances of success in winning opportunities in major projects supply chains. The following Tender-Ready Action Plan template provides suggested strategies and actions.

Strategy Actions Responsibility

Start Due

Due Date

Success Measure

Supply Chain Capability & Capacity Strategy

Develop or update Strategic Business Plan and incorporate strategic approach for participating in major projects supply chains.

Develop and implement a Supply Chain Performance Scorecard that is aligned with the Strategic Business Plan.

Develop a Supply Chain Strategy and Roadmap to deliver the Strategic Business Plan.

Review and optimise supply chain network to ensure the flow goods and services achieve performance targets.

Review and update supply chain processes to best practice to comply with operational and performance requirements.

Review and optimise supply chain resources (people, materials, finished goods, parts, tools, equipment, technology and budget) to support Processes and Network.

Identify Supplier Development requirements in alignment with the requirements of your Supplier Tier.

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