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The Importance of Sustainable and Flexible Supply Chain

Industry Developments
The Importance of Sustainable and Flexible Supply Chain
15/12/15

The Importance of Sustainable and Flexible Supply Chain

Supply chain is a crucial element for operational efficiency. The right supply chain leads to company success and customer satisfaction. To maintain cost certainty and quality, robustness and sustainability is absolutely essential. There can be fluctuations in the global commodities market which can cause ripple effects within the economy. These fluctuations can be related to a shortage of skilled labour or advancement in technology. With each small fluctuation, there can be a knock on effect through the entire chain.

 

To make sure that everything is stable, you should realise the risks in the supply chain. These risks could be due to the local, regional, and global market conditions or related to shipment and delivery inaccuracies. To control them, you need to understand their parameters. With clear boundaries, you can build a sustainable system that can offer business continuity. It is best to document the entire process so that risks can be easily identified.

 

Conflict areas and due diligence

Companies in the construction sector often come across conflict areas that require risk based due diligence. These companies should check their supply chain to identify the hazards that may be causing a loss through certain activities. When they report them publicly, the companies can show their consumers as well as investors that they are committed to acting responsibly. With due diligence, a company can prevent damage to its reputation and brand.

 

The skill gap

The recession in the construction industry had forced the supply chain dynamics to change as several major contractors went bust and there was a shortage of expertise to meet the growing demand. Now with the change in global conditions, the construction sector in UK has become a leading driver of the country’s economy. However, with a shortage of skilled professionals, the construction sector is facing many challenges as it depends a lot on the workforce. Recruitment agencies dealing in construction sectors are facing a lack of qualified candidates for the present job market. While the construction industry is a vital part of economic growth, skill gaps can be threatening and derail the progress.

 

There are still some professionals who can deliver quality and they command high prices for that. This high cost can upset the cost stability of supply chain, which can lead to imbalance in several other sectors. Some other major variables for stability are:

 

  • Rising cost of raw material: As the costs of raw materials rise, the construction costs go up. This can have an impact on the upcoming projects which have had budgets set many Months previously.
  • Shortage of skilled labour force: With the last recession, many construction professionals made a change in career and now the industry is facing a shortage of skilled labour.
  • Lack of company competition: There are few skilled professionals left in the market, and this is why there is almost no competition. This is another reason behind the rising costs.
  • Risk of delivering and receiving substandard work: Many projects cannot afford the high cost of labour and resources, which is why they risk accepting substandard work.
  • Not engaging with flexible and innovative subcontractors: With the lack of subcontractors, the present professionals have a high workload, which means low flexibility/desire for innovation. There is a need for a better supply of talent.

 

New prospects in the job market

Due to the high risk nature of the construction industry, imbalance in cost stability can impact the global economy. If a struggling economy faces a slowdown on new projects, the recovery will take a long time, which can have an international impact. Investments are growing in the present time though. There have been new housing initiatives that have boosted the economy from the last recession. Employers have more confidence, and there are many prospects in the job market. It is the right time for people to get involved in the construction industry again which will ensure continued economic expansion.

 

While the construction industry has a solid ground in the UK market, there is a need for skilled labour including plumbers, bricklayers, and project managers; this shortage can affect businesses worldwide. As the demand for labour is greater, and the supply is less, it has led to a disparity which needs to be filled as soon as possible.

 

In a nutshell

The supply chain mechanism needs to be flexible and robust. Without these two factors, the quality of the project will suffer because of cost restraints, which in turn would lead to ineffective and non-sustainable buildings.