Market leaders in every industry are increasing their grip on the supply chain. They do so by monitoring rather than managing and working more closely with suppliers. The result of this may be that suppliers or contractors are absorbed into the culture of the dominant firm while avoiding the costs and liabilities of actual management. Powerful procurement departments emerge to define and impose the necessary quality standards and guard the lists of preferred suppliers.
The trend in many manufacturing businesses is to involve suppliers in a greater part of the manufacturing process. Much of the final product is the assembly of prefabricated subassemblies. This is particularly true of the automotive and aircraft industries. This is good practice as it:
- involves the supplier in the design process;
- reduces the number of items being managed within the business;
- reduces the number of suppliers;
- improves quality management by placing the onus on suppliers to deliver fully checked and tested components and systems.
In retail, suppliers are even given access to daily sales and forecasts of demand which would normally be considered highly confidential information. In the process, the freedom of local operating managers to pick and choose suppliers is reduced. Even though the responsibility to do so is often retained, it is strongly qualified by centrally imposed rules and lists and assistance or oversight.
Suppliers have to be:
- treated with fairness in a partnership;
- given full information to meet the demands being placed on them.
Under these conditions, suppliers and contractors looking for a business with major firms need greater flexibility and wider competence than earlier. This often implies increased size and perhaps mergers, though in principle bids could be, and perhaps are, made by loose partnerships of smaller firms organized to secure such business.
Advantages of good supply chain management
Reduction of waste
This is an important objective of any business and involves not only waste of materials but also that of time. Examples of waste are:
- unwanted materials due to over-ordering, damage, or incorrect specifications;
- extraneous activities like double handling, for example, between manufacturer, builders merchant, and the site;
- re-working and re-fitting due to poor quality, design, storage, or manufacture;
- Waste of time such as waiting for supplies due to excessive time from ordering to delivery or early delivery long before they are needed.
A well-managed supply chain should be able to respond rapidly to changing requirements. Winter conditions require very different materials than during warmer or drier seasons. A contractor may have to modify plans quickly, and suppliers may need to ramp up or change production at short notice.
Reduction in accidents
A closer relationship between clients, designers, principal contractors, and suppliers of services and products can result in a safer finished product and, in construction, a safer method of erection. If more products are preassembled in ideal factory conditions and then fixed on-site, it is often safer than utilizing a full assembly approach in poor weather conditions on temporary work platforms. Examples are made-up roof trusses and prefabricated doors and windows already fitted to their frames.
The HSW Act Section 6 places a duty on everyone in the supply chain, from the designer to the final installer, of articles of plant or equipment for use at work or any article of fairground equipment to:
- ensure that the article will be safe and without risk to health at all times when it is being set, used, cleaned, or maintained;
- carry out any necessary testing and examination to ensure that it will be safe;
- Provide adequate information about its safe setting, use, cleaning, maintenance, dismantling, and disposal.
There is an obligation on designers or manufacturers to do any research necessary to prove safety in use. Erectors or installers have special responsibilities to ensure that the plant or equipment is safe to use when handed over.
Similar duties are placed on manufacturers and suppliers of substances for use at work to ensure that the substance is safe when properly used, handled, processed, stored, or transported and to provide adequate information and do any necessary research, testing, or examining.
Where articles or substances are imported, the suppliers’ obligations are attached to the importer, whether they are a separate importing business or the user personally who does the importing.
Often items are obtained through hire purchase, leasing, or other financing arrangements with the ownership of the items being vested with the financing organization. The financing organization’s only function is to provide the money to pay for the goods. The supplier’s obligations do not attach to them.
Information for customers
The quality movement has drawn attention to the need to ensure that processes ensure quality, rather than just inspecting and removing defects when it is too late. In much the same way, organizations need to manage health and safety rather than act when it is too late.
Customers need information and specifications from the manufacturer or supplier – especially where there is a potential risk. When deciding what the supplier needs to pass on, careful thought about the health and safety factors associated with any product or service is required.
Duct or service. This means focusing on four key questions and then framing the information supplied to deal with each one. The questions are as follows:
- Are there any inherent dangers in the product or service being passed on – what could go wrong?
- What can the manufacturer or supplier do while working on the product or service to reduce the chance of anything going wrong later?
- What can be done at the handover point to limit the chances of anything going wrong? What steps should customers take to reduce the chances of something going wrong?
- What precisely would they need to know?
Depending on what is being provided to customers, the customer information may need to comply with the following legislation:
- Supply of Machinery (Safety) Regulations 1992 from December 2009 Supply of Machinery (Safety) Regulations 2008;
- Provision and Use of Work Equipment Regulations 1998;
- Control of Substances Hazardous to Health Regulations 2002 and 2005 amendments;
- Chemicals (Hazard Information and Packaging for Supply) Regulations 2002 and 2005 amendments.
Examples of problems that may arise when purchasing include:
- second-hand equipment which does not conform to current safety standards, such as an office chair that does not provide adequate back support or have five feet/castors;
- starting to use new substances which do not have safety data sheets;
- machinery which, while well guarded for operators, may pose risks for a maintenance engineer
A risk assessment should be done on any new product, considering the likely life expectancy (delivery, installation, use, cleaning, maintenance, disposal, etc.). The supplier should be able to provide the information needed to do this. This will help the purchaser decide on the total costs because the risks will have been identified and the precautions needed to control those risks. A risk assessment will still be needed for a CE-marked product. The CE marking signifies the manufacturer’s declaration that the product conforms to relevant European Directives. Declarations from reputable manufacturers will normally be reliable. However, purchasers should be alert to fake or inadequate declarations and technical standards that may affect the product’s health and safety despite the CE marking. The risk assessment is still necessary to consider how and where the product will be used, its effect on existing operations, and what training will be required.
Employers have some key duties when buying plant and equipment:
- They must ensure that work equipment is safe and suitable for its purpose and complies with the relevant legislation. This applies equally to equipment adapted to be used in ways for which it was not originally designed.
- When selecting work equipment, they must consider existing working conditions and health and safety issues.
- They must provide adequate health and safety information, instructions, training, and supervision for operators. Manufacturers and suppliers must provide information that will enable safe use of the equipment, substances, etc., without health risk.
Some of the issues that will need to be considered when buying in product or plant include:
- ergonomics – the risk of work-related upper limb disorders (WRULD);
- manual handling needs;
- storage, for example of chemicals;
- risk to contractors when decommissioning old plant or installing new plant;
- hazardous materials – provision of extraction equipment or PPE;
- waste disposal;
- safe systems of work;
- training; machinery guarding;
- emissions from equipment/plant, such as noise, heat, or vibration.