Supply Chain Mentoring Toolkit

Supply Chain Mentoring Toolkit

Centre for Performance Improvement

Contents

1. Introduction...........................................................................................................3

2. Preparation for mentoring.....................................................................................3

3. The Mentoring role................................................................................................3

4. Mentoring skills and background knowledge........................................................3

Supply chain concepts..............................................................................................3

Relationship development and behavioural analysis................................................3

Communication skills................................................................................................3

Effective Questioning................................................................................................3

Delivering feedback..................................................................................................3

Applying listening skills.............................................................................................3

5. The Mentoring process.........................................................................................3

Initial review..............................................................................................................3

Follow up activities....................................................................................................3

Follow up sessions...................................................................................................3

6. Subsequent developments....................................................................................3

The development of a dedicated supply chain management role............................3

Working with fewer trade contractors.......................................................................3

The development of a supply chain strategy............................................................3

Preferred Trade Contractor Agreement....................................................................3

Contractor / trade contractor interfaces....................................................................3

7. Mentoring BME contractors...................................................................................3

8. Building Performance development programme...................................................3

2Centre for Performance Improvement

1. Introduction

This supply chain mentoring toolkit has been developed from the work carried out as part of a Department of Trade and Industry funded research project into construction supply chain management.

The research looked at how a main contractor, through using the expertise of its people, can support supply chain partners and locally based construction organisations. This toolkit is accompanied by a Best Practice Guide which gives an overview of the key research findings and makes recommendations.

The toolkit itself seeks to provide guidance to organisations on how to successfully mentor people within other organisations. Although based on the experience of a contractor it also has significant relevance for clients and consultants.

The result of this mentoring process has been to set in motion a chain of events that has lead to the establishment of a comprehensive supply chain strategy. Although there are many approaches to setting up such a strategy, the mentoring approach seems to be particularly powerful. This is because it involves the widest possible number of people, equips them with the necessary skills and knowledge, and gets the buy-in from the organisations that make up the supply chain.

Special acknowledgement would like to given to Denne Construction through whom this research project was carried out.


2. Preparation for mentoring

For any organisation that wishes to consider taking on a mentoring role it has to first establish whether or not this role is in alignment with its overall business strategy. A supportive business strategy is one which is built on the development of long-term collaborative relationships with its suppliers and customers. Without this basis it would be impossible to get mentoring to work – it would simply not be possible to build up the required level of trust between the two parties.

The other issue is what do the individual mentors feel about business relationships?Although the business strategy may be built on collaborative relationships, what is the reality in terms of the way individual managers or staff carryout their work?

A representation of the way that two people within an organisation can feel about what it takes to do a good job is shown in figure 1.

The top branch A – B – D of this diagram says that in order to do a good job ie make money for the company, we must maximise buying gains. And in order to maximise buying gains we must not limit who we potentially can work with. This represents the traditional view of contracting and a set of beliefs that is still ingrained within the industry.

The alternative view is expressed in the branch below A – C – D’. This says that in order to make money for the company we must maximise delivery performance. This means getting projects done most effectively within the agreed budget, programme and specification. In order to maximise delivery performance we need to limit who we work with, so that we can develop more effective relationships with these fewer organisations.

This tension exists in many organisations that have not yet made a full transition to working through long-term partnering relationships. The short-term interest of maximising buying gains is in conflict with the longer term interest of improving delivery performance.

So very clearly mentors need to be selected from those people who hold the set of beliefs as represented in the lower branch of the diagram.


Make money

for the company

Maximise delivery

performance

Limit who we

work with

Do not limit who

we work with

Maximise buying gains

A

D’

D B

C

Fig 1

3. The Mentoring role

What makes a good mentor? A good mentor is generally someone who is a high performer within their own organisation, who is knowledgeable about the issues effecting the other person’s business and is enthusiastic to support that person in achieving their desired goals.

In a construction business environment the people who are best placed to be mentors by virtue of their regular contact with trade contractors tend to be surveyors, estimators and to a lesser extent contract managers.

The issue here is that the area of expertise of people from these departments tends to be relatively narrow and specifically focused on the work role. This fact does limit the extent to which mentoring can take place between organisations. However, the skills necessary for mentoring can be very effectively used in developing more productive relationships between organisations.

Examples of areas in which mentoring was effectively used include assisting trade contractors with:

improving the way they present valuations

improving the method of preparing estimates for work

finding ways to work more effectively together as partners

4. Mentoring skills and background knowledge

In order to develop the appropriate skills, attitude and knowledge amongst the mentors it invariably requires the provision of training. The training programme developed for this project covered 3 key areas. These were i) gaining an understanding of supply chain concepts, ii) exploring issues of relationship development and behavioural analysis and iii) communication skills. Supply chain concepts

The first task in developing mentoring skills was to put the concept of mentoring in a supply chain in context. This is through an understanding of how value streams and information flows operate up and down the supply chain.

This was achieved by categorising and analysing different types of transactions between organisations. These categories consist of:

i) value flow (goods or services provided), ii) demand information (what is needed)iii) supply information (what is available) iv) payments

Together these transactions define the operation of the supply chain. How well these transactions are managed and coordinated determines the effectiveness of the supply chain.


Relationship development and behavioural analysis

This purpose of this area if training is to raise awareness of issues affecting people’s behaviour.

Fig 2 provides a representation of the interrelationship between the behaviour of two people. It says that a person’s behaviour towards another person is determined by their attitude which is in turn determined by perception. If person A wishes to change the behaviour of person B then the only mechanism that they have for doing this is to change their own behaviour. By changing their own behaviour they will be able to influence the perception of Person B. This in turn may result in a change of attitude leading to a change in that persons own behaviour.

This approach to managing relationships is made extremely well in a workshop exercise known as the Red & Blue game. In the game two or more teams have to decide if they are going to chose Red or Blue. The objective of the exercise is for each team to maximise their respective scores. The choice of colours by each team determines the outcome of points. Fig 3 shows the scoring mechanism.

The choice of colour is carried out by each team in isolation from the others. The exercise is played over 10 rounds. A facilitator checks the team’s colour choices at the end of each round, communicates the outcomes to each team and calculates the team’s respective scores. There are two opportunities during the exercise for the teams to get together for a conference to discuss strategy.


BehaviourBehaviour

AttitudeAttitude

Perception Perception

Person A Person B

Fig 2

Team 1 selectionTeam 2

selectionTeam 1 scoreTeam 2

scoreRedRed

+3+3RedBlue-6+6BlueRed+6-6Blue

Blue-3-3

Fig 3

The key learning point from this exercise is that in order to get a positive result the other team(s) must chose Red. Any other combination will result in a negative score. The only way that one team can influence the other team(s) is to go Red is to go Red itself. This demonstrates a commitment to be trust worthy. If this trust worthiness is not reciprocated then the relationship enters a downward spiral.

Communication skills

Next is training in a specific range of skills that support mentoring. These include:

Effective questioning Delivering feedback Applying listening skills

Effective Questioning

This involves exploring different types of questioning approaches and the context in which they can best be applied. Questions can be either open or closed and can be used to explore content, feelings or intentions.

Delivering feedback

This explores various styles of giving feedback together with a set of rules to consider when both giving and receiving feedback. These rules range from Don’t try to interpret or judge intentions to Summarise what you have understood.

Styles of feedback

Yes – No feedback the most common

Assessment feedback based on a scale

Evaluative feedback praise or disappointment

Advice feedback what I would do if I were you

Information feedback providing information on which the other party can use to calculate a response

Applying listening skills

Listening skills are probably the hardest set of communication skills to master, but probably the most important. The listener needs to be able to develop the ability to listen at three levels.

Level 1 - the content, the ability to listen and accurately record the content of what someone is saying. Level 2 - the feelings, what is the emotion behind the message.

Level 3 - the intentions, what is the motivation and commitment


5. The Mentoring process

The mentoring process consisted of a series of stages through which the mentor company went through with their trade contractors. These consisted of an initial review, follow up activities and a follow up session.

Initial review

Despite the fact that these companies had worked with the main contractor before, the level of understanding of each others businesses was not necessarily high. This review provided an opportunity for each party to increase their understanding of common issues. The review was structured to include the following parts:

Company information - understanding the nature of the business, size, ownership, management structure

Current business issues – issues effecting the performance and prospects for the business, ie obtaining work, recruiting the right people etc

General supply chain issues – payments, workload, sources of supply, information flow

Relationship issues with main contractor – areas that work well, areas that need improvement, actions that trade contractor would be interested in taking, support that they would like to receive from main contractor

Follow up activities – what is the agreed course of action for both parties to take

Follow up activities

The purpose of the follow up activities is to move the relationship and level of understanding to a higher level. This could involve carrying out more work to resolve a particular issue or to broaden the level of contact between the two organisations.

These activities included anything from a further meeting to review specific areas of common interest, a meeting with another person or persons from either organisation, a site visit or joint training.

One of the outcomes of these follow up activities was the development of a preferred trade contractor agreement. This agreement set out what each party could expect from the other in a partnering relationship.

Follow up sessions

The follow up sessions were scheduled to take place 6 months after the initial review session. Their purpose was to provide an opportunity to assess progress in the development of the relationship.

In a few instances the relationship was not able to develop. This was either because the company was not able to provide the services that were required at a competitive price or that difficulties or disagreement that emerge during the normal course of business were not able to be resolved through the mentoring process.

In the majority of cases the follow up sessions were able to reflect on improved performance in the relationship between the parties. This was in terms of improved methods of dealing with issues as and when the arose, an earlier involvement in projects, and generally a higher level of workload.


6. Subsequent developments

The mentoring approach provided the basis for developing a broadly based supply chain strategy within the company. This included establishing a dedicated supply chain management role within the organisation, working with fewer trade contractors, identifying key areas for improvement focus and developing a framework agreement.

The development of a dedicated supply chain management role

There has been a growing recognition of the importance of effective supply chain relationships within Denne. This culminated in the appointment of a dedicated supply chain manager in July 2004. The role is to facilitate the setting up of ‘tiered’ supply chain and to provide support to the rest of the Denne team when engaging with the supply chain.

Working with fewer trade contractors

It is not always practical for an organisation to limit its supplier base to 2 – 3 trade contractors for each trade. This is because a small number of trade contractors can not always the geographic range of work that a main contractor undertakes or has may not have the resources and expertise to carryout the full range of works required. The concept of a tiered supply chain is helpful in this situation. In a tiered supply chain the trade contractors can be categorised under the following headings.

Dedicated trade contractors – those trade contractors that have been selected to work on projects on behalf of an individual client. This arrangement relates to two strategic partnering relationships where the client is supportive of having specific trade contractors moving from one project to the next.

Preferred trade contractors – those trade contractors that have been selected to be considered for on-going work opportunities. These trade contractors are the ones that are invited to become involved early on projects in which case the cost is agreed by negotiation. Or they are invited to tender against a limited list of other preferred trade contractors. All the dedicated trade contractors would also be recognised as preferred trade contractors.

Approved trade contractors – the number of preferred trade contractors is too limited to support all the work that Denne currently undertake. This is because they do not offer the complete range of services that may be required, and they do not cover all geographic areas. Therefore this ‘approved’ list of trade contractors is maintained.

This approved list also acts as a reserve in the event that any of the ‘preferred’ trade contractors do not perform to the required standards expected of them.

The development of a supply chain strategy

Considerable discussion has been had over what a supply chain strategy should look like. Part of the strategy evolved in terms of working more closely with fewer trade contractors. This resulted in the development of the Preferred Trade Contractor Framework Agreement. The strategy has been developed to focus on the service level arrangements that a Contractor should agree with its preferred trade contractors. It is seen that the way that this relationship is managed has a considerable impact on cost.


Preferred Trade Contractor Agreement

The purpose of the Preferred Trade Contractor Agreement is to provide a framework in which the Contractor and its Preferred trade Contractors can work together for mutual benefit. Set out below are examples of a statement of principle and obligations.

Obligations of Contractor :

1. Provide opportunities to involve ...preferred trade contractor ... on a one-to-one basis on construction projects.

2. Provide information on anticipated future workload

3. Provide regular updates on anticipated start dates for commencement of works

4. Provide information in a timely manner so that works can be undertaken without unnecessary uncertainty and disruption

5. Provide a well managed and safe working environment

6. Deal fairly in all matters (Final accounts, Variations etc)

7. Provide objective feedback on ...preferred supplier’s.. performance

Obligations of preferred supplier:

1. Provide competitive and reliable cost advice and technical input during pre contract negotiations

2. Provide in full the resources that have been agreed to carryout the works allowing for flexible response to accommodate the building process

3. Provide complete information for valuations by the dates agreed at the pre-start meetings

4. Submit any dayworks in accordance with the daywork procedure agreed at the pre-start meetings

5. Work in a safe and professional manner and keep the work area clear of all rubbish and unwanted materials

6. Provide adequate H & S literature and project specific Method Statements and Risk Assessments

7. Complete works to the agreed standards and programme

8. Deal fairly in all matters (Final accounts, Variations etc)

9. Provide objective feedback on Denne’s performance

These obligations define the relationship between the parties. They can be regarded as necessary conditions for the partnering relationship to achieve its purpose. The success in meeting these obligations would be reviewed on a regular basis. Contractor / trade contractor interfaces


“Both organisations accept that the success of their respective businesses is dependant

on developing effective working relationships with their customers and suppliers

and continuously improving their capability in delivering value for money services”.

These necessary conditions alone do not guarantee success. For an effective supply chain strategy the value creating aspects of the relationship have to be reviewed and improved. The starting point would be the identification of the interfaces that exist between the main contractor and trade contractor into three categories.

Bid process – looks at the way that information is prepared for the trade contractors to price. It also deals with developing the knowledge internally of what typical construction elements should cost for different project types in order to strengthen the basis for negotiation.

Contract process – refers to the way that contract matters are dealt with. This includes valuations and dealing with variations.

Construction process – refers to the way that sites are managed. This factor is considered to be the most important in relation to influencing trade contractor costs and productivity.


7. Mentoring BME contractors

The mentoring approach is designed to assist BME contractors in winning more work and developing expertise within their business. This objective is widely shared amongst housing associations and public sector organisations. However, the research points to certain difficulties that these organisations have in meeting these objectives.

There are two areas that need addressing to overcome barriers to BME contractors obtaining more work. These barriers are not confined to BME contractors but are shared by many small and medium sized construction businesses.

The first barrier is current procurement practices which is determined largely by the organisations themselves. The majority of contracts that would be considered suitable for small and medium sized BME contractors generally tend to be procured through lowest cost tendering and schedule of rates. Traditional forms of contract also tend to be favoured. This is despite numerous Government reports 1-4 which promote partnering and supply chain development as a preferred procurement arrangement.

Many BME contractors lack the experience of competitively tender and also working within traditional forms of contract. This means that many BME contractors may be immediately disadvantaged by this procurement approach.

The second barrier is in the area of contract management. In all projects there is a high demand for information to satisfy legislative and contractual requirements as well as for good project management control.

The mentoring approach must recognise these barriers. In terms of the procurement barrier, the decision has to be taken as to whether developing expertise in tendering and contractual awareness is the right approach. Until there is a widespread switch by clients to more collaborative forms of procurement then there will continue to be the need to develop expertise in this area. However, clients are slowly but increasingly adopting more progressive procurement strategies. The approach favoured within this toolkit is to assist BME contractors in developing expertise in working collaboratively so that they will be more readily selected as a supply chain partner. This is the approach underpinning the Building Performance series of workshops.

Contract management and commercial awareness can best be tackled on a one-to-one mentoring basis. This is where experienced staff from the mentoring organisation can work effectively with BME contractors to help develop an understanding of good practice.

The best opportunities for learning is on live issues arising during the course of tender enquiries or actual projects. These issues can include:

Pricing elements of the works Dealing with contractual risk Developing proposals Motivating and rewarding staff Dealing with disputes Managing health and safety Managing contractual issues Submitting valuations Developing strategies for winning more work Managing the business

A high level of commitment is required for any construction organisation to engage in mentoring other businesses. So what are the benefits to the organisation delivering the mentoring?


There are commercial and personal benefits for organisations and their people from being mentors. For senior personnel within the mentoring organisation it can be seen as an opportunity of giving something back to the industry. Passing on their experience to others, and seeing their businesses benefit can be a rewarding experience.

More junior staff often have specialist knowledge of particular aspects of contract and project management. This means that they are able to respond to particular issues by supplying information and ideas. This can very beneficial for businesses that would not normally have access such resources. For the staff themselves, this can be a valuable learning and development opportunity. They will be exposed to a wider range of business issues than might be the case in their normal line of work. They will also gain experience of sharing and developing ideas which shape business decisions earlier than would be the case within the confines of the normal work. In commercial terms, the mentoring organisation is providing a service to their clients whose own objectives include supporting locally based businesses. This approach would be seen as part of a supply chain strategy. The supplier organisation is demonstrating that it is capable of providing services which go beyond the narrow definition of construction. For sophisticated clients, this approach should be welcomed because it can allow them to be more successful at delivering their wider business objectives.

Many clients have difficulties in responding to these opportunities. This is primarily where they are organised in narrow functional departments which do not have sight of the organisation’s overall objectives.


8. Building Performance development programme

The Building Performance programme was developed to assist small and medium sized construction organisations to develop the capability to work as effective supply chain partners.

The programme was based around a business strategy cycle as set out below. This strategy cycle is appropriate for any sized business and is made up of the six stages as set out in the diagram below.

Three workshops were dedicated to exploring this cycle:

Workshop 1 - Defining the Company’s Goal, critical success factors and constraints

Workshop 2 - Developing your business strategy

Workshop 5 - Building effective relationships

Two sessions were also included in the programme which covered topics that were considered as providing the greatest leverage to companies in achieving their long-term business objectives. These were:

Workshop 3 - Building effective relationships. This explores the issues around developing effective customer / supplier relationships.

Workshop 4 - Improving business performance. This deals with how organisations can improve their operational processes and collaborate in value engineering solutions for their customers.

One of the key benefits that many of the organisations attending the workshops derived was the opportunity to discuss business issues with other similar sized organisations.


1. Define the system

2. Analyse the issues

3. Create a strategy

4. Plan the implementation

5. Do it

6. Review it

Session 1

Session 2

Session 3

Building effective

Relationships

Session 5

Session 4

Improving Business

Performance

Outline of the Building Performance Programme

Documents

Supply Chain Mentoring Toolkit