Best Practices for Managing Suppliers in Civil Construction

In the dynamic world of civil construction, managing suppliers efficiently is crucial for project success. At Varicon, we understand the complexities involved in supply chain management and the importance of maintaining strong relationships with suppliers. Here are some best practices for managing suppliers effectively in the civil construction industry.

The Consequences of Poor Supplier Management

When suppliers are not properly managed, the repercussions can be severe, impacting both the project’s timeline and budget. Here are some potential outcomes of inadequate supplier management:

• Increased Costs: Without proper management, you can be paying more than you need to.  A proper supplier management process ensures that you are getting the best possible price, and that you are not being overcharged.

• Legal Disputes: Ambiguous or poorly structured supply arrangements can lead to misunderstandings and disputes, potentially escalating to legal battles. This not only consumes time and resources but also tarnishes the company’s reputation.
• Reputational Damage: Consistent issues with supplier management can damage a company’s reputation, making it harder to secure future contracts and maintain client trust.

4 Best Practices for Managing Suppliers in Civil Construction

1. Ensure Proper Supply Agreements

The foundation of a successful supplier relationship is a well-structured supply agreement. These agreements should clearly outline the terms and conditions, including delivery schedules, payment terms, quality standards, and responsibilities of each party. Proper supply agreements protect both parties and provide clarity, reducing the likelihood of misunderstandings and disputes. They also set the groundwork for a transparent and professional relationship, ensuring that expectations are aligned from the outset.

These supply agreements do not need to be complicated, and in most situations the simpler and clearer, the better.  In the majority of cases, listing your standard purchase terms and any specific requirements and specifications for the specific order will suffice.

2. Implement Robust Procurement Processes

Proper procurement processes are essential for good governance and ensuring that all purchases are necessary, justified, and authorised at the appropriate levels. Implementing a structured procurement system helps in:

• Standardising Procurement Procedures: This ensures consistency in supplier selection.

• Streamlining Approval Processes: Clearly defined approval hierarchies prevent unauthorised purchases and ensure accountability.

• Enhancing Cost Management: Effective procurement practices help in negotiating better terms and pricing with suppliers, ultimately reducing costs.

3. Verify Supplier Invoices

One common pitfall in supplier management is assuming that all invoices are correct. To avoid overpayments or errors, it is crucial to maintain detailed records of all transactions and deliveries. Implementing a verification process involves:

• Maintaining Accurate Records: Keep all purchase orders, delivery receipts, and other relevant documents organised and accessible.

• Regular Audits: Conduct periodic checks and audits of supplier invoices against delivery records to identify discrepancies.

• Utilising Technology: Leverage software solutions to track and match invoices with deliveries automatically, reducing the risk of human error.

4. Documentation for Dispute Resolution

In the event of a dispute, having comprehensive and organised documentation can make a significant difference. The more information that is kept, the better prepared you are to resolve any issues. Essential records include:

• Delivery Dockets: Ensure all deliveries are accompanied by signed dockets that verify the quantity and quality of goods received.

• Job Supervisor Comments: Document any observations or issues noted by the job supervisor related to the supplier’s performance.

• Photos and Site Diaries: Visual evidence and detailed site diaries provide additional context and support in case of disagreements.

• Communication Records: Keep a record of all communications with suppliers, including emails, meeting minutes, and phone call logs.

Conclusion

Effective supplier management is a cornerstone of successful civil construction projects. By ensuring proper supply agreements are in place, implementing robust procurement processes, verifying invoices, and maintaining thorough documentation, you can build strong supplier relationships and mitigate risks. 

Supplier management doesn’t need to be complicated and time consuming.  With a well designed supplier management system, you can avoid these supplier management pitfalls without creating extra work for your team.

At Varicon, we are committed to following these best practices to ensure the smooth execution of our projects and the satisfaction of all stakeholders.

For more insights and updates on our practices, stay tuned to our blog.  If you want to improve your supplier management processes reach out for a no commitment assessment of your business.