How To Manage Supply Chain Risk In The Construction Sector

How To Manage Supply Chain Risk In The Construction Sector

If your business operates in the construction sector, you’ll know how complex it can be managing supply chain risks, and how there is increasing pressure on managing, mitigating and transferring them effectively.

Supply chain risk is a common issue across the entire commercial sector, where the 2013 Supply Chain Resilience Survey report found that 75% of firms had suffered at least one significant supply chain disruption in the last year.

Such delays can impact the commercial, design, logistical, quality and safety risks, which often negatively influence the businesses operations, project management and reputation; it’s easy to see why supply chain management is a top priority for many risk managers.


Increased activity levels

The improving global economy brings with it increased pressure on construction firms to fulfil building requirements based on the availability or materials, components and skilled labour; especially when components are often produced on a just-in-time basis. If something goes wrong or plans change, it can have a knock-on affect to the entire project.

Enterprise and individual project level risks

Many construction firms face risks at both enterprise level and individual project level. At enterprise level, firms are faced with risks such as disruption in the global steel or cement markets and areas of political uncertainty.

Plus, many contractors use the same subcontractors for numerous projects, so if a problem arises, it will affect all associated projects. At an individual project level, the above risks filter down and therefore it is essential that each project is thoroughly assessed before starting.

Managing Supply Chain Risk

Before starting a project, managers should check that:

  • they have the correct tools and labour to do the job.
  • they have enough material to complete the job.
  • supplier and subcontractors are prepared and aware of potentially needing additional materials.
  • a plan is in place to complete the project and deadlines are in place.
  • risk management processes have been considered, and staff training has been provided.

If your business operates in the construction sector and you would like more information on supply chain risks, contact Insync Insurance. For a free construction or tradesman insurance quote covering your public liability, legal expenses, tools and more, click here.