For a construction business there is so much potential in creating and managing good supplier relationships. Your subcontractors and suppliers each bring their own expertise and experience to your projects. 

Considering the labour shortages (83% of construction businesses are feeling the strain from a lack of skilled workers) it’s really important to ensure that you are building a network of loyal suppliers and subcontractors. 

One of the biggest indicators of high quality supplier relationships is trust. The following highlights how this can be achieved.

Build meaningful relationships

Supplier relationships can often get tense when your margins are being squeezed and your commercial team is looking for creative ways to cut costs. Often the first place to look is your supplier costs and looking to reduce them either by re-pricing work or negotiating on outstanding payments. These are very common tactics that often leave your suppliers feeling hard done. 

There’s a saying: 

“Get to know your neighbours; before your house is on fire.”

Think about how you can add value to your supplier relationships, especially the high performing ones. If they’ve been doing good work and offering great prices to you. It’s only a matter of time before they get approached by a bigger contractor with deeper pockets and a bigger order book. 

Consider

• Creating a preferred supplier list and sharing tender opportunities with them before any other suppliers. 
• Organise supplier events where you invite them into your office to introduce them to your team and show them the projects you’re working on.
• Offer support to your subcontractors- this could involve leveraging your network to help them with issues they’re facing.

Needless to say that building a better relationship with your suppliers makes a big difference when you need to call in favours or re-negotiate prices.

Upskill your supply chain 

As you tender and win new projects you may have a requirement for a specialist skill or certification that your suppliers don’t currently have. This is often a reason to go out and find a new subcontractor that does have this skill. Your client may require that all subcontractors on site have a specific certification e.g. considerate constructors scheme.

Have you considered offering a training budget to your subcontractors to get them trained up or certified in this area. You might fear that they will use these new found skills or certificates and work for other contractors. 

"The only thing worse than training your employees and having them leave is not training them and having them stay." 

• Henry Ford

What’s more likely to happen is that they will value your relationship even more and prioritise working on your projects because there will be more opportunities for development. You also save the time of sourcing and then onboarding a new subcontractor that you’ve had no prior experience working with.

Give constructive feedback 

If you’re lucky, someone recommends you a good subcontractor, if not you’re left to figure this out on your own. 

Start tracking what you liked about working with a particular subcontractor, think about their professionalism, adaptability and quality of work. This feedback will only help them improve and ultimately grow their own businesses. 

This is also really important for continuity in your business. When new team members join your company, where do they go to get quantitative feedback on your supply chain? You want to know which suppliers are best for delivering specific products on time and in good condition. Also, which subcontractors are better at working on specific projects e.g. commercial offices, hospitals or residential. 

Pay Invoices Faster 

This is obvious and may sound simple but without the right process it can become a nightmare. On a typical project you will have more than 30 different suppliers and multiple invoices sent to you at the same time. For each supplier, you have to cross check the work that’s been done, work out how much has been completed or delivered and make a record of payment so you don’t make an overpayment. 

This process is often a long-winded string of emails back and forth between different people on different teams. At the same time you need to consider how pay runs affect your cash flow as well. 

Consider investing in your accounts payable process. This could be as simple as setting clear due dates on when each person or department needs to finish their work in processing, approving and making payments. You could also look at implementing accounts payable software that integrates with your accounting system. 

Paying invoices faster helps your supply chain smoot out their cash flow and is a big reason they’ll choose to work with you vs other suppliers.

In conclusion, Coreloops helps you to:

• Speed up procurement with the data and tools to source suppliers and get prices faster.
• Track the quality, cost and progress of work on site. Link your programme to get a real-time view on costs.
• Manage payment applications, generate payment notices and approve invoices. Sync with your accounting system.
• Track costs and build Cost Value Reconciliation (CVR) Reports. Share and present dashboards to clients and senior managers.