Inclusive Approach Yields Ongoing Results for Renewables Construction Company
The lack of a formalized supply-chain function in a renewable energy construction company was causing problems. To operate efficiently, control spend, maintain its strong reputation and prepare for significant growth, company leaders knew they needed to address supply chain, but previous internal attempts had failed. Ventoco led a 12-month process that achieved cross-functional data and process uniformity, elevated the supply-chain function to the executive level, saved the company millions in the first year and enabled it to grow to meet demand.
Disbursed Supply-Chain Responsibility Worked. Until It Didn’t.
For more than a century Ventoco’s client had been handling supply-chain activities the same way, but seldom in the same way across the business.
Separate divisions of the multi-billion-dollar construction company consistently handled specific supply-chain responsibilities, but generally there was little communication between divisions working on the same project, best practices were lacking and there was little data or process uniformity. The process worked in individual divisions, but collectively it was disconnected and kept the company from capitalizing on its size and spend or achieving the growth it needed to remain competitive.
By 2019, the firm was spending $1 billion plus per year on procurement, but the lack of consistency was causing havoc at times; separate divisions caused problem for others, no one was ultimately responsible and the company was wasting essential time and millions of dollars in the process.
The situation also was often causing construction delays and the potential for missed deadlines, and could prevent aggressive growth opportunities, which the executive team understood could ultimately undermine a positive reputation built over the course of decades in the renewables industry.
Almost more impactful, the company was not broadly in the practice of developing back-up plans for its supply-chain needs. When issues came up, it wasn’t able to adapt and make good on all its promises, or it had to pay a premium to make up time.
First, Trust
When the company asked Ventoco to help build a sustainable supply-chain team, best practices and organization-wide uniformity, we knew from previous experiences that educating employees and establishing trust were the first priorities.
Ventoco Principal Lars Moller and Senior Associate Mike Ford, both of whom had been involved in much more complex and expansive supply-chain-development projects for much larger global companies, led the effort.
“It’s a journey, and it’s about gaining the trust of the organization within the organization,” Moller said. “We knew, through acquisitions, integrations and restructuring initiatives we’d run or been involved in over the years, that culture, people’s feelings, emotions, habits and allergies to change can kill the best of plans. To be successful, our approach needed to be one of inclusion.”
The heads of all the construction company’s divisions identified the people involved in sourcing, and they would later form the new supply-chain team which included dozens of people from myriad disciplines.
Ventoco and our client’s leadership team agreed to give the project 12 months and see what progress could be made. In the first three months, Moller and Ford spoke with each of the future department members, functional leaders and a broad range of employees, and to many of them three or four times. They also brought in representatives from other companies to speak about best practices and processes, and even arranged field trips to other companies with effective and efficient supply-chain functions.
We also identified several relevant and unique focus areas tailored to our client based on the internal discussions and our deep dive into the company’s operations – procurement and best practices, supplier qualification and partnerships, organization and career development, processes and internal partners, legal and contracts. We then assigned team members and internal owners to each and facilitated team meetings every week.
“For this to work, we needed them to own the process,” Ford said. “There’s nothing like actually having to stand up and speak about a specific area of responsibility for someone to take ownership.”
The Ventoco-client team also reached out to critical suppliers to better understand their needs and strengthen relationships. In fact, with suppliers more strategically aligned, they were able to be more responsive to the company. This, in turn, resulted in better terms for our client and their suppliers.
One year after commencing the project, we were able to introduce the organizational chart for a formal supply-chain division. The company hired a vice president for the new division, which not only meant that supply chain activities would have focus and become more uniform, but also that the division would now have a seat at the leadership table.
Supply Chain, Up and Running
Where multiple internal attempts had come up short, the Ventoco-led process has produced ongoing results.
In less than a year, the supply-chain project started the development and implementation of supply-chain best practices and achieved key data and process uniformity across the organization that was so sorely needed to avoid issues with suppliers and customers, improve efficiency and either reduce spend or increase the amount of work at the same spend level.
COVID broke in the middle of everything, along with the accompanying lockdown restrictions and supply-chain disruptions. This hit before the new vice president joined the company, so the “in-project-mode” supply-chain team jumped from working on a how the function would operate in the future to actually driving and reacting in crisis-management operation overnight, with Moller taking on several responsibilities typically led by a division leader.
While the pandemic could have been an absolute disaster for the company, the fact that the supply-chain team was already in one-team mode to operate as a cohesive function allowed it to operate in a crisis mode and made it possible to pivot in ways no one ever imagined would be necessary.
The company launched the supply-chain over the following year and saved millions as a result. At the same time, it increased spend due to rapid company growth, and the formalization of the supply-chain function made contributed significantly to its ability to take on more work, even during a global pandemic and a period when hiring people has been a serious challenge.
The process was so successful that it led to another exciting project for the same customer. The supply-chain team continues to function, anticipate and alleviate issues and eliminate unnecessary spend.
* Note – Due to nondisclosure agreements, we are unable to reveal this client’s identity.
