To be fully
effective, sustainable development must extend from a single
company, both up and down the supply chain.
A significant area of environmental,
social and financial concern is the control of supplied materials
and services.
During 2001, Carillion spent
approximately £1.7 billion on purchasing goods and services.
This was spent with approximately 9000 suppliers and sub-contractors.
We can have a positive effect
on all elements of sustainable development through appropriate
supply chain management. For example, timber gained from a
sustainable source, under good working and salary conditions
whilst purchased at a reasonable cost, will ensure that we
deliver the finished product to our clients without causing
excessive damage to the environment or the people involved
throughout the supply chain.
Our engagement with, and assessment
of, supplier sustainability issues was enhanced across the
group via the 2001
Sustainability Targets The business groups
achieved targets to meet the following objectives;
Develop stewardship of Carillion’s
Supply chain across all Business Groups
Increase the purchase of
materials and products from sustainable and well-managed
sources
To share the best practice we
have gained, a paper on sustainable supply chain management
was presented to the Institution of Civil Engineers conference
"Sustainability - what does it mean for the Civil Engineer?".
Supply Chain Management Structure
The management of supply chain
impacts was reviewed during the restructuring process and
procurement support is now provided at two levels;
Category Management level
-Category Managers review specific areas of spend and
consider the total costs, which is an assessment of
many issues including sustainability.
Operational level - Qualified
and experienced procurement staff assist projects in
making informed decisions for each contract.
To fully capture our sustainable
purchasing capabilities we have replaced our original supply
chain taskforce with a dedicated resource within the supply
chain team ensuring that the principles of sustainable development
become truly embedded in purchasing decisions across the group.
Carillion-wide procedures for
assessment and engagement of suppliers are being trialled
and will be implemented throughout the group during 2002.
The assessment is broken down into two layers:
1.
General assessment
2.
Tender and Project stages
– project specific requirements and risks are identified
In addition, we supply purchasing
staff with guidance on the completion of the tender/project
stages.
The procedures ensure suppliers
are assessed to determine their overall environmental risks
and their potential risks according to the requirements and
constraints of projects.
In addition to our assessment
of our suppliers, our Clients assess Carillion. For example,
we were was singled out by the Environment Agency at the Greening
Government Procurement Conference held in Birmingham's International
Convention Centre on 22 May.
The Agency's Procurement Strategy
Manager, Chris Browne spoke about a survey recently carried
out to establish the environmental and sustainability credentials
of the Agency's top 500 suppliers. Carillion was mentioned
as being amongst only 5% of suppliers seen as true environmental
'pioneers'. Of the rest, 30% were described as 'settlers'
and the remaining 65% 'laggards'.
Pay on Time
The ‘pay
on time’ strategy introduced in 2000 has been successful.
Systems are not yet in place to capture the number of complaints
related to late payment. However, as the table below indicated,
the number of litigation’s served against the company
due to late payment decreased in 2001 when compared to 2000.
Carillion Litigation
Received 2000 - 2001
Litigious
Action
Year
2000
2001
Claim
Form
346
224
Statutory
Demand
14
3
Winding
Up Petition
3
1
Total
363
228
Claim Form
A Claim Form is when a customer
litigates to reclaim an outstanding payment plus any interest
accrued and the solicitor's and court fees. The Claim Form
total also includes Writs and Summonses.
Statutory Demand
A Statutory Demand is when
a customer litigates to reclaim an outstanding payment only.
There are no costs and interest attached but if not replied
to within 21 days, a Winding Up Petition can be issued.
Winding Up Petition
A Winding
Up Petition is served when a customer seeks to wind up the
business for default of payment.
Project Acorn assisted Crown
House Engineering in working closely with a key supplier,
Waterloo Air Management, to help improve its environmental
performance.
" Waterloo plc has recently
completed the Acorn Programme leading to a proposed accreditation
to ISO 14001. Carillion and its Mechanical and Electrical
Engineering business, Crown House Engineering, both initially
motivated and gave welcome guidance throughout the process.
Their appreciation and understanding of the demands of the
construction industry ensured that their advice was both relevant
and appropriate. Without this support it is unlikely that
Waterloo Air Management would have achieved ISO accreditation
for at least another twelve months. By working in partnership
with Crown House Engineering, Waterloo has now gained significant
competitive advantage by reducing waste throughout the supply
chain."
Waterloo Air
Management, Crown House Engineering supplier.
Guidelines
Carillion has two purchasing
guidelines for timber
and PVC.
Through membership of the WWF 95+ Timber Group, Carillion
is introducing (where possible) the purchase of Forestry
Stewardship Council Certified timber.
The following case studies demonstrate
practical examples of sustainable supply chain management:
