2020Case16Mercury

Contents Lean Construction Ireland Annual Book of Cases 2020 Ca e 16 a huge role in our daily operations, and, in 2013, we did not know exactly how compliant we were but now we have the systems, data, and people to measure it and to manage it. • End-to-end supply chain management of key categories, Lean supply chain, and full end-to-end logistics control from manufacturer to site. On previous projects, some of these categories were de-risked through the use of distributors. • Spend is now apportioned more objectively across the supply chain with key partners, both in terms of consolida- tion and spread. Risk has been reduced significantly as there are more competitors and alternatives in the market place who are willing and able to meet our requirements. • We have a full suite of procurement reporting on BI in- cluding: Materials expediting Schedule impact mitigation Inventory management Vendor performance Price Lead times Quality Purchase Price Variance (PPV) management Budget management Transport costs Incoming freight Internal transfers AP management • On-site JIT vendor managed inventory (VMI) agreements with four key vendors. These agreements mean that key consumable type materials, which were traditionally purchased on a daily basis, are now on site and managed by the vendors. Key vendors have invested in and implemented on-site scanning systems that enable Mercury personnel to collect materials on JIT basis. Downtime associated with waiting for materials to arrive to site is essentially eliminated for these categories. Daily POs to these vendors is limited to one PO per month. • The use of standardised material data has improved from 45% in 2013 to 99% in 2020. There have been benefits in terms of buying activity, including: • Continuous flow – Zero lag time from requisition to PO for 53,000 SKUs – Takt time reduced. • Increased time to focus on critical high value procurement activity – Opportunity time increased. • Consistent pricing agreements. • Average PO value in 2020 is five time greater than in 2013. • 43% decrease in the number of POs per buyer. • No increase in the number of buyers on a project that is four times larger and more complex than the previous major project undertaken. • 95% decrease in the number of engineers processing requisitions. Supplier agreement improvements include: • In 2020, there are 112 supplier agreements in place (in 2012 there were zero and 2013 there were four). • In 2020, there are 53,000 PIRs in place (in 2012 there were 2,500 MMs in place – prices only). • In 2020, there are four Consignment stock agreements in place (in 2013 there was one Consignment stock agree- ment). • In 2020, Procurement is driven by Procurement, with SOPs in place, whereas in 2012 Procurement was driven by construction with a high-risk SCM strategy. Figure 3. Usage of Standardised Material Data Figure 4. Migration of Spend from Key Distributor to Manufacturer