Responding to supply chain issues

14 June 2022
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While international pressures from Covid and the war in Ukraine have led to supply chain disruptions, particularly felt by the building industry, Carr’s commercial interiors team has been honing its own research and approach. By leveraging outside intel, Carr are developing a series of strategies that ensure a dynamic response and a managed outcome.

The rippling effects of logistical disruptions have undeniably been felt across many, if not all, sectors of business. Most prominently these affects have been felt by the building industry, and subsequently the design industry has felt a similar sense of interruption. In response, Carr’s commercial interiors team is taking a more proactive approach by being prepared.

Adding insight, Nicole Coutts, Associate at Carr, says, “Both the pause in supply due to lockdowns and the war have created significant bottleneck issues,” she says, “while additional labour costs, pressure on leasing agreements and unforeseeable delays have affected both construction programs and pricing significantly, we believe it’s our job to help educate our clients on the risks, and inform and formulate any pivots in direction, if needed.”

 

A local focus

The latest Slattery National Market Update: Uncertainty in the Market, State of Play, published in May 2022, refers to a predicted 4-8% price escalation over the next 12 months. This report also identifies the main impacts on the interiors industry as being shipping costs, steel, aluminium, timber, plasterboard, and general material availability.

Reflecting this, the building and design industry has needed to substantially downsize or cease works altogether. To avoid this, and to continue to deliver and maintain key working relationships, Carr has been fervently adapting to adjust.

“Where in the past, for example, a large percentage of stone was coming from Europe,” Nicole explains, “we are shifting more to find locally sourced materials, and we are interrogating our traditional approach to further understand where parts are coming from, and how we can dismantle lead times by finding alternatives.”

We believe it’s our job to help educate our clients on the risks, and inform and formulate any pivots in direction, if needed.”

Nicole Coutts Profile
Associate
Norton Rose Fulbright, Melbourne. Photography by Nicole England.
Lander & Rogers, Melbourne

The right people

The limited access of movement across borders has also affected the labour force, and the available skilled hands to perform specialised tasks. The Slattery report mentions Victoria, in particular Melbourne, is in a very uncertain contractor market at present, with an estimated cost escalation of 4%, which in some cases is between 5-8% as a result.

With the cost of labour also increasing, Nicole says, “Head contractors are finding it harder and harder to engage specialised skills and certain trades for our interior projects, creating issues around program and the affecting costs.” In response to this, she adds, “We are recommending an early procurement strategy. This brings contractors on early, which embeds a sense of engagement and collaboration to investigate pricing and solutions from the beginning. This helps control the outcome.”

 

Reducing risk

Working closely with Quantity Surveyors has always been an integral part of Carr’s successful project timelines; however, never more has their role been more crucial. “The QS’s role and responsibility is to be on top of these risks and communicate them with the client regularly,” Nicole says, “For Carr, we request costing to be completed at the end of concept design and subsequently after each phase, and for those to be signed off before we progress to the next phase.

While we can’t control costings, we can control the risk by constantly being involved in the process and communicating to our clients, identifying areas for further research and substitution on products and materials.” A close and continued relationship with suppliers, alongside constant access to current pricing and lead times at the front of discussions, ensures any issues can be “avoided as much as possible,” she says.

For products that are at risk of price escalation or long lead times, we are thinking differently and factoring in multiple material sources, that remain true to the design, allowing for a backup plan.”

Rebecca Trenorden Profile
Associate Director
Lander & Rogers' custom-made boardroom table, developed in collaboration with Indigenous organisation Manapan based in Arnhem Land. Photography by Peter Clarke.
Norton Rose Fulbright, Melbourne. Photography by Nicole England.

An evolved approach

“We’re also seeing tenders that are going out this year being affected by these price increases,” adds Associate Director, Rebecca Trenorden, “and instead of waiting to be surprised, we want to manage client expectation and the build process as early as we can.”

For both materials and furniture, turning to a more local focus ensures the pressure on delays can be more easily managed. This also supports Carr’s sustainability commitment to reducing the overall carbon footprint of each of their projects. Bolstering this philosophy, Carr actively looks for opportunities to creatively reuse and repurpose a client’s existing products, furniture and materials; an approach that also reduces the reliance on stock availability while also minimising waste.

Embedding added contingencies is also playing a part in Carr’s evolved approach. Rebecca explains, “For products that are at risk of price escalation or long lead times, we are thinking differently and factoring in multiple material sources,  that remain true to the design, allowing for a backup plan. Where possible, we also like to reserve stock ahead of time to ensure delivery will be in line with the program.”

When working with project managers, Carr advocates for an additional month into a program as a standard contingency. All factors that, when combined, are helping the team maintain quality and standard of service during the current supply chain turbulence.

 

Looking ahead

While historically the ease of logistical distribution meant many materials (like stone, aluminium, timber, and steel) could easily be sourced from overseas suppliers, the current need to look more locally is having an enormously positive affect on local industry – no doubt as they ramp up production capabilities.

As the market and industry continue to challenge one another, it is the ability to change and alter their approach, from sourcing smarter to thinking more innovatively, which sees Carr remain dynamic and diligent, delivering to the same exacting standard and quality as they ever have.

 

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