Why regional sourcing makes sense for building projects
Sponsored: Kingspan Insulation | 5 March 2018
When it comes to sourcing materials for a building project, thinking local can have huge benefits, including sustainability wins, greater transparency around compliance and enhanced financial flexibility.
Kingspan managing director Scott Gibson says local sourcing results in clear efficiencies that directly affect the bottom line.
Having smaller, more frequent orders, along with the streamlined delivery programs a local supplier offers, can improve cash flow and cash retention during procurement and construction phases.
Just-in-time deliveries can also “markedly reduce” storage costs.
“Local supply chain sourcing also allows flexibility in material supply volumes,” Gibson says.
“This makes it easier to service complex construction programs and creates efficiency gains in onsite scheduling.”
Another bottom-line benefit is lowered risk exposure.
“A shorter supply chain via regional sourcing means customers are less exposed to global logistical disruptions,” Gibson says.
“Shipping delays, natural disasters and political instability are common in many countries where building materials are commonly sourced.”
Using a local supply chain can also result in significant emissions reductions from the transport of supplies. There are also other, perhaps less obvious, possibilities for a more climate-friendly outcome.
“It is important to think beyond the savings gained by reducing the lengthy transportation and logistics associated with offshore sourcing,” Gibson says.
“Significant manufacturing efficiencies are to be had by supporting more technically advanced onshore production facilities.”
Australian manufacturers are able to access a ready, reliable and increasingly sustainable power supply for their operations. There has also been substantial investment in energy efficiency and energy productivity in the industrial manufacturing sector.
Gibson points out that both the federal and state governments have been providing incentives for manufacturers to generate their own energy through technologies such as solar PV. This kind of localised generation results in better sustainability outcomes and a lower emissions footprint for products.
Greenwash claims are also easier to spot.
“Rigorous market regulation of sustainability claims inhibits rubbery Life Cycle Analysis,” Gibson says. Testing and certification regimes also ensure more predictable and accurate outcomes.
Another benefit of a local focus in the supply chain is reducing the risk of procuring items that do not the specified quality standards, such as an AS/NZ or ISO standard, or a National Construction Code requirement.
“The supply chain for imported building materials is often extremely convoluted, and this makes it very difficult to ensure absolute continuity when it comes to product quality, performance, conformance and compliance,” Gibson says.
“In light of recent fire events here and abroad, the building industry regulators in some states are taking steps to create chain of responsibility laws where everyone in the supply chain can be held accountable for non-conforming, non-compliant products.”
Having local sourcing and the paperwork associated with the product supply chain means that demonstrating conformance, compliance or whether a product meets design specifications is less complicated. The whole process is also more transparent.
Gibson says that some quality management systems, such as ISO9001:2008, are heavily regulated, third party audited and result in improved certainty for end users.
Certification schemes such as CodeMark, administered by the Australian Building Codes Board, provide legislated surety to builders and certifiers.
“It ensures a material is compliant to any and all relevant testing such as fire performance, but also indicates the material’s suitability for use in specific building types and applications per the National Construction Code,” Gibson says.
“Most local manufacturers opt to have their products third party certified. Some don’t.”
Increasingly, consumers of many products including building materials have the welfare and treatment of the people who work to make the products front of mind.
“Distasteful activity can torpedo a brand, not to mention what impact it has on that community,” Gibson says.
“The facilities in question are often located in remote countries with relatively closed societies, and therefore difficult to monitor or access.”
By contrast, the rights and welfare of Australian workers are protected under our workplace health and safety laws. In addition, reputable local manufacturers often hold third party ISO certification for WHS, which ensures conditions and systems are regularly independently audited and achieve best practice.
It is not just workers that benefit from the activity of local manufacturing. When a manufacturer can establish the business case for a local operation, it can make a difference to an entire community.
“Businesses must become part of the community they inhabit, and this needs to go beyond a pay check,” Gibson says.
“It is important to support local sporting clubs, shop local where possible and be open to ideas and suggestions that are put forward.
“The benefits to local engagement are myriad, ranging from employee retention and business continuity, to consumer support and business success.”
Gibson says governments should be doing more to encourage local product manufacturing.
“Let’s not fool ourselves – the establishment and siting of any private industry facility is a business decision. The proposed headcount of new jobs is immaterial if the numbers don’t stack up,” he says.
“It is incumbent on state and federal government to support and incentivise businesses that will ultimately be the web that connects the local community together.
“The impact of unemployment, excessive commuting or in extreme cases family dislocation is simply devastating to a region or town.”
When a project chooses local sourcing, it is not only supporting regional economies, there are benefits beyond the metrics of taxes, jobs and product creation.
“The intangibles are there too,” Gibson says. “There is the fabric of local civic pride, the importance of a national manufacturing industry and the vision of the Australian building stock in 20, 30 or 50 years that doesn’t need to be bulldozed to the detriment of all.”