Poor supply chain resilience can affect profitability/fundability of projects. In this regard, a fairly big barrier to the take-up of MMC is seen to relate to its lack of well-established supply chains.
Recognising this as an issue, a push towards supply chain integration has emerged in public sector contracting. The Crown Commercial Service launched its £1.2 billion modular alliance framework recently and even more recently (about a bit less than two weeks ago), CCS selected its first lot of suppliers for its £30bn construction framework.
These frameworks focus on "alliancing" – for example, the FAC-1 framework alliance contract is used by CCS in its modular framework. This promotes an overarching theme that of "alliancing", which seeks to align objectives and interests (to make things more cost-effective for the procuring authority). This is a theme that has continued into CCS' latest £30bn contract alliance. These frameworks seek to promote a "joined-up" approach to achieving supply chain resilience.
"Alliancing" is perhaps one way of achieving a resilient supply chain. However, as MMC manufacturing products become more specialised, for example because of greater focus on data accumulation during the construction and operational phases, we could see greater sophistication, and savvy operators within the supply chain, meaning that "alignment" of interests may not always be possible.
Here, commercial MMC developments could see our traditional JCT or NEC subcontract replaced with hybrid contracts that place greater emphasis on compatibility and repeat use of components. This would mean MMC manufacturers can keep building quickly without coming up with bespoke solutions each time or where products supplied deal with data aggregation about homes built or use specialist software. A "resilient supply chain" in this context could mean a set of well-negotiated commercial sub-contracts, instead of some emails or an order form with miscellaneous contract documents.
In research undertaken for the Client Leadership Council, King’s considered the new supply chain relationships that are needed to enable modular housing construction, in particular the need for contracts that connect planned annual volume to a collaborative culture through which agreed innovations can drive efficiencies as well as social value such as jobs, training and improved sustainability. CCS have adopted these findings in their modular alliance and are carrying them through into their contractor alliance. They have also put in place the means by which any public sector client using a CCS framework alliance can follow the same principles and can use consistent systems under its delivery contracts.