Willmott Dixon’s Steve Watson: ‘We must find a silver lining post Carillion’

Willmott Dixon pays suppliers quicker than any other major contractor. Steve Watson, its national supply chain director, tells CM why collaboration with subcontractors is so important in the wake of Carillion’s demise, and how its new ‘supply chain partner framework’ will operate.

Willmott Dixon pays more quickly, on average, than any other member of Build UK (33 days). How have you achieved this?

Supply chain partners constantly say being able to rely on us paying them on time is what they value most about working for us, so this is important.

We hope our performance underlines to them that actions are important to back up the values, behaviours and culture we talk about.  

We have robust systems in place, backed up by KPIs to ensure we pay our supplier within agreed terms; it’s a strategic priority for us.

You pay 92% of invoices within agreed terms. Briefly, what are those terms?

Payment terms are agreed with supply chain partners and quoted on each purchase order but are typically:

• 19 days from certification date on certain public sector frameworks.
• 30 days from valuation on a number of other major frameworks.
• 42 days from valuation date for supply of other works partner services (subcontractors).
• 30 days from the end of the month for the supply of other goods and services (other suppliers).

Willmott Dixon has just launched its new Supply Chain Partner Framework. What are its main goals? 

As a privately owned company, respect, fairness and collaboration are key values. That applies equally to our supply chain partners and our people and customers.

Our new framework focuses on a core team of supply chain members, working with these firms collaboratively to help them get better, so that they help us achieve our aims.

We expect a defined level of service quality from members of the framework, while they benefit from better visibility of workload, regular access to our senior team, monthly feedback on performance, plus access to training through our “better together” academies. 

You are launching a supply chain app in September. Briefly, how does it work and why are you introducing it?

This is a key feature of the new framework. It keeps category A partners (who represent 75% of our subcontract spend and work closely with our business) up to date with work in the pipeline.

They can use it to read new policies and regulations, and it allows us to see whether companies have read them before starting work on our sites. It will also allow businesses to see when they will be paid, which is great for transparency. 

Why are you reducing the number of suppliers you use?

We’re reducing our supply chain numbers by 10% year on year to focus on a core of around 500 companies. This means we can give them the attention they deserve.

We spend around £900m each year with suppliers and we need to make sure that is a relationship based on continuous improvement not short-termism.

It’s vital our partners make good margins; a strong base of SMEs is the lifeblood of construction. To help achieve this, we’re introducing a new supply chain class known as category A plus, which demonstrates suppliers’ commitment to continuously improve and align themselves with our customers’ requirements.

Do you think it’s important that other major contractors collaborate more with the supply chain?

As an industry, we must find a silver lining to the post-Carillion era. To do so we need to be reminded of what needs to change, and the recent payment practice statistics should be one of those change point moments.

Cash flow is the lifeblood of all business; each party within a capital project construction contract has a responsibility for ensuring that all tiers within the supply chain are paid promptly, so they too can invest in people, growth and skills.