Case Study: Sub-Contractor Labor shortage / Control of Supply Chain

Periodically we choose one of our case studies from real-member issues in our CEO peer group meetings. The objective is to share a real-world CEO challenge with practical solutions and experiences so that if you know anyone facing something similar, you can help them with ideas. We will never reveal anything confidential or of sensitive nature.

Industry: Construction

Category(s) of the COPI: Challenge, Opportunity, Problem, or Idea: Sub-Contractor Labor shortage / Control of Supply Chain

THE ISSUE: The general contractor’s (GC) concrete company (a sub-contractor) is consistently becoming unreliable. The concrete company is backlogged, short on labor, and no other concrete company close in proximity. Additionally, the other concrete businesses are short on labor and backlogged with jobs. As a result, the general contractor’s jobs are being delayed and missing deadlines making it challenging to schedule workaround to keep the GC’s employees productive. Additionally, being able to bid on jobs accurately is becoming an issue with this sub-contractor. The question to their council was: What options do I have to manage a sub-contractor that I need but cannot meet my demand?

The Insights:

• Pay a premium to the concrete sub-contractor to prioritize your jobs

• Batch your concrete jobs together so when the sub-contractors are available, they can do multiple jobs at once while you have them engaged

• Look to invest or buy a concrete company

• Share your workers, if possible, based on skillset

The Outcome:

The company owner was tired of running the company and had trouble bringing consistent work. He found a concrete company in another state to buy. The company relocated all employees to the GC’s city because the cost of living and quality of life was better. He solved his own supply chain issue and can subcontract out to other contractors in the area who had the same problem while remaining in control of meeting deadlines and on budget.  The solution also created a competitive advantage.