Helping keep Australia on the move, civil engineering and construction major Fulton Hogan is responsible for some of the country's most important infrastructure projects.
Founded in New Zealand in 1933, Fulton Hogan started in the asphalt business – building state highways – and soon grew to tackle major construction projects. Expanding across the Tasman, today Fulton Hogan is responsible for building major Australian transportation projects such as upgrades to Melbourne's M80 Ring Road, Queensland's Bruce Highway and the Princes Highway south of Sydney. Fulton Hogan is also involved in the construction of airports, ports and rail links across the country, as well as wind farms and hydroelectricity stations.
While Fulton Hogan's interests stretch far and wide, with 25 regional businesses across Australia and New Zealand, it has maintained a decentralised business structure which empowers each region to deliver local projects. This freedom allows a large business like Fulton Hogan to remain agile, but in return it creates challenges in terms of supply chain management and making the most of its bargaining power with suppliers.
Fulton Hogan operates its own asphalt manufacturing plants for its road-building and maintenance businesses, and operates a number of quarries throughout New Zealand and Australia.
"In a traditional manufacturing supply chain, all roads lead to the manufacturing facility and then on to the customer," says Jane Falconer – Fulton Hogan's Executive General Manager, Procurement.
"Our world is different because our supply chain is largely focused on the provision of materials and services to project or work sites around the country, where these materials and services are consumed in the field."
“We are a vertically-integrated business which means we can use internal resources, such as asphalt and aggregates, to meet our regions’ needs for their projects. We are constantly reviewing our supply chain to determine what is best for the project and community. For example, if our quarries are located close to the site, it makes sense to use them. In other instances it may be more economical to use an external supplier if they are closer to the site.”
"We also leverage our size and negotiate national agreements with suppliers," she adds. "Our centre-lead procurement team and national, or Trans-Tasman, supplier agreements are available to our people. They also have the flexibility to look elsewhere if they find better value. This means that we are constantly evaluating and balancing individual supply verses our national agreements.”
"We've always been a decentralised business, almost like a federation of regional businesses, and part of my team's role is to ensure that everyone understands the supply agreements that are in place. Having a nationwide supplier deal on paper is one thing, but the benefits only come when we realize the real value and savings in the field.
With around half of its 6,400 employees procuring goods and services in some way, Fulton Hogan is looking to implement a business-wide purchase-to-pay system.
The system won’t be designed to centralise approvals and stifle autonomy, which Jane says would go against Fulton Hogan’s enduring principles of empowerment and autonomy. Instead the purchase-to-pay system will standardise and streamline processes, and offer greater insight into Fulton Hogan’s purchasing habits. The results will help Jane's team strike more efficient procurement deals and develop more targeted sourcing strategies.
"We can leverage scale across the business, but it can only be done from the centre – which means striking the right balance between regional autonomy and centralisation. As we do this it is critical to get the stakeholder engagement right," she says.
The new purchase-to-pay system must be mobile and accessible to frontline staff. This will involve issuing them with devices so they can process purchases on the move and with no downtime to our activities. As such the deployment and change management aspects of the project will be critical.
“A large part of the process will be teaching people how to use this technology both in the office and out in the field."
"We need to approach the project's deployment and training in a way that staff will see the benefits and embrace the change. We're excited about working with our regional businesses to deploy this technology right down to the front line, to facilitate our business becoming tech-savvy in the 21st century."
Fulton Hogan is also looking to the future in terms of sustainability, aiming to minimise carbon emissions, improve energy efficiency and reduce waste. It is a member of the Clean Energy Council, the peak body for the clean energy industry in Australia.
Each business region is encouraged to develop its own environmental initiatives to encourage greater ownership at the local level.
"Sustainability is something we take seriously and our efforts include using more biofuels, such as biodiesel, to reduce our reliance on diesel and gas in terms of how we operate on sites and run our plants," Jane says.
"Another aspect involves the installation of solar panels on all of our major plants across Australia, which is helping to manage our carbon emission exposure. With the advent of more affordable battery storage devices we believe this will continue to drive value across our business”.
With many of its projects in regional and remote areas, there is also a strong focus on engaging with communities, and in particular indigenous communities, to increase their participation in the construction sector.
"We've been working on establishing processes and strategies which allow us to identify indigenous companies and then procure from them. For example, working with Supply Nation in Australia to identify suppliers that are relevant to our businesses and project locations," Jane says.
"At the same time and within our Australian business, we're in the process of developing a reconciliation action plan, finalising an indigenous engagement strategy and strengthening relationships with our local communities. Procurement is just one area where we can create strong connections with communities."
With Fulton Hogan’s unique and successful business model, optimizing the supply chain offers great opportunity and challenge to drive value throughout the business and to our shareholders.