How a Local Community Wins from Supply Chain Investment

Bell Bay - Under 400kbBy Phil Preston

Last week, almost by chance, I stumbled on an industrial company that helped build the capacity of a local supplier to compete against an offshore alternative.

What I found most interesting about this and similar examples is the lack of airtime they get. We get blinded by the headlines, which generally only appear when something goes wrong, such as job cuts, accidents or scandals. Meanwhile, there can be greater things going on under the surface.

I had the pleasure of travelling from Sydney to the northern part of my home state, Tasmania (Australia) for a family reunion of sorts. It’s a relatively small island state that has historically relied on forestry, mining and the public sector for employment.

More recently, tourism has accelerated on the back of boutique food, wine and arts attractions, as well as stunning natural scenery. Diversity of industry and employment is critical to its future.

Bell Bay Aluminium

By way of background, the smelting operation began in 1955 and is part of Pacific Aluminium, a wholly-owned subsidiary of Rio Tinto. It’s a large exporter, electricity consumer and (direct and indirect) employer in the state.

While staying nearby at George Town, situated on the north coast, I met up with Lou Clark, community relations specialist at Bell Bay Aluminium. We hadn’t met before, and I was interested in hearing about the company’s community engagement challenges and successes. Like many companies of its size and local importance, Bell Bay provides an array of grants and support for community needs.

It was almost by accident that our conversation drifted onto the company’s local capacity-building initiative.

Supporting local engineering

The aluminium smelting operation progressively replaces anode rods when they wear out and makes modifications for energy efficiency. Before committing to a Chinese supplier, Bell Bay’s business improvement team worked collaboratively with George Town-based CPT Engineering, assisted by a business action learning program.

The end result was that CPT matched the price, and a four-year supply agreement worth $3.7 million was awarded. Benefits include:

  • Savings on logistics
  • Three new employees at a local firm
  • Significant investment in equipment and training
  • Establishing a culture of supply chain innovation

Although the contract size is modest compared to Bell Bay’s $690 million contribution to Gross State Product, there are longer-term benefits associated with the supply chain investment.

Lou explained that, in an industry where employee numbers have been declining, finding a way to boost local supply and production is the right path to take. It benefits the community and sets an example for future industry practices.

Why we should be cautiously optimistic about the future

When I stumble across examples like this, I wonder: How many similar examples are out there? While we are prone to being dazzled by the bright lights of giving, volunteering and social responsibility programs, initiatives embedded in company operations are arguably more powerful.

Uncovering and telling these stories helps to resolve the tensions we feel between people, planet and profit. It helps build a bridge between the challenges we face today and the world we seek to create for tomorrow. As William Gibson noted:

“The future is already here — it’s just not very evenly distributed”

What can you do to be part of it?

The skills and behaviors that got us to where we are today are not the same ones that will take us forward. McKinsey noted as much in an article about nurturing CEOs of the future.

Understanding and addressing community needs is becoming critical to business success. I encourage managers and executives to look at their business through a new lens and find areas where community engagement can play a meaningful strategic role.

This could be done in many ways, such as:

  1. Reconsidering the purpose of the business in society;
  2. Looking for new socially-aligned product opportunities; or
  3. Addressing social issues to boost productivity.

In Bell Bay’s case, helping the local community leads to productivity benefits in terms of logistics savings and improving the socio-economic conditions in its workforce capture area. It’s also helping to increase the innovation capacity and value-add of local suppliers.

Is there a similar business opportunity for you and your supply chain? I’d love to hear about any successes or challenges you have encountered.

Image credit: Bell Bay Aluminium’s Switchyard, Rob Burnett Images

Phil Preston helps employees and businesses devise community engagement strategies. He can be contacted via support@philpreston.co or followed @PhilPrestonTwit

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