104506015 logistics analysis within the construction industry

7/30/2019 104506015 Logistics Analysis Within the Construction Industry

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Logistics Analysis of a

large Construction Project in Western AustraliaSCM in the Construction Industry

An analysis of the logistic activities within a very large construction project based just off the coast of Perth, WA, Australia with focus on the issues affecting incoming goods shipments along with a broadlook at SCM in the construction industry as a whole.


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Logistics Analysis of a large Construction Project in Western Australia

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Abstract

Title: Logistics Analysis: SCM within the Construction Industry

CA as tasked:

Within a company of choice, through a contact within this company, discuss and analyse issues faced

within the logistics activities of this company before proposing solutions to overcome these

problems.

Word Count: 5,444 (on editing)

Grade Received: 95%

Summary of content:

As tasked this report focuses on logistic issues faced within a company of choice with an outcome of

proposed solutions for possible implementation at the companys discretion. With that b eing said,

the company of choice is one of the worlds largest construction companys and more specifically

within their very large Liquid Natural Gas (LNG) construction project, a massive investment and

contract by any standards. The reason for this is in the hope of gaining an insight into what

belonging logistics and supply chain management (SCM) may have within what externally seems likea somewhat inefficient yet highly profitable industry.

Having made contact with a chief engineer tasked with logistic responsibilities for this project

(although not in any way titled or figure-headed as such) a general overview of applicable activities

was gained along with posed issues for analysis. However it was immediately obvious that within this

project there was little to no logistical focus, expertise or strategy with no resemblance of an SCM

ethos in existence. With the necessary primary research and knowledge on hand this report analyses

both the efforts currently in effect and the problems faced, to not only propose solutions but also a

more in depth base of issues that both cause the already obvious shortcomings in their logistics

efforts but also majorly hinder an overhaul of them. It is these deep rooted issues that highlight a

severely negative correlation between logistics and the construction industry but ironically in a way

the possible need for a concerted effort to instil a SCM approach with this industry, and most

certainly this project.


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With this in mind it was important to not get lost in the philosophical argument of the existence of

logistics within construction but to also face the task at hand, that is propose implementable

solutions with a strong cost benefit ratio to make these solutions worthwhile.

The proposed solutions are implementing procedural and specific efforts within these as follows;

MRP system implementation

Incoming receiving practises

Supplier practises and co-operation

Procurement practises

Logistics project sub-division/cross functional training and co-operation.

By considering the cost to implement versus the perceived benefits to be received from this thesesolutions allow a way forward that is not only cost effective but with an almost cyclically co-

dependency between each, may go some way towards solving/negating the underlying issues at

hand.

Beyond the initial broad nature of this tasked assignment, this report delves into a territory of

interest and worthy consideration; is there room for logistics or SCM within the construction

industry, and if not then why not? Where a company in this industry to establish a dedicated

logistics/SCM platform within their operations would they not gain an immediate competitiveadvantage?


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Introduction

Logistics can be considered to be the total SCM (Supply Chain Management) objectives and activities

within an organisation. It entails controlling and adding value to all areas of the supply chain

beginning with suppliers through to inventory and production and also to the customers, not only in

terms of a delivered product or service but also information, to and from and involving all areas of

the supply chain. With this in mind logistics management, or SCM when implemented fully, can be

seen metaphorically as an all inclusive net encompassing all impacting areas within the company in a

rejuvenating fashion as all areas impact on, are related to or depend on all other areas, maintaining

continuity. What does this mean? Basically SCM can be either a business philosophy or

methodology that can help control, measure, add value to and monitor success of the logistic

functions within a company and as such is important across many industry sectors worldwide.

Supply chain strategies require a total systems view of the linkages in the chain that work together

efficiently to create customer satisfaction at the end point of delivery to the consumer. As a

consequence costs must be lowered throughout the chain by driving out unnecessary costs and

focusing attention on adding value. Throughput efficiency must be increased, bottlenecks removed

and performance measurement must focus on total systems efficiency and equitable reward

distribution to those in the supply chain adding value. (Hines, 2004)

Its clear that logistics, or SCM, is a very broad and dense topic with its methodol ogy incorporated

into many industrial sectors and activities and with many examples worldwide. So where does one

to begin to look to get a personal and practical insight into the world of logistics operations in a

company, and where to begin to present any more value to the supply chain of such a company. The

most general and supply chain focused sectors are retailing, production, manufacturing,

warehousing and transportation but logistic operations are evident across many more industrial

sectors such as this.

With that in mind, this report will focus on one of the most heavily and consistently active and highly

funded and invested in sectors globally, the construction industry. This may seem a little irregular

but the supply net and requirements within the construction industry are huge and operate

worldwide on anything from a miniscule level to an almost incomprehensibly massive level. Also

within this sector jobs or projects are generally individualised and not related to other projects

within the same company, and similarly within the one project, different project areas or focuses

may again be separated and non-related to others giving a lack of fluidity and continuity which is

generally one of the notable trends of SCM, continuity and sustainable operations. Combined with


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the finite operational activity of construction, when a job is finished it is finished, this somewhat

both appeals to and conflicts with the methodology of SCM, which may lead to many logistics

orientated issues needing analysis and appraisal, and an interesting subject matter if nothing else.

This report will focus on a Liquid Natural Gas (LNG) Project; based offshore of Western Australia, by

one of the worlds largest construction and engineering companies. This is the biggest resource

project in the history of Australia and has been on an operational level since September 2009.

Having made contact with (name removed on editing), a project engineer based on a logistics focused

mainland, off-site port and dockyard dealing with all material requirements for the off-shore project,

this report will give an outline of his role and how it is related to the logistics operations of the

company. This report will then field the problem that (name removed on editing) posed before

proposing what will hopefully be applicable and considered options to successful improve the supply

chain as well as adding value to it within this project.


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The Problem

The problem that was posed initially and the actual issue analysis and resolution suggestions are

somewhat of a different scale and scope entirely. The initial problem was a basic and broad one,

with an overall enclosed need for resolution. However it is so related to and rooted in fundamental

flaws in other co-dependent activities within the supply chain function that it was necessary to delve

into them also, analysing their operations and activities and suggesting possible overhauls here also.

This will then, in somewhat of a domino effect, un-earth other faults and flaws in other aspects of

the supply chain management activities within this project, but this report does not go down the

road of individual resolutions as that would be far too great and specific a task but rather propose a

small number of applicable actions to resolve the initial issues and then give an account for the

existence, or lack of existence, of SCM as a methodology within the construction industry.

The problem as posed

When shipments are received, generally on a sea-barge, they must be checked and all parts

identified and accounted for according to the suppliers manifest for the said shipment. This is a

general task within any supply chain however this can be a very difficult and complicated process

within this project. There are a number of reasons for this; the main ones being:

All parts, as listed on the manifest, are to be labelled with an identification no. (GS no.)

corresponding with the manifest. This is to enable easy identification and then adequate

processing of all elements of the shipment. However, frequently many parts of the manifest

are not labelled with a GS no. and as such identification is almost impossible. In this instance

the project engineer, a person skilled in other areas, must photo the un-identifiable parts

and email the suppliers and the project area specialist that ordered these parts asking if they

can identify them. This is a frustrating and time wasting task and adds greatly to the

inefficiencies of the goods receiving practises.

Another major issue in this respect is in the instances of kits or of an overall part being made

up of a number of different elements shipped as different pieces while being manifested as

one overall unit. For example, as can be seen in the manifest provided there is included in

the manifest a recycling plant listed as 1 pie ce, and it has the GS no. 181. However, on

inspection of this shipment it was found that this was in fact made up of more than 5

individual parts that upon assembly made up the overall unit that is the recycling plant. Only

one part was labelled with the G S no. and it wasnt until having realised the extra no. of


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items on the barge and having requested instructions from the project area design specialist

that the receiving crew and the project engineer, (name removed on editing) , were able to

figure this out and act accordingly. The only thing that may alert the receiving operative to

this is the weight of the item, 11 tonnes, which the labelled item clearly was not, but how

many other pieces that belonged to it could not be assessed without major delays.

A lack of any particular or pre-defined receiving practise makes each shipment a new

challenge and somewhat un-coordinated if not for the overall and individual control of the

project engineer, which would be unnecessary should procedures and preset guidelines be

in place. This makes the intake, processing and storage of these incoming shipments messy

and in efficient, with little coherent relation to future or past activities.

These issues lead to very complicated and inefficient goods inward and outward activities within

what is effectively the logistics provider for the off-shore project site.

Figure 1: Copy of actual shipping manifest (altered to remove names & dates)

Company Logo removed on

editing


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Figure 2: Different elements of part listed 'Recycle Plant' as 1 unit (note: yellow label on products are supplier labels thathave no reference for receipt)

Figure 3: Example of incoming barge shipment with a variety of parts and supplies


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The problem as analysed

As previously entailed in the problem as it was posed, there is a clear lack of any outlined SCM

structure or methodology within this constructions project and this is obvious upon first inspection

and discussion of the activities. However this raises the question of SCM within the construction

industry; does it belong and can it co-exist and develop amongst more traditional and already

established practises. This is an issue this report will discuss briefly after first outlining other more

initially impacting issues on the fore-mentioned activities that can be revealed upon inspection and

analysis of them.

The main issues for consideration when suggesting possible immediately implementable options are

as follows:

The myopic and independent procurement procedures that are in place throughout the

entire project, and presumably the company. In effect what is currently in place is that each

individual project engineer over different areas of the project on the off-shore production

site are responsible for the ordering of whatever parts, supplies and equipment they may

need for the completion of their area of the overall project. This can be seen to lead to

multiple orders of the same products from manufacturers in differing batches and

shipments, which are then in turn forwarded on individually to their respective order origin,

or stored when necessary albeit in possibly an uncontrolled and unrelated fashion. There is

no co-ordination between different areas of the project to correlate and group orders so as

to reduce costs, wastage and inefficiencies.

The unplanned and unorganised ordering and shipment of goods between project area

engineers and suppliers leading to scattered and organised deliveries, storage and inventory

procedures. Basically due to a number of individual area requirements orders are frequent

and somewhat erratic in that some parts are ordered very far in advance and are then left in

unnecessary storage or in extreme cases forgotten about, whilst other times parts are not

ordered soon enough to account for manufacturer lead times. Due to no overall responsible

procurement specialist this is a very unorganised and chaotic approach. Coupled with a lack

of supplier communication parts are often manufactured and shipped according to supplier

convenience and preference rather than the timely fulfilment of the project requirements.

Again this leads to dramatic wastage and inefficiencies.

The complete inexistence of any inventory control system. There does not existence a

project wide ERP (Enterprise Resource Planning) or more applicably in this case a MRP(Material Requirements Planning) system to coordinate and control the inventory of the


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company. When goods are received they are coordinated with those that ordered them and

they are then shipped on in time for when they are required but, as previously mentioned, if

parts have been ordered too far in advance then they may be forgotten about. Also with

multiple orders of the same products wastage is high as each individual order entails a

buffer stock along with the multiple storage and shipments issues this brings.

Another issue that is apparent, and which is understandable due to this being within the

construction industry, there is no experienced and trained logistics professional to control

and manage the SCM efforts and to coordinate and maintain organisation of them. What

exists currently are able but not experienced construction professionals that with a little

training could increase efficiencies and reduce costs and wastage and implement a

successfully operational SCM methodology.


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The Way Forward Proposed Solutions

Obviously within such a large scale and expensive project as this, and within such a huge company as

(name removed on editing) , then the expense of the suggestions are not as impacting as on other

smaller scale and cost restrictive operations, however cost versus value is a factor which still must be

considered. Other considerations exist within the problems themselves and within the industry. One

of the main impacting considerations that must be accounted for when proposing realistic solution

options is that of the nature of the industry, such as the construction industry being based upon

project and job work rather than a continuity of sustained procedural and operational activity in

which SCM practises are so particularly successful. So when setting out the final list of

implementable proposals it was very important for us to be realistic and considerate of impacting

issues upon our solutions. With that being said what now follows is a list of proposed solutions

based around different areas of the logistics function whilst addressing each of the previously

mentioned issues that exist within these areas. Each of these solutions are of individual and separate

consideration on their own merits and with their own implementation, however they are in another

sense highly interdependent and for one to be truly successful and beneficial to the company it is

important to embrace the SCM and logistics concept and focus behind them as a whole. These

solutions are:

MRP system implementation

Incoming receiving practises

Supplier practises and co-operation

Procurement practises

Logistics project sub-division/cross functional training and co-operation

Inventory control system implementation

MRP (Material Requirements Planning) is a production, inventory and manufacturing control system

used to control manufacturing processes. It is generally software based and it is generally a

production industry concept within the SCM spectrum and it can be, admittedly, limited in its

applications and has undoubtedly been in most instances outdated by MRP II system (Manufacturing

Resource Planning) and more so by ERP (Enterprise Resource Planning). Both MRP systems are

generally an inventory control and production schedule control system that allow for smooth

operations within a manufacturing environment, while ERP is a much more incorporative system

that integrates management information across an entire organisation, including finances, sales,


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production, CRM (Customer Relationship Management) etc. These systems are founded and

successful within the SCM methodology and approach and if either of them where to be

implemented in this project they would also need to embraced by more than just one area or

activity. Having said that it can be seen the inadequacies and efficiencies that exist throughout the

logistic activities of the (name removed on editing) as a whole and most other proposals within this

report are founded on the opinion that for any supply chain changes to be truly made and successful

than an investment, in belief and effort as well as monetary, must be made to provide a fruitful

foundation and such an inventory control system is important.

Having already mentioned that the nature of the construction industry if one where jobs exist in

projects to be completed fully and then wound up it may be seen that the implementation of such a

system may be somewhat futile and lack little value to cost. This is an arguable point and correct in

some ways however on such a large scale operation and company such as this being focused on, a

system implementation in regards to cost will be miniscule to the overall value added in terms of

efficiencies, lack of wastage and general supply chain operations. This will especially be the case if an

MRP system were to be implemented, with proposal to that of the WHS inventory and warehouse

control system. This is a cost effective and highly adaptable solution that will provide an

operationally successf ul system within this project. The WHS system is one that records and

monitors all stock levels and locations, can perform many audit and inventory control measures as

well order shipment and clearance. The system can be adapted to individual projects and

requirements as well as to individual user abilities depending on their responsibilities and skill sets. It

is an MRP system that can also be integrated with finances and more importantly with suppliers

ordering systems making incoming shipments and product identification easy and more efficient.

This WHS system would be particular successful should the logistics activities be considered a sub

division of the projects activities, as will be discussed in more detail later, with stock being recorded

as receipts from suppliers and then stock being forwarded to the off-shore project site being shipped

as fulfilled orders from clients, and as such giving a more controllable and maintainable level of efficiencies.

Another option as opposed to an MRP system is an ERP system, as previously mentioned, such as

SAP which would need to be incorporated and embraced throughout the entire organisation. This

would be a major overhaul of any conflicting system that may currently be in place in other areas of

the company, su ch as sales or finances, and it is considerably more costly, but whereas WHS would

need to be re-adapted and effectively restarted for each individual project, an ERP system would be

continually operational throughout the entire companies operational activities and would offer


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There should be trained staff able to work consistently in the outlined manner that will

consistently meet performance targets and without constant need to involve the project

engineer who realistically has need to focus their attentions elsewhere on more important

matters.

These staff should have the equipment and systems necessary to process all shipment and

manifest receipts

o In particular an option available is to introduce mobile scanners for identifying and

recording products; these can be radio or Bluetooth based depending on the

required distances needed from the operational device. Such a device would also

need a labelling system, primarily a bar coding system to be co-operated with the

suppliers. However the cost and effort necessary to do this is very low in relation to

the reward and value.

There should be the availability of a supervisor capable of dealing quickly and efficiently with

any issues that may arise with any manifested parts, as has been the case frequently until

now in this project.

There should be pre-defined locations for stock storage once the parts are processed and

recorded onto the inventory system so as to make inventory control efficient, accurate and

maintainable

Stock should be fully recorded when received from a supplier, when sent on to be used inthe off-shore project site or if any parts or supplies should be in turn returned from there

Obviously these are not practices, although only briefly outlined as they are, that can be

implemented without investing in training of the relevant staff, preparation of the relevant floor

areas and introducing the relevant systems and equipment as well as sufficiently embracing the

relevant SCM methodology, creating a whole new impetus and focus within the logistics activities.

However they are practices that will show an instant return of value for the investment as

efficiencies will increase and wastage and costs will reduce significantly, particularly if these are

implemented along with making parts identifiable, labelling or bar-coding by suppliers and manifests

more detailed so as to remove the initial issue of confusion and over complication.

Supplier Practices and Co-operation

One of the impacting generalities within the construction industry, particular within the smaller

construction company, is a lack of co-operation and structure between the company and their

supply manufacturer. In the case of (name removed on editing) and the (name removed on editing), due to the sheer size of the operations and undoubted customer importance they hold with their


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supplier, it should be relatively easy to establish good communications with their suppliers, and to

have them meet some requirements and considerations on their behalf that would make ordering,

receiving and identifying shipments much more efficient and easier on the part of the logistics

activities. This is especially applicable in regards to the initial problem posed in this report,

identifying unlabelled parts and parts manifested as 1 piece that are in fact consisting of a number of

elements. So much value can be added to the supply chain by improving relations with the suppliers,

getting to meet certain requirements and also to adapt certain practices. In particular this can be

done by:

Ensuring all parts and pieces are labelled correctly is the least to be expected. Realistically it

should be demanded of the supplier to label each part with a unique label fitting the needs

of this project, ideally with a bar code for the newly implemented inventory systems, but at

least with the product name, description, code and corresponding manifest no. in clear view.

Ensuring that a more detailed or effective manifest is in place that makes it easier to identify

parts and that will list the no. of elements in a kit item such as the previous example of the

recycle plant.

If possible should a kit item such as the recycle plant, be in a shipment it could be organised

that such a kit or no. of related elements are housed in a purpose built container/cage or

design that will keep them as one in transport making for much easier identification, receipt

and storage.

Setting up a professional and positive relationship with the supplier by involving a dedicated

procurement professional so as to lead to more harmonised operations, leading to efficiency

benefits, cost reductions and joint success for both companies.

An accessible product database, either an available file or hyperlink, whereby if necessary a

product picture can be viewed to allow identification if still unable although the

implementation of the previous points

As previously mentioned some suppliers in the construction industry can operate in amanner that is inconsiderate to their customers requirements by operating to their own

considerations rather than fulfilling the customers prioritisation or time requirements

needs. Such practices should be discouraged in the companies suppliers can be influenced

by having a good working relationship and mutual consideration as per the previous point.

Within the SCM methodology it is important to have a good relationship and professional working

appreciation and joined efforts where possible with ones suppliers. This is especially the case within

the JIT management but this is also applicable for this project as the immediate impact of improved


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manifests and part identification is enormously valuable for both parties, albeit mainly for (name

removed on editing) .

Procurement Practices

As previously analysed the procurement activities within the (name removed on editing) are

somewhat chaotic, un-communicative, myopic and unorganised. It is an area that needs obvious

attention if an overall efficient and successful logistics operation is to be in place and will go a long

way in assisting the successful implementation of the other suggestions.

One of the most fundamental and important suggestions of changes to be implemented in this area

are the placement of a dedicate purchaser, a procurement professional that can be imperative and

effective in many areas throughout the company, such as:

Co-ordinate all procurement efforts with individual project area engineers to fulfil their

supply needs and to order at a level that is most efficient and cost effective for the company

Co-ordinate with the logistics and receiving team so as to deal with any shipment issues or

any foreseeable issues that should be made aware to either party

Co-ordinate with an overall logistics manager, should one be in place, to ensure all needs

and performances are being met along with bridging the gap or any divide that may exist

between the construction interests and original parties of operations with the newlyinterlaced logistics focus and approach so as there is no animosity or ill-feelings leading to as

smooth a transition as possible, should that be the approach that is taken of course.

Cooperate and communicate with suppliers so as to ensure all company demands and

requirements are being met and to a sufficient standard while maintaining a positive and

jointly successful relationship so as to make future changes easier and more approachable

for both parties.

A procurement specialist really can add value to the logistics function of any company and within

pretty much any industry, however it would be extremely beneficial within this project as it would go

along to resolving the part identification and suppliers manifest issues, as well organising the

somewhat erratic methods currently in place for ordering of supplies. Although the nature of the

construction industry being project based would lead to a company in this industry to keep away

from employing a specialist in this field for when the project is finished it is an extra liability however

in such a big company as (name removed on editing) it is a consideration that could easily be

accommodated and add great value to their operations especially where they to adapt an SCMapproach to their logistic activities.


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Logistics Project Sub-Division/Cross Functional Training and Co-operation

As mentioned in the previous suggestions, it is important for one aspect to work that as many of the

other options are implemented with full belief and backing so that all can operate and take effect co-

dependently and successfully. This is also true in the suggestion to implement a full logistics

operation within the organisation, a sub-division that stands on its own classification as a function

within the (name removed on editing) to co-ordinate and control all logistics activities throughout

the project, adding procedural efficiency and inventory accountability and accuracy and value

consideration throughout all activities.

This can be implemented by the hiring of a dedicated logistics professional to implement their own

logistics structure within the organisation, training individuals for positions were needed and

possible, introducing an SCM methodology and process outlines were applicable. This would be a

less dramatic and less offensive of adapting to the logistics platform and as such would not cause as

many interruptions or encounter as many refusals to this. Due to the fact that this project is in

operation for quite some time and a more aggressive approach might cause unrest and more harm

than good this report would suggest this as the best option, to hire a couple of logistics experienced

professionals to shore up the faltering logistical platform that is already in place.

Alternatively the company could go for the more aggressive approach and introduce an entire new

logistics team, focus, and methodology, and completely rehashing the current operational activities.

This would offer benefits in the long term as it is an approach that must be committed to and

although maybe not the best for this particular project it may have much more beneficial

applications in future projects. But again as previously suggested this seems to be an inharmonious

and unnecessary approach to take, when by cross training amongst the different sectors and areas a

healthy and efficient logistical structure can be achieved for this project and future ones.


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SCM in the Construction Industry

Within the construction industry there are many practices that are still very inefficient, wasteful and

myopic in their outlook and focus. The nature of the industry itself leads to it being project based

and goal orientated whereby performance is measured in what is effectively job lots, moving from

job to job. This seems to have manifested itself to a more short term scale also where by an overall

project is again goal orientated and short sighted in planning, with engineers, builders, tradesmen

alike all focused on the next goal at hand and co-ordinating around that with little regard for the

inter-dependencies and relationships that exist throughout the overall operation. This leads to many

short falls in consistency, fluidity, efficiencies and cost control. This is highly contradictive and

counter to the methodology and focus of SCM and as such it is not compelling for the possible

success of SCM within this industry. It also reasons why SCM should be invested in, believed in, and

implemented within the construction industry, especially in larger companies and projects such as

the (name removed on editing) where the sheer scale of activities allow SCM principles to add great

value across all activities of the project.

Some areas of application of SCM within the constructions, which may be, and to a certain extent

have been subjected to SCM, include the reduction of costs (especially logistical costs) and inventory

in the supply chain. In view of the large share of these costs in construction, this focus is often fullyappropriate. The focus may also be on the impact of the supply chain on site activities. Here, the

goal is to reduce site costs and duration. In this case, the primary consideration is to ensure material

flows to the site for the sake of avoiding disturbances in the workflow. Also, the focus may be on

transferring activities from the site to upstream stages of the supply chain, the goal is again to

reduce the total costs and duration. In practice, these areas are intimately interrelated. It is often

difficult to improve the dependability of the deliveries of a supply chain without addressing the total

supply chain. If activities are transferred from site upstream the supply chain, it is necessary that the

resultant, more complicated supply chain is properly managed, implemented and improved so as to

have the benefits and successes that are possible.

This is a conflicting consideration, to think that it should not work and is polar to the current

activities but that its approach is the tonic that many of the flaws within this industry need in order

to reach through profitability and success. If SCM were to be implemented than obstacles to its

adoption as a management philosophy certainly do exist within the construction industry.


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Development Issues of SCM according to Lin and Shaw (1998)

Development

Issues

Description of the

development

Actual Construction Practise

Order

Information

Transparency

The issue is how to manage

the order information

propagation to

improve the supply chain.

It is not rare to find that the placing of a

subcontract or material order is delayed

due to price negotiations. As a result, the

order information propagation is effectively

halted.

Reduction of

Variability

The issue is how to reduce

variability and how to make

the supply chain robust whenfacing uncertainty.

Changes to orders, originating from the

sphere of the client, the design team or the

main contractor, are quite usual.

Synchronisation

of Material Flows

The issue is how to

synchronize the availability of

materials for assembly.

It is not uncommon to see that materials are

produced in an order suitable for the

supplying factory, and delivered to the site

in a mode minimizing the transportation

costs. Thus, other considerations than the

needs of assembly dominate.

Management of

Critical Resources

The issue is how to identify

critical resources, lay out a

critical path network and put

the effort on reducing the

workload of critical resources.

In the traditional design-bid-build

procurement in construction, where the

parties are selected based on price, it often

is impossible or difficult to objectively

identify critical resources of the supply

chain in advance.

Configuration of

the Supply Chain

The issue is how to evaluate

and then change the chain.

This kind of continuous and long-term

improvement of the supply chain is out of

question, because for each project, a new

supply chain is configured.

Although this does not include all points of the issues regarding the logistics activities within the

(name removed on editing) it does highlight the variability procurement processes that are involved

in the actual construction practices as well as the nature of the industry and how this contradicts the

long-term continuity of the SCM concept. This table can be seen to show that actual practice in

construction not only fails to address issues of supply chain, but rather follows principles that makesupply chain performance worse.


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Conclusion

SCM can play major roles in construction. The principle roles of SCM are covered by the generic SCM

methodology. The SCM offers general guidelines that can be used to analyse, reengineer, properly

coordinate, and constantly improve virtually the complete construction supply chain, resolving basic

problems and the myopic control that have been plaguing the supply chain. This would be practically

impossible to realise in the short term. Therefore, initially, the SCM methodology is properly

deployed on a lower scale, addressing partial supply chain problems, involving a limited number of

supply chain activities.

This is particularly pertinent in this project and within such a company, as although initial

improvements in terms of shipments, part identification and manifest accuracy may be made

immediately without any great difficult or repercussion the overall adaption the SCM philosophy and

methodology is a very difficult one which should be performed incrementally and not instantly in the

short term but will have major long term benefits for a company of this scale.


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Lin, F-R., and Shaw, M.J. (1998). Reengineering the Order Fulfillment Process in SupplyChain

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