ROLES OF SUPPLY CHAIN MANAGEMENT

IN CONSTRUCTION
ABSTRACT
Supply chain management (SCM) is a concept that has flourished in
manufacturing, originating from Just-In-Time (JIT) production and logistics.
Today, SCM represents an autonomous managerial concept, although still
largely dominated by logistics. SCM endeavors to observe the entire scope
of the supply chain. All issues are viewed and resolved in a supply chain
perspective, taking into account the interdependency in the supply chain.
SCM offers a methodology to relieve the myopic control in the supply chain
that has been reinforcing waste and problems.
Construction supply chains are still full of waste and problems caused by
myopic control. Comparison of case studies with prior research justifies that
waste and problems in construction supply chains are extensively present
and persistent, and due to interdependency largely interrelated with causes in
other stages of the supply chain. The characteristics of the construction
supply chain reinforce the problems in the construction supply chain, and
may well hinder the application of SCM to construction. Previous initiatives
to advance the construction supply chain have been somewhat partial.
The generic methodology offered by SCM contributes to better
understanding and resolution of basic problems in construction supply
chains, and gives directions for construction supply chain development. The
practical solutions offered by SCM, however, have to be developed in
construction practice itself, taking into account the specific characteristics
and local conditions of construction supply chains.

1
INTRODUCTION
Supply chain management (SCM) is a concept originating from the supply
system by which Toyota was seen to coordinate its supplies, and manage its
suppliers (Womack et al. 1990). In terms of lean production, SCM is closely
related to lean supply (Lamming 1996). The basic concept of SCM includes
tools like Just-In-Time delivery (JIT) and logistics management. The current
concept of SCM is somewhat broader but still largely dominated by
logistics.
Until now, in construction, initiatives belonging to the domain of SCM
have been rather partial covering a subset of issues (e.g., transportation
costs) in a limited part of the construction supply chain (e.g., the
construction site). In most cases, the issues are regarded from a main
contractor’s point of view (e.g., Asplund and Danielson 1991, Wegelius-
Lehtonen et al. 1996).
Statistical figures show that main contractors are purchasing more labor
and material than previously. For instance, in 1994, in Dutch construction
industry (i.e. residential, commercial and industrial building), the main
contractors’ share in the total national turnover had decreased to 24%
(Scholman 1997). Thus, suppliers and subcontractors represented about 75%
of turnover. Currently, this is expected to be more.
As a consequence, main contractors become more and more reliant on
other actors in the construction supply chain (e.g., suppliers and
subcontractors). Therefore, they need to revise their supply strategies and
trading relations with subcontractors and suppliers.
Thus, the goal of this paper is to clarify the roles and possibilities of
SCM in construction. Starting from the lessons learnt and methodological
development of SCM in manufacturing, present supply chains in
construction are observed, and recommendations for SCM in construction
are presented.
The focus of this paper is on the supply chain of a main contractor. It has
to be noted that in construction, real estate owners also may drive supply
chain development.

SUPPLY CHAIN MANAGEMENT WHAT IS IT ?

Any discussion of construction supply chain management (SCM) is usually
informed by a wide range of definitions. This diversity of definitions and
understanding presents a challenge, which this book addresses. We explore a
wide range of conceptual issues that help us to understand the nature of
supply chains in construction. In addition, there is case-study material
reflecting the work of some of the leading proponents of SCM in

2
construction. The premise for this book is the move from the project and its
management, as the main focus for the management of the construction
process, towards the supply chain and its management as the main focus.
The supply chain is the focus for more effective ways of creating value for
clients; as a vehicle for innovation and continuous improvement, integration
of systems and perhaps even improved, industry-wide, profitability levels.
Value creation is increasingly viewed as a process facilitated through a
supply chain a network of relationships within which firms are positioned.
New and Westbrook (2004) suggest that firms in supply chains must build
networks so as to provide complementariness between inner and external
.Abilities, that is to say, effective supply chains need to be supported in
networks that extend beyond the immediate linkages of exchange in order to
create the value in each link. In the same way that individuals are drawn to,
or naturally seek, other individuals with skills, knowledge and attributes that
they themselves lack, firms are drawn to form collaborative relationships
with other firms with skills, knowledge, attributes and perhaps resources that
are complementary to the first firm. Just as individuals in society find it
difficult to survive isolated from others, isolates in business are vulnerable
and may fail in time unless they possess a unique skill or talent which gives
them market power (for example a monopoly supplier or oligopoly of few
suppliers in a market of buoyant demand). The term supply chain implies a
linear process. This linearity, however, exists only at a high level of
abstraction

SUPPLY CHAIN MANAGEMENT AND PROJECT MANAGEMENT

Project management has evolved through several stages of development,

each adding complementary understanding to the existing bodies of
knowledge
•Traditional project management approach – techniques and tools for
application , which tend to have a production or assembly orientation
focused upon efficiency.
•Functional management approach – strategic, ‘frontend’ management of
projects for example program and project strategies, and partnering and
supply chain management and other task driven agendas which dovetail
with the traditional approach, for example the waste elimination application
of lean production.
•Information processing approach – technocratic input–output model of
managing projects.

3
• Relationship approach – project performance and client satisfaction,
achieved through an understanding of the way in which a range of
relationships between people, between people and firms, and between firms
as project actors operate and can be managed. Relations are context specific.
There are different contexts for relationships, which operate at different
levels:
• Business-to-business or organization-to-organization;
• Organization-to-individual representing the business: market and other
Societal relations
• Individual-to-individual: personal and social relations.
Personal relations can be characterised as:
• Authority: management and leadership;
• Task related: function and role;
• Acquaintance: social obligation;
• Friendship: social bonding and reciprocation;
• Sense of identity: who you are (not what you do), such as inheritance
and societal recognition – through ownership in business for example.
Organisational relations can be characterised as:
• Individual or personal: the individual represents the organisation;
• Systematic or procedural: personal relations have been enshrined into an
approach or systematic way of proceeding in order that the essence
Relationship is replicated at a general level in the future through social or
legal obligation .
• Strategies and culture help guide the context in which systems operate,
guiding the thinking and behavior of individuals in order that relations
through individuals and systems are aligned;
• Structure of an organization both reflects relations and governs relations
through hierarchy, function and proximity. The quality of relationships is a
key element in the success of a project. The quality may be the product of a
range of factors and therefore a consequence of a whole series of dynamic
issues. In this way a project team is merely the recipient of those
relationships and how they develop both within

SUPPLY CHAIN MANAGEMENT IN MANUFACTURING

ORIGIN OF SUPPLY CHAIN MANAGEMENT
SCM is a concept that has originated and flourished in the manufacturing
industry. The first signs of SCM were perceptible in the JIT delivery system

4
as part of the Toyota Production System . This system aimed to regulate
supplies to the Toyota motor factory just in the right - small - amount, just on
the right time. The main goal was to decrease inventory drastically, and to
regulate the suppliers’ interaction with the production line more effectively.
After its emergence in the Japanese automotive industry as part of a
production system, the conceptual evolution of SCM has resulted in an
autonomous status of the concept in industrial management theory, and a
distinct subject of scientific research, as discussed in literature on SCM (e.g.,
Along with original SCM approaches, other management concepts (e.g.,
value chain, extended enterprise) have been influencing the conceptual
evolution towards the present understanding of SCM.
In a way, the concept of SCM represents a logical continuation of previous
management developments . Although largely dominated by logistics, the
contemporary concept of SCM encompasses more than just logistics
(Cooper et al. 1997). Actually, SCM is combining particular features from
concepts including Total Quality Management (TQM), Business Process
Redesign (BPR) and JIT.
CONCEPT OF SUPPLY CHAIN MANAGEMENT
The supply chain has been defined as ‘the network of organizations that are
involved, through upstream and downstream linkages, in the different
processes and activities that produce value in the form of products and
services in the hands of the ultimate customer’ (Christopher 1992).
Information flow (orders, schedules, forecasts, etc.)

Suppliers Manufacturers Assemblers Retailers Customers

Parts Product Use or

Materials Sales
manufacture assembly consumption

Material flow (supplies, production, deliveries, etc.)

Figure 1: Generic configuration of a supply chain in manufacturing

SCM looks across the entire supply chain (Figure 1), rather than just at the
next entity or level, and aims to increase transparency and alignment of the
supply chain’s coordination and configuration, regardless of functional or
corporate boundaries (Cooper and Ellram 1993). According to some authors
(e.g., Cooper and Ellram 1993), the shift from traditional ways of managing
the supply chain towards SCM includes various elements (Table 1).

5
 The traditional way of managing (Table 1) is essentially based on a
conversion (or transformation) view on production, whereas SCM is based
on a flow view of production. The conversion view suggests that each stage
of production is controlled independently, whereas the flow view focuses on
the control of the total flow of production (Koskela 1992).
METHODOLOGY OF SUPPLY CHAIN MANAGEMENT
In the literature on SCM, many supply chain methods have been proposed.
Most methods address logistical issues of the supply chain, e.g., quality
rates, inventory, lead-time and production cost.
The methods of pipeline mapping supply chain modeling and logistics
performance measurement analyze stock levels across the supply chain. The
LOGI method studies time buffers and controllability problems of the
delivery process. Supply chain costing focuses on cost buildup along the
supply chain. Integral methods like value stream mapping and process
performance measurement offer a “toolbox” to analyze various issues
including lead time and quality defects.

‘Bottom–up’ design
One of the most important changes that the construction industry must deal
with in its evolution into SCM organisations is the recognition of the most
appropriate location of specialist knowledge in a number of fields. Applying
the principles of lean production to construction must move the location of
the leadership in design from the relevant consultant to the most appropriate
subcontractor, supplier or group of same.. borne out of the need of the North
Sea Oil industry to drastically reduce its costs in the face of plummeting
world oil prices, identified some important principles, which many have
sought to apply to many countries
• Use of performance specifications to communicate interpretation of client’s
brief by consultant to subcontractor or supplier;
• Standard forms of contract to emphasize mutuality rather than adversarial
positions;
• Use of incentives to deal more fairly with risk allocation within these non-
adversarial alliances;
• Simplification of the tendering protocol and the documentation with which
it is associated.

6
SCM articulates a process of design and financial management, the need for
which must always have been present. But management of any process or
system requires some focal point from which the manager can operate. The
division of labour within the construction industry has meant previously
that management of the whole process has been fragmented. Design, site
production and component manufacture have each been managed separately.
The management of these sectors has been poorly coordinated and this is
partly because the conditions of contract have traditionally distinguished and
separated these sectors. This tends to point to a growing need for one actor
to manage the whole design/site production/component manufacture
process. In terms of capacity and authority, this actor would need to be either
the client or the contractor. SCM introduces a fundamental shift in focus of
responsibility and authority within the overall network of project roles. This
system of evolving project roles sits within a context of competing and
perhaps conflicting governance patterns. A dynamic exists between formal,
contractual relationships (which initially define roles and relationships) and
the less structured and formalized project management policies, such as
partnering (which both ultimately shape project roles and the way in which
they are connected). These managerial approaches have a fundamental

Integration and Coordination in Construction Supply Chain

One of the primary reasons for the adoption of supply chain in construction
has been the need for the integration in construction projects. The
researchers have discussed different initiatives in the construction industry,
in order to achieve optimal level of supply chain integration. The work
discusses the concept of aggregation, and also looks at other supply chain
integration related concepts including client-led supply chain, knowledge
about the whole supply chain, effects of procurement on integration of
supply chain, etc. Old concept of working together with new name of
integrated supply chain is among one of the hot research topics in the recent
years within construction management. Researchers have looked at the
traditional ways of procurement within construction and identified the
problems, and solutions in terms of better ways of working. Similarly,
practitioners have informed the researchers their initiatives within the
industry to bring improvements within the industry through construction
procurement process. Some of the findings from the case study in
construction industry are listed below. There is a true understanding of what
does ‘partnering’ mean by the entire supply chain participants. Long-term
relationship among supply chain members, which was due to trust and open

7
communication; Processes are in place to incentivize for good performance
as part of the supply chain; Appropriate strategies are in place for main
contractors to use local suppliers, subcontractors, and work force; There is a
commitment of client to provide long term work (work continuity) for
enhancing supply chain integration; • Strong commitment of clients and
main contractors to invest in training and development of their supply chain
organizations; Early payments of services provided is observed;
Involvement of downstream suppliers and subcontractors at the beginning to
understand the build ability and interface issues, is not very common;
Learning is taken from one project to the new projects; Support is provided
from main contractors to their supply chain partners if any one of them are
in troubled water either financially or skill shortage-wise, etc.; and All
supply chain participants are practicing the partnering ethos both in the
office as well as on construction and development site. The results from the
case study are showing savings in time and cost. To maintain the momentum
of these gains there must be a continuation of the positive attitude amongst
the partners in sharing their knowledge and experiences on future projects.
By this approach, further benefits will be passed onto the client and end
users. At this point, there is a positive approach by all partners to take the
innovative approaches forward to achieve its targets. All the partners in the
supply chain are committed to the innovative ways of solving problems, and
new methods of working with each other as an integrated team. The supply
chain partners in the case study are highly motivated to the framework
agreement because of the continuity of work, agreed profit margin, long-
term relationship with client and other supply chain members, and
recognition of their quality services in response to the invitation to work
with the clients, fully subscribed to innovate the processes related to
procurement and supply chain integration within the construction industry.
Money saving through reducing cost is another motivating factor for being
part of such framework agreements especially for main contractors and
subcontractors. One of the biggest cost reductions is achieved through not
incurring cost in tendering for jobs for the same client for a period of say 3-5
years.

SCM As Tool for Effective Construction Project Management

The earliest documented account of the construction supply chain has been
reported with relation to Coordination, Costing, and Control in construction
(O’ Brien, 1995) . It has been reported by the researchers that the application
of SCM can result in better coordination, costing and control in a

8
construction industry. A better understanding of firm’s production costs and
capabilities – in particular their ability to manage their resources across
projects given changes in schedule and scope – affords several opportunities
for improvement. It provides a background for improved production control
within each subcontractor and supplier. Moreover, the link between cost and
production allows new forms of contracts that promote system optimization.
It has been found that Construction supply-chain management offers new
approaches to reduce the cost of and increase the reliability and speed of
facility construction. Supply-chain management takes a systems view of the
production activities of autonomous production units (subcontractors and
suppliers in construction) and seeks global optimization of these activities.
The promise of supply-chain management comes from its system
perspective on production activities. Such a perspective allows improved
understanding of firms’ production costs and capabilities (particularly under
the uncertain and changing conditions that characterize modern construction
sites). This provides a rational basis to improve coordination and control on
construction projects. Production activities can be better planned and
adjusted and, by linking to costs, contracts can be formed that promote
optimal supply-chain performance. Similarly, enhanced understanding of
production allows analysis of the impact of facility design on supply-chain
performance. The systems discipline of supply chain management contrasts
sharply with traditional methods of planning, controlling and contracting for
projects that, taking a hierarchical, decomposition approach, seek at best to
optimize individual activities. Thus whereas current construction methods
tend to support the fragmentation that plagues construction, supply-chain
management promises an engineering basis to design, plan, and manage
construction projects in a collaborative manner. The need for improved
linking of costs to production performance places priority on research area
one –more work must be done in this area before progress can be made in
research areas three and four. There must be a knowledge of payoffs to
design practical contracts in research area three and the production
knowledge necessary to evaluate design criteria will come from further
research in area one. However, econometric measures are necessary to
complement cost and performance modeling. Such measures serve to
generalize more specific models and test the propositions of those models.
More generally, such measures allow generation of an empirical database
that can demonstrate the gains possible by supply chain techniques. This
should help to speed adoption of these techniques across the construction
industry. According to the researchers the contribution of supply chain
management to the construction industry is as under. Cost and performance

9
modeling of subcontractor and supplier production. Improved scheduling
methods, particularly with regard to the design and placement of buffers
against uncertainty and changes. Improved subcontractor coordination
methods by linking site production to resource management. Improved
accounting and production control systems. While the application supply
chain management has been documented by the these researchers based on
some case studies there are others who have deduced some of the
shortcomings of construction supply chains that are still full of .wastages
and problems caused by myopic control. Actual practice in construction not
only fails to address issues of supply chain, but rather follows principles that
make supply chain performance worse. The SCM offers general guidelines
that can be used to analyze, 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 realize 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 actors. Due to its recurring character, the SCM methodology
implies a continuous improvement process of which the scope can be
enlarged over time, involving an increasing number of areas of application.
Some areas of application, which may be, and to a certain extent have been
subjected to SCM, include the reduction of costs (especially logistical costs),
lead-time and inventory in the supply chain. In view of the large share of
these costs in construction, this focus is often fully appropriate. Secondly,
the focus may 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 (and labor) flows to the site for the sake
of avoiding disturbances in the workflow. Thirdly, the focus may be on
transferring activities from the site to upstream stages of the supply chain.
The rationale may simply be to avoid the inferior conditions of site, or to
achieve wider concurrency between activities, which is not possible in site
construction with its many technical dependencies. Here, 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 requisite that the
resultant, more complex supply chain is orderly managed and improved in
order to have the benefits intended. In view of these roles, gaps in prior
initiatives to advance the supply chain can be identified. For instance, the
logistics initiatives, stressing (average) costs, have often failed to address the

10
impact of supply chain variability on site assembly. In addition,
industrialized construction, with its long and complex supply chain, has
often been lacking even basic principles of SCM. The generic body of
knowledge accrued in the framework of SCM leads to improved
understanding of the characteristics of construction supply chain problems,
and gives direction for action. However, the practical roles for SCM have to
be developed in construction practice itself, taking into account the
characteristics of construction and the specific situation. It has been brought
out that although supply chain management for an individual organization is
an emerging field of research in the construction management discipline, but
less attention has been devoted to investigating the nature of the construction
supply chains and their industrial organizational economic environment. The
merging of the supply chain concept with the industrial organization model
as a methodology for understanding firm conduct and industry structure and
performance is an important contribution to both construction supply chain
and construction economic theory. Much of the industrial organization
supply chain literature has tended to focus upon manufacturing industries,
where typically firms are permanent organizations. This raises issues as to
the differences between industries founded upon temporary compared with
permanent organizations. There is potential for the development of an
industrial organization methodology applicable to the project based industry.
Ultimately industrial organization research seeks to have direct implications
for industry performance and government policies. The researchers have
attempted in developing procurement models as applied to the construction
field with an aim to economize the inbound material cost. It has been
emphasized that SCM has many of the features associated with a ‘fifth
generation innovation’ It has been suggested that although construction
practitioners have some knowledge of SCM they need a better conceptual
understanding of it and new and more systematic approaches to its
implementation. The investigations has also been carried out regarding the
extent to which supply chain management practices can be shared between
different industrial contexts (Green et al., 2005). The researchers have
brought out that the recipes for learning from other industries often fail to
recognize the embedded and contextual nature of management practice. The
researchers emphasize on the contextual awareness as an essential element
in application of supply chain management in the construction industry.
They have studied the industrial context of construction aerospace industry.
The researchers have provided a fresh perspective on how SCM is
interpreted and enacted in the construction and aerospace sectors. The
adopted approach differs from previous studies in the way that context has

11
been conceptualized as an active part of the analysis. The researchers
brought out on the basis of the interviews and participative workshops, that
there is much to suggest that practitioners in the two sectors make sense of
SCM in different ways. Aerospace interviewees consistently link the need
for SCM to the imperatives of global competition. Furthermore, they
frequently allude to the need for firms to strategically position themselves in
the marketplace in pursuit of competitive advantage. In the case of the
aerospace sector, it is therefore relatively easy to construct a sense making
narrative that relates SCM to the dynamics of sectoral change. Indeed, the
narrative is readily identifiable in the views of industry practitioners. In
contrast, the derivation of a single sense making narrative for the
construction sector is more problematic. SCM is less well-established in
construction with a notable diversity of views. Progress towards the
implementation of any normative framework of SCM within construction
would appear very limited. Many respondents tend to describe the
frameworks they would like to introduce rather than systems that are already
in place. Construction practitioners invariably see SCM as a means of
improving operational performance, rather a fundamental shift in the way
that they do business. There is little evidence of any strategic perspective
amongst those interviewed. However, there was considerable discussion of
the barriers to implementation and the need for cultural change. What was
noticeable lacking amongst the construction interviewees was the shared
sense of destiny that characterized those from the aerospace sector. Although
they repeatedly cite SCM as a means of alleviating industry fragmentation,
construction interviewees did not tend to refer to the dynamics of inter-
temporal change without direct prompting from the research team. For
construction practitioners, the mantra of culture change seems to transcend
all other issues. In common with much of the literature, the tendency is to
view culture as an independent variable. The narrative of culture change is
seemingly mobilized by construction practitioners to persuade others (and
perhaps themselves) that they are striving to overcome the industry’s
adversarial culture by the adoption of enlightened management practices. In
this respect, the narrative in support of SCM is inseparable from that of lean
thinking, partnering, collaborative working and several other manifestations
of „enlightened practice. However, in the case of the construction sector it
seems that all such narratives are almost entirely disconnected from any
grounded understanding of sectoral change. Notwithstanding the above, any
meta-narrative concerning the interaction between discourse, managerial
action and structural change in the construction sector must be treated with
considerable caution. The fragmented structure of the sector, coupled with a

12
plethora of niche markets, means that practitioners views are much more
locally embedded than tends to be the case in aerospace. However, in
construction there is likely to be much greater variance in the inner contexts
within which practitioners operate, thereby rendering any generalizations
about the ascribed meanings of SCM much more tentative. It must further be
recognized that practitioners have considerable scope to shape the context
within which they operate. In recent years many construction firms have
attempted to integrate themselves into stable supply chains to take advantage
of serial contract arrangements, including prime contracting.. The emergence
of prime contracting and the increasing use of framework agreements in the
construction sector potentially provide a more supportive climate for SCM
than has traditionally prevailed. Providing that a regular workflow can be
achieved, prime contractors may well be able to form collaborative
relationships with key suppliers that approximate towards established
practice within aerospace. If clients are able to deliver the required
continuity of work, they will undoubtedly benefit in the short term through a
more integrated service. However, it must also be recognized that there is a
point at which supply chain consolidation may become anti-competitive if
new entrants are not encouraged. In either case, the influence of
collaborative SCM practices on the construction industry at large is likely to
remain small in comparison to highly consolidated sectors such as
aerospace.

Decision Models in Construction Supply Chain

13
The risk management is an essential component in any construction project.
“A Case Based Reasoning - Decision Support System Framework for
Construction Supply Chain Risk Management” which can support decision
makers in preventive as well as interceptive construction supply chain risk
management has been formulated by the researchers (Kumar and
Viswanathan, 2007). They have suggested an ITenabled solution to the risk
management problem in construction supply chains. The paper discussed the
framework of an integrated DSS based on CBR, which Risk Management is
an essential process of construction project planning. When a risk event
occurs during project execution, the required actions are taken by project
managers using their own experience and knowledge. While knowledge and
experience gained in past projects is very useful in identifying and managing
risks in a new project, such information resides primarily in Project
Managers’ minds and is seldom documented in a reusable form of
information. A decision support system with a case-base of previously taken
actions and a record of previous risk management plans can assist managers
in risk management of construction supply chains in a new project. This
paper suggests the framework of a Decision Support System adopting Case-
Based Reasoning approach; which can support decision makers in
preventive as well as interceptive construction supply chain risk
management. As the DSS can be used flexibly for various different projects,
it ensures the return on investments. For the firms who undertake projects in
a particular segment, this CBR system would bring enormous savings. In the
area of collaborative SCM application to project management now focus is
getting shifted to present systematic models. It has been brought out (Hu,
2008) that the construction management is generally characterized with
project-based management which is scattered with separated responsibilities
from independent construction participants and separated phases from the
lifecycle of construction. Efficient construction collaboration among all
participants and construction lifecycle is crucial to improve construction
management performance. Supply chain management is an innovative and
systematic approach to resolve many problems in construction collaboration,
but the construction supply chain is relatively fragmented and inefficient
since construction management process and collaboration are unique. The
researchers have presented a systematic supply chain management model for
construction projects, and construction information is specified and
illustrated for supply chain management. The information flow in the
construction supply chain system has been optimized to improve
construction collaboration performance, and an efficient internet-based
construction collaboration model has been suggested to accelerate the

14
innovations for management of construction projects. The timely completion
of construction projects is always associated with costs to the company. A
time-cost trade-off problem to optimize net revenue has been developed by
the researchers (Jian-hua and Wan, 2010) to discuss the impact of an
incentive plan combined with a lump sum contract on the determination of a
project’s optimal duration. A bi-level programming decision model has been
proposed in the viewpoint of the client to discuss the optimal selection of the
revenue incentive intensity so as to harmonize the benefit between the client
and the contractor and reach a certain equilibrium state. Furthermore, the
influence of some factors on this equilibrium state is analyzed through a
numerical example. Results of the research show that revenue-based
incentive mechanism is effective in object and benefit coordination between
the two parties of construction supply chain. During last few years, the
researchers have contributed in developing various mathematical models for
decision making and integration in construction supply chain. One such
study to explore the special characteristics of the construction industry and
develop a maturity model for measuring and improving the relationships
between the key partners of a construction supply chain has been conducted
(Meng et al., 2011). The model follows the capability maturity principle and
defines four maturity levels of construction supply chain relationships. It is
in a matrix format, which provides detailed descriptions for assessment
criteria in eight categories at each of the four maturity levels. It also provides
three assessment procedures of varied depths, which outline different ways
of using the model. The model is evaluated through a series of expert
interviews. It can help construction organizations to assess their existing
relationships and identify key areas for further relationship improvement.
Relationship improvement in supply chain may cause performance to
improve also, by reducing the costs of conflict and increasing the
opportunities of collaborative working. In bid to find the application of Real
Options concept in construction supply chains, researchers (Tran and
Tookey, 2012) have carried out the feasibility study in New Zealand
construction Industry. Real Options (RO) has been a universally accepted
concept in a number of major industries. However, its use in the
Construction Supply Chain Management (CSCM) sector has been limited.
Some rare supply chain management RO studies have shown a number of
limitations. First, there is a lack of a rigorous theoretical RO framework
pertaining specifically to CSCM. All such supply chain management RO
studies are based off RO theories or models developed for other sectors
(engineering, infrastructure, natural resources). And second, attempts to
extend real option to wider uses in CSCM seem premature at the present.

15
The study proposes a research program pertaining to CSCM in New Zealand
in order to enhance the current understanding of RO in this area and in the
process develop a comprehensive theory for the RO application in New
Zealand CSCM. A study is to analyze the development of SCM introduction
in the construction industry, investigating the risk factors affecting the
implementation of SCM principles has been conducted by the researchers
(Aloini et al., 2012). The researchers have identified a lack of Construction
Supply Chain Risk Management (CSCRM) literature which is mainly
conceptual and descriptive and focused especially on the risk assessment
phase. Common risk factors have been identified in literature and critically
analyzed considering eight key perspectives. These stress the attention on
the project planning phase and confirm the main contractor as the main
promoter for the SCM practice. The researchers (Yan, 2012) have also
introduced lean construction supply chain management model to
Engineering Project and Construction (EPC). They have aimed at applying
lean thinking as well as relevant lean technologies to solve the major
problems of EPC project management and improve the overall competence
of our Construction supply chain. The researchers have brought out the
Construction Supply Chains (CSC) are filled with various kinds of waste
and luxurious coordination cost mainly due to uncooperative behavior and
adversarial relationship among parties/actors. These problems have greatly
affected the effectiveness of the EPC project management as well as the
comprehensive performance of CSC. The reason can be largely attributed to
the lack of advanced project management thinking and appropriate EPC
project management model.

Material Flows in Construction Supply Chain

16
The smooth flow of material across the construction supply chain is
considered as major factor in successful execution of construction projects.
The identification of challenges of contractors regarding material
management and logistics in confined site construction has been
documented by the researchers (Spillane et al., 2011). The researchers have
identified the various managerial issues encountered by UK/ Irish
contractors in the management of materials in confined urban construction
sites. Through literature review, interviews, case studies, cognitive mapping,
loop diagrams and questionnaire survey an insight into the materials
management concerns within a confined construction site environment has
been envisaged and portrayed. The leading issues highlighted are: that
contractors’ material spatial requirements exceed available space, it is
difficult to coordinate the storage of materials in line with the program,
location of the site entrance makes delivery of materials particularly
difficult, it is difficult to store materials on-site due to the lack of space, and
difficult to coordinate the storage requirements of the various sub-
contractors. With the continued development of confined urban centres and
the increasing high cost of materials, any marginal savings made on-site
would translate into significant monetary savings at project completion.
Such savings would give developers a distinct competitive advantage in this
challenging economic climate. As on-site management professionals
successfully identify, acknowledge and counteract the numerous issues
illustrated, the successful management of materials on a confined urban
construction site becomes attainable.

Information Flows in Construction Supply Chain

17
Moving on further in a bid to improve coordination in construction supply
chain and flow of information amongst various entities an ebusiness model
to support supply chain activities in construction has been developed by
researchers (Eddie et al., 2001). A virtual network structure that acts as a
value-added component of an e-business infrastructure has been used by
researchers to improve communication and coordination, and encourage the
mutual sharing of inter-organizational resources and competencies. The
researchers have contended that the proposed e-business model not only will
be of benefit to those organizations which operate in the construction supply
chain, but also may be fit for other types of business-to-business ecommerce
when cooperation between business partners is necessary to improve
organizational performance and gain a competitive advantage. The
researchers (Lin and Tserng, 2001) have brought out that objective of supply
chain management is to quickly obtain real-time information, minimize cost,
increase levels of service, improve communication among supply chain
components, and increase flexibility in terms of delivery and response time.
In the traditional construction industry, construction processes are always
labor-intensive, manual, and time-consuming. With the advent of the
information technology, it is possible to achieve the supply chain
management for construction by seamlessly connecting all components in
the construction chain with real-time information. The supply chain of
construction contractors includes internal construction supply chain and
external construction supply chain. The scholars propose simplified models
for internal and external construction supply chains to achieve supply chain
management for construction by utilizing information technologies. These
information technologies adapted in construction supply chain management
include Internet, Intranet, Extranet, and Mobile devices (such as Personal
Digital Assistant device). In addition, XML is introduced for standard and
technology designed to accelerate data sharing by seamlessly integrating
systems across the construction supply chain effectively. Supply chain
management is both a management process and an e-commerce technology
integration that extends beyond the enterprise into supply chain. Information
is crucial to the performance of a supply chain because it provides the basic
upon which supply chain managers make decisions. Information technology
consists of the tools used both to gain awareness of this information and to
analyze the information to make the best decisions for the supply chain. The
essential process of supply chain management for construction is the
exchange of data among components in the chain. In recent years, this
exchange occurred using telephone, fax, or paper-based systems. Use of the
Internet, Intranet and Extranet has changed the platform for data exchange

18
forever. Ordering, billing and information-sharing functions are migrating to
Web-based applications in supply chain management. These applications of
information technologies allow the entire construction supply chain more
access to information and data and quicker response times by contractors
and suppliers. Extensible Markup Language (XML) is becoming the new
communication standard. XML is poised to become the standard for
business-to-business communications. It promises the seamless exchange of
data between applications, allowing companies to conduct business via the
Web without the heavy-handedness of previous programming languages. In
addition, XML technology provides a cross-platform approach to
information exchange. Using XML technology, corporations are able to
integrate with other corporate business systems through the exchange of
business documents. The ineffectiveness and inconvenience of current ways
of information processing and data collecting at construction sites can be
improved by integrated with promising information technology such as
mobile device – personal digital assistants. In addition, the mobile device
enabled on-site engineers to access information cross the supply chain and
integrate information into supply chain management system. Construction
Supply Chain Management is intended to make savings by linking the
supply chain more closely, making manufacturers more responsive to orders
placed online and enabling the widespread use of e-procurement. Its
shortterm effect will be better scheduling leading to lower inventory costs
and eventually manufacturing closely to order. By linking the entire supply
chain more closely, contractors will be better able to respond to the demands
of ecommerce. The important of IT in the supply chain will continue to
grow. As supply chains become more global and more complex and as
customers and competition become more demanding, companies will need
the supply chain capabilities that only sophisticated IT systems can give
them. Therefore, the important of IT to a supply chain can only increase. The
future role of IT in the supply chain, however, is very difficult to predict. An
attempt to transform Construction supply chain into knowledge bases supply
chain has been carried out by the researchers (Konukcu, 2011). The scholars
have reported that construction is a project-based industry and construction
supply chains generally work with a unique product in every project.
Commonly, project organizations are reconfigured for each project. This
means that construction supply chains are characterized by various practices
and disjointed relationships, with the result that construction supply chain
actors generally have transient relationships rather than long term risk
sharing partnerships. A consequence of this is the lack of trust between
construction clients, designers, main contractors and suppliers. Because the

19
construction supply chain works as a disparate collection of separate
organizations rather than as a unified team, the supply chain suffers from
lack of integration. Knowledge flow in construction supply chains are
hindered due to the reasons such as inadequate adaptation to collaborative
procurement type projects, inadequate collaboration between the
downstream and upstream supply chain, lack of interoperability of the
design tools, lack of well structured SCM process and lack of well
developed knowledge management applications. These characteristics of the
construction supply chains are the main reasons for its low efficiency and
productivity in project delivery. There is a need for the development of
appropriate systems to ensure the effective diffusion of knowledge such that
each actor of the supply chain adds value to the project delivery process.
This is expected to result in the creation of knowledge chains in
construction. The scholars believed that construction SCM, when integrated
with Knowledge Management (KM), can successfully address the major
problems of the industry. The research aimed to develop a framework to
transform construction supply chains into knowledge chains . To reach this
aim, the research first provided an overview of practices and issues in SCM
across a range of industry sectors including construction, aerospace, and
automotive industries. It discusses research and developments in the field of
SCM and KM in construction industry, the key SCM issues with a
knowledge flow focus, and the best practices from other industries to
improve the construction supply chains. Furthermore, the results of the
company specific and project specific case studies conducted in aerospace
and construction industry supply chains are presented. These results include
the key SC problems, key issues related to knowledge flow and the
presentation of knowledge requirements of each supply chain actor.
Following the data analysis process, a framework to transform the
construction supply chain into a knowledge chain taking full cognisance of
both the technical and social aspects of KM was presented. The main
purpose of the knowledge chain framework was to enable construction bid
managers/project managers to plan and manage the project knowledge flow
in the supply chain and organize activities, meetings and tasks to improve
SCM and KM throughout the supply chain in an integrated procurement
type (PFI) project life cycle. The knowledge chain framework was intended
to depict the knowledge flow in the construction supply chain specifically,
and to offer guidance for specific business processes to transform the supply
chains into knowledge chains. Finally, this research focused on the
evaluation of the framework through industry practitioners and researchers.
An evaluation of the Framework was conducted via workshop followed by a

20
questionnaire comprising industry experts. The findings indicated that
adoption of the Framework in construction project lifecycle could contribute
towards more efficient and effective management of knowledge flow,
standardization and integration of SCM and KM processes, better
coordination and integration of the SC, improved consistency and visibility
of the processes, and successful delivery of strategic projects. The overall
research process contributed the construction research in many perspectives
such as introduction of knowledge chain concept for construction supply
chains; comparative analysis of the SCM practices in different industry
sectors, identification of best practices for construction supply chains, better
demonstration of the maturity level and critical factors of the SCM within
the construction industry, demonstration of the KC framework which
integrates the supply chain process and knowledge sharing within a single
framework which covers all the recent trends in the construction industry
like collaborative procurement route projects, creation of better integrated
SCs, applications like offsite construction and BIM where all supply chain
management and knowledge management should take place. The role of
information sharing in construction supply chain has been explored by
researchers (Harsha et al., 2013) by reviewing of all the main developments
in the area. Coordinating and defining each player in construction project
and their activities is a very complex task. Hence, an Information System
capable of aggregating and displaying the relevant information, in the right
time, is an extraordinary tool to help the construction site managers. There is
a diversity of software available in the market that is very powerful in many
specialized areas, but lacks the supply chain management overview. It has
been concluded by the researchers that the information sharing is valuable
for the whole Construction Supply Chain. However, thorough and much
practical research is yet to be conducted in the area of implementation of
SCM and IT for effective and efficient data management and systems
integration issues. For information sharing which can be improved by
Information Technology, more attention should be paid on development of
advanced information technology to support sharing information efficiently

Implementation of SCM Techniques in Construction

21
The benefits of SCM in construction and barriers in its implementation, has
been very well documented by the researchers (Ahmed et al., 2002). The
scholars have summarized the benefits of construction supply chain
management as under. It looks at the enterprise as a whole. It includes not
only relationships with other functions within the firm but also with all
trading partner relationships outside the firm. For this reason Supply Chain
Management is said to have ‘Visibility’ and allows development of a
consistent supply and demand plan from the customer to the supplier. Hence
a planner, by taking a holistic view of the process from start to finish, can
devise a complete plan for the movement through the chain of a specific
product. This kind of planning could take place between the various
functional groups (sales/marketing, manufacturing, distribution) of a
vertically integrated enterprise or between several independent companies in
the distribution channel (raw material suppliers, manufacturers, third party
logistics services). This can provide better service, reduce inventories,
reduce paperwork, help consolidate distribution centers, and reduce
transportation costs. The authors have concluded the following reasons and
barriers for the slow growth of supply chain management in construction.
Lack of guidance for creating alliances with supply chain partners. Failure
to develop measures for monitoring alliances. Inability to broaden the supply
chain vision beyond the procurement or product distribution to encompass
larger business processes. Inability to integrate the company’s internal
procedures. Lack of trust inside and outside a company. Organizational
resistance to the concept. Lack of integrated information systems and
electronic commerce linking firms. • Lack of suitable organizational setup.
The researchers (Wong et al., 2005) have also attempted to find the
applicability of construction SCM on ground by floating questionnaires and
taking feedbacks. It has been reported that implementation of SCM in
construction has been filled with obstacles. In their study, a questionnaire
survey was used to identify the major problem obstructing the
implementation of SCM in construction. It was found that unfair allocation
of risks and benefits commonly adopted in current contracting systems
impede the effective use of SCM in construction. In addition, the degree of
seriousness of these problems is found to vary with the scale and duration of
projects. The researchers (Peat and Anna, 2007) have analyzed the
implementation aspects of construction supply chains and suggested
measures to improve the performance. They have reported that initially,
current supply chain performance should be measured and understood given
that it is evaluated by the criteria ‘is the overall product on time and to
budget’? This ‘broad - rush’ evaluation quite obviously does not provide any

22
mechanism to fully understand where process can be improved, wastage can
be reduced and additional value can be added. An effective approach must
be adopted towards activities where the knowledge ‘gained’ is stored, shared
and applied to the next activity. Currently, all efforts are focused on looking
forward to the next project rather than attempting to learn from previous
activities and applying the lessons learnt to a general raising of value adding
activities. The whole Supply Chain must look to improve the management of
its’ processes, in particular with regard to the sharing of data and information
(which in turn can be utilized to create knowledge). All parties involved in
the supply chain must look to drive change through all areas of the Chain
through: • Education process. • Cultural change. • An understanding that all
parties will benefit / profit • Open and shared approach to the dissection of
the ‘associated benefits’ of improved supply chain performance. • An
attitude of ‘if your in, you win’ with regard to enhanced approach to Supply
Chain participation. • Pre-planning and visibility opportunities provided by a
visible client forward workload well into the future that is shared by the
Supply Chain ‘family’. • Where possible freeze expectations but include
change where necessary through joint agreement through the use of
contingency plans. More effective management of subcontractors through: •
Regard the sub contractor as being part of the supply chain (key to the value
add process) • Sharing a full picture of the project • Sharing the values that
are required by the Supply Chain • Inviting input where the sub contractor
can add value • Vision for future The authors have also suggested that
improvements to the supply chain must be planned and must form part of an
overall strategy. The change processes must start at the very top of
organizations and must be carried out internally within the organization first.
As progress is made within the organization, change must then be extended
to all parties external to the organization (but within the supply chain).
Terminology and classification of materials / products etc. must take place to
facilitate the exchange of information through the supply chain. It was
agreed that it would be easier to ‘drive change downwards’ into the supply
chain rather than to ‘encourage’ change. Whilst this would be contradictory
to the preferred incremental change process (where ‘willing participants
were gradually educated), a step change approach should be ‘forced’
possibly by a major client . Such change however may not lead to true
‘ownership’ of the evolved Supply Chain. The ‘forced’ change must be
clearly identifiable as being for the right reasons and not solely for the
benefit of single organizations where it could be regarded suspiciously as a
mechanism for the client to ‘squeeze out’ the ‘margin’ from the Supply
Chain. The change process should involve, where possible, ‘like minded’

23
organizations and should be seen as a mechanism that will bring about
change in all directions within the supply chain. The Supply Chain members
should look to the following mechanisms: • Apply best practice whenever
and wherever possible. • People and culture issues must be addressed before
positive results can be expected. These issues are key to the success of
Enhanced Supply Chain Performance. • Organizations should look to adopt
innovative approaches to their activities and embrace best practice rather
than adopting an approach that perpetuates broadly out-dated approaches to
supply chain interaction and management. In the contextual studies an
investigation carried out by the researchers into the degree of awareness of
the factors affecting the implementation of SCM in the UAE construction
industry as well as the differences between the traditional and modern
management supply chain is an interesting reading. Importance-performance
analysis indicated the largest improvements to be needed in Support by
upper management; Activity sequences; Customer need approaches; Supply
chain technical background; and Resource planning. In contrast with other
developed countries, the requirement for UAE companies to associate with
at least one local counterpart company also has a significant effect on the
manner of SCM implementation – particularly in the approach and
expectations concerning knowledge sharing and coordination. SCM aims to
improve trust and collaboration among supply chain partners, thus
improving inventory visibility and velocity, and is an innovation that seems
to be especially appropriate for construction projects. As in mainstream
management, construction management ideas on supply chains have been
evolving with corresponding influences from the theory of production,
distribution, and strategic procurement, but there has been little significant
research on the extent to which the construction industry is merging the
supply chains and industrial organization fields. In particular, the industry’s
awareness of both the concept of supply chain integration and its methods
are relatively unknown, particularly in countries such as the United Arab
Emirates (UAE). The researchers have described an investigation into the
degree of awareness of the factors affecting the implementation of SCM in
the UAE construction industry as well as the differences between the
traditional and modern management supply chain. The data were obtained
by researchers by means of a questionnaire survey. The majority of these
supported the need to use SCM as a tool to meet project objectives and
identified the critical factors affecting the performance of supply chains to
be Support by upper management. In contrast with other developed
countries, the requirement for UAE companies to associate with at least one
local counterpart company also has a significant effect on the manner of

24
SCM implementation – particularly in the approach and expectations
concerning knowledge sharing and coordination. The application of SCM in
particular context of Indonesian construction industry has also been
documented by the researchers (Dewilarasati, 2010). This paper discusses a
preliminary study designed to investigate the construction industry’s supply
chain structure, as an initial step toward developing strategy for improving
its competitiveness. The researchers have brought out that the SCM in
construction industry represents a consciously efforts in forming cooperative
network and executing construction work amongst the construction players
to accomplish the project objectives. The research indicates that the
construction company’s business policy plays significant role in dictating the
selection of SCM patterns. This finding has laid important foundation
toward a more thorough study on SCM in Indonesian construction industry.
The researchers (Gosling et al., 2012) have reported that there have been a
range of calls for the construction industry to address perceived structural
failings and adopt supply chain management best practice models. However,
many studies in the construction sector report poor uptake. A possible reason
for this is a failure of companies to implement their supply chain
improvement programs effectively. Such changes may involve companies
adopting new approaches, new processes and new ways of working. In order
to manage this daunting undertaking, the role of managing new knowledge
and sequencing activities is important. Hence, the researchers have
investigated the anatomy of a long term supply chain improvement program
in the construction industry. Building on established supply chain
management principles, and models of supply chain learning, a longitudinal
case study has been analyzed. The researchers have concluded that
implementing the FORR IDGE (fundamental rules for enabling smooth and
seamless material flow) principles, combined with a structured approach to
accumulating and capturing supply chain learning, offers considerable
opportunity for competitive advantage for those willing to invest. The
researchers content that there are a range of barriers in achieving the vision
that is set out in the FORRIDGE principles, and that the empirical elements
of this paper inevitably have limited claims to generalized ability, but they
seek to set out an approach to address some of the well documented supply
chain failings of the construction industry. The principles may be achieved in
a myriad of different ways. The insight given by the scholars, the
FORRIDGE principles, the initiatives undertaken by a construction
company, and the sequencing method proposed, are an area of interest to
researchers in the construction supply chain management and give

25
organizations some guidance in designing and implementing their supply
chain improvement program

Table 1: Characteristic differences between traditional ways of

managing the supply chain and SCM (Cooper and Ellram 1993)
Element Traditional management Supply chain management
Inventory Independent efforts Joint reduction of channel
management inventories
approach
Total cost Minimize firm costs Channel-wide cost
approach efficiencies
Time horizon Short term Long term
Amount of Limited to needs of As required for planning
information current transaction and monitoring processes
sharing and
monitoring
Amount of Single contact for the Multiple contacts between
coordination of transaction between levels in firms and levels of
multiple levels in channel pairs channel
the channel

26
Joint planning Transaction-based Ongoing
Compatibility of Not relevant Compatibility at least for
corporate key relationships
philosophies
Breadth of Large to increase Small to increase
supplier base competition and spread coordination
risks
Channel Not needed Needed for coordination
leadership focus
Amount of sharing Each on its own Risks and rewards shared
risks and rewards over the long term
Speed of “Warehouse” orientation “Distribution center”
operations, (storage, safety stock) orientation (inventory
information and interrupted by barriers to velocity) interconnecting
inventory levels flows; localized to flows; JIT, quick response
channel pairs across the channel
Besides assessing and improving the supply chain, other elements are
essential to the methodology of SCM. A generic methodology of SCM can
be deduced combining and generalizing the commonalities of different SCM
methods. In a way, the SCM methodology bears resemblance to the Deming
Cycle (Figure 2). Generically, the methodology of SCM consists of four
main elements: (1) Supply chain assessment, (2) Supply chain redesign, (3)
Supply chain control, and (4) Continuous supply chain improvement.

Improve Assess Act Plan

Control Redesign Check Do

Figure 2: Generic SCM methodology compared to the Deming Cycle

27
The first step is to assess the current process across the supply chain in order
to detect actual waste and problems. The issue here is to find the causality
between the waste and problems, and locate their root causes. Once the
causality is understood, and having found out about the root causes, the next
step is to redesign the supply chain in order to introduce structural resolution
of the problems. This includes redistribution of roles, tasks and
responsibilities among the actors in the supply chain, and a review of
procedures.
The next step is to control the supply chain according to its new
configuration. An important part of the control is the installation of a
monitoring mechanism to continuously assess how the supply chain
operates. This includes systems to measure and estimate waste across the
supply chain process, and feedback systems to discuss and evaluate
underlying problems. The objective is to continuously identify new
opportunities, and find new initiatives to develop the supply chain. In fact,
this continuous improvement implies the ongoing evaluation of the supply
chain process, and the recurring deployment of the previous three steps:
assessment, redesign and control (Figure 2).

SUPPLY CHAIN MANAGEMENT IN CONSTRUCTION

ASSESSING CONSTRUCTION SUPPLY CHAINS THROUGH CASE STUDIES
In this section, three case studies that were executed in the Netherlands and
Finland are being described, representing three exercises of supply chain
assessment. The case studies represent three separate analyses of different
supply chains. The case studies give some insight in the waste, problems and
causes, and their interdependence presently existing in construction supply
chains (Table 2).
Table 2: Case study methodology

Method Case study 1 Case study 2 Case study 3

Quantit Measure Waste:
ative ment time buffers
analysi
s
Qualitat Observati Problems:
ive ons, controllability
analysi interview problems

28
s s etc.
Implicit Impressi Causes:
analysi ons etc. traditional
s trading
The case studies merely applied to the part of the supply chain coordinated
by the main contractor (Figure 3). The first case study represented a
measurement (i.e. quantitative analysis) of time buffers along a part of a
chain process of concrete wall elements in residential building (Vrijhoef
1998). The second case study represented a problem analysis (i.e. qualitative
analysis) to identify and locate controllability problems in a chain process of
composite façade elements in residential building (Vrijhoef 1998). The third
case study represented a quick scan of the cost impact of trading methods
used by a main contractor to purchase materials. The scan was an
undercurrent part (i.e. implicit analysis) of a larger research program to
investigate new ways of materials management by a main contractor.

29
UNDERLYING THEORY OF SUPPLY CHAIN MANAGEMENT Even
if rarely acknowledged in literature on SCM, it is easy to see that its
emergence is due to the same shift in theoretical concepts as the emergence
of JIT and lean production. The traditional way of managing the supply
chain (as presented in Table 1) is based, to a large extent, on a
transformation view of production, whereas SCM is primarily based on a
yow view of production. The transformation view suggests an independent
control of each stage of production, whereas the view suggests a focus on
the control of the total of production (Koskela,1992, 1999). Related to this is
the concept that the supply chain can be seen as a `logical factory. Thus, the
same principles and methods that have been used to develop factories can
also be used to improve supply chains (Luhtala et al., 1994). On the other
hand, practices particular to quality control in SCM have a third basic
conceptual basis, which is the view of production as value generation
(Koskela, 2000).

Characteristics of construction supply chains In terms of structure and

function, the construction supply chain is characterized by the following
elements It is a converging supply chain directing all materials the
construction site where the object is assembled from incoming materials.
The `construction factory is set up around the single product, in contrast to
manufacturing systems where multiple products pass through the factory,
and are distributed to many customers. It is, apart from rare exceptions, a
temporary supply chain producing one construction projects through
Repeated reconguration of project organizations. As a result, the
construction supply chain is instability, fragmentation, and especially by the
separation between the design and the construction of the built object. It is a
typical make-to-order supply chain, with every project creating a new
product or prototype. There is little repetition, again with minor exceptions.
The construction supply chain by facility, or real estate owners. They may
well drive the management and development of the construction supply
chain on which they are reliant for the continuation of their business, for
instance when they exploit a number of facilities that need frequent new
development and refurbishment. An example of this is the wide-ranging
construction-related programme of BAA Ltd (Duncombe, 1997). Here,
practically all the four roles of SCM are simultaneously applied in order to
improve both the essiency and the effectiveness of the supply chain. Indeed,
this example shows that in addition to contractors, clients who have
sufficient construction volume are able to initiate major Improvements

30
The historical development of SCM

SCM, as a term, fi rst appeared in the early 1980s to describe:‘. . . the range
of activities co-ordinated by an organisation to procure and manage.’ SCM
is a concept that originated and developed in the manufacturing industry.
The first signs of SCM were perceptible in the Just in Time (JIT) delivery
system as part of the Toyota Production System (Shingo 1988). Harland .
(1999) indicate that the evolution of SCM theory is driven by rapid changes
in global business practice. They contend that the worldwide recession of the
late 1980s and early 1990s forced companies to re-examine, at a strategic
level, the ways in which they aimed to add value and reduce costs
throughout their business. Initially, the term referred to an internal focus
bounded by a single organisation and how that organisation sourced and
procured supplies, managed their internal inventory and moved goods onto
its customers. It was recognized that this understanding was inadequate and
that the reality of managing supplies meant that supply chains extended
beyond the purchasing organisation and into its successive lower tiers
(suppliers and their suppliers’ suppliers) [Christopher 2005, p. 5]. SCM, as
an area of study, is a recent phenomenon and yet is clearly related to
logistics. It is a common notion that logistics involves the movement of
physical goods from one location to another. As long ago as the construction
of the great pyramids, man was concerned with how to move materials to a
construction site. Human migration from Europe to the Americas is another
example of signifi cant logistical challenges. The term logistics was
originally fi rst used in the military environment. The study of logistics
received much attention from the armed forces during both World Wars. The
Second World War necessitated greater movement of troops and supplies
than any other period in history; logistics proved a crucial factor in its
outcome and indeed the success or failure of many military confl icts.
Following the war, logistical concepts were given more attention in the
business
world (Christopher 2005, p. 3; Long 2004, p. 4). Figure 2.2 illustrates the
evolution of logistics as a discipline, into SCM. There are many ways of defi
ning logistics, but the Council of Supply Chain Management Professionals
offers a useful standard:
‘The part of the supply chain that plans, implements, and controls the
efficient, effective fl ow and storage of goods, services and related
information from the point of origin to the point of consumption in order to
meet customers’ requirements.’According to Long (2004, p. 10), from the

31
point of view of a company, there are three distinct areas to logistics.
Inbound logistics includes sourcing and materials management; operations
logistics, closely related to material management emphasizing the way
logistics affects operations; and finally
RISK MANAGEMENT AND THE SUPPLY CHAIN

This chapter will explore the use of supply chains and their management,
and the inextricably linked challenge of managing risk. This chapter
provides an insight into some of the more subtle distinctions made between
the rhetoric and practice of managing risk through the use of supply chains.
It will consider what the difference is between risk and uncertainty – and
whether such a distinction is important; and then consider how the practical
challenge of forming and managing a supply chain may result in unexpected
consequences. We first need to explore the issue of risk. Risks are present all
the time and everywhere. For those who derive a living from being expert in
risk management, there is a specialist area of knowledge with its own
lexicon of terms. For the purposes of this chapter, the specific terms to be
used need careful definition. ‘Risk’ henceforth will be considered as
comprising risk and uncertainty. The word ‘uncertainty’ is typically used to
indicate less confidence, suggesting a class of vagueness that is inferior to
those concerns that can be tagged as ‘risks’, where there may be more
formal assessment of both impact and likelihood of the risk, risk event or
hazard (Knight,1921). In this context, the Oxford English Dictionary defines
uncertainty as: ‘[The quality of] a business risk which cannot be measured
and whose outcome cannot be predicted or insured against’ accessed March
2008). The use of the word risk to cover both terms reflects the general
mood of modern literature, which is dominated by the term risk. However, in
the context of the study of risk, it is important to be clear about the nature of
the risk to be managed, and therefore the distinction between risk and
uncertainty should be at least considered. In the world of risk management
there is great importance placed on the assessment of issues associated with
terms such as ‘impact’ and ‘likelihood’. Combining the two allows the use of
a risk register where a particular risk (event) has a consequence (impact)
with an assessed probability (likelihood).
Such risk registers are a mainstay of project risk management and have been
developed to very high levels of sophistication, depending upon the nature
of the project (context) and who is involved in generating and reviewing the
register. The term ‘uncertainty management’ is not as familiar as ‘risk
management’,

32
as the implied vagueness requires more general use of common-sense
approaches. The Harvard Business Review’s (1999) useful summary of texts
under the title Managing Uncertainty deal with a number of subjects, but
with an overall emphasis on setting forward-looking strategy and business
planning. This leads to the second important point – that uncertainty is
frequently associated with benefi ts or opportunities and much of the
discussion about the management of risk (intrinsically downside biased) can
be applied to the management of opportunity – considered as the potential
benefit. For example, many of our most personally cherished memories are
from occasions or events that have some element of thrill or excitement.
Indeed, there are those in society that we can call ‘thrill-junkies’, or more
formally ‘risk seekers’, who enjoy pastimes that many others would consider
as being extraordinarily dangerous or scary. In business, many investment
decisions are taken for the potential pay-off or benefit , recognising that the
investment may fail, but hoping that the proverb – speculate to accumulate –
will prove true. Bringing the two issues of risk and benefit management
together provides us with the management challenge

33
 The case studies represent some good examples of the effects of
interdependency in the construction supply chain (Table 3). Time buffers, as
observed in the first case study, were mainly located in between the sub-
processes, separating the sub-processes in order to cope
Resident Principal Architect & Main contractor
consultants
Direct suppliers Indirect
& sub- suppliers
contractors
Initiative Tendering Design Procurement

Fabrication Parts
of elements manufacture

Construction Operation Materials

Use Hand-over
on site capacity production

Information flow (orders, schedules, forecasts, etc.)

Material flow (supplies, production, deliveries, etc.)

Figure 3: Generic configuration of a traditional supply chain in residential

building
Table 3: Overview of the First Two Case Studies

Case study 1 Case study 2

Descript This case study refers to time Involves problem analysis
ion measurement to detect and to identify and locate
analyze time buffers in a part controllability problems in a
of a supply chain process of part of a chain process of
concrete wall elements composite façade
including the excavation and elements. The observed
delivery of sand, the part included the job
fabrication and delivery of preparation, price
elements, and the site bargaining, engineering,
installation of elements. assembly, and site
installation of the elements.
Objectiv Analysis of the time use along Analysis of the
e the process in order to get controllability problems
insight in the time buildup, along the process in order
and the magnitude and to get insight in the
location of time buffers. occurrence and causality
among the problems and

34
 their causes.
Method Decomposition of the process Decomposing the process
in sub-processes and in sub-processes
activities Uncovering the
Time measurement of the controllability problems
activities per sub-process
Categorizing time use per Identifying and locating the
activity: wasted, non-value- causes
adding, value-adding Finding connections
Locating and quantifying time between the problems and
buffers causes
Composing the process time
buildup
Results It appeared that at the The controllability problems
beginning and the end of the were numerous. Root
sub-processes remarkable causes included non-
time buffers occurred. The collaborative working
time buffers were particularly relations between parties,
due to inventory and delays. and adversarial bargaining.
The share of the time buffers Most problems that were
compared to the total lead- encountered on an
time was quite large (70- operational and managerial
80%). Underlying problems of level were caused by
the time buffers included strategic and cultural
separate planning. The issues. These included
problems referred to various lacking common targets,
root causes including inter- reluctance and
organizational barriers. opportunism.
with variability and non-synchronicity. The time buffers were having a large
impact on time buildup in the total process (Figure 4). Controllability
problems, as observed in the second case study, mostly stemmed from earlier
activities in the chain, performed by prior actors (Figure 5). The
controllability problems caused much waste, including time buffers.
From the case studies three main conclusions can be drawn. First, even
in normal situations much waste and problems exist in the construction
supply chain. However, this is not seen or often ignored. In the chain, most
actors (separate companies and divisions of the same company) appear to be
managing just their own parts, securing their own businesses. Second, most
of the waste and problems are caused in another (i.e. earlier) stage of the

35
construction supply chain other than where they are found. The root causes
of the waste and problems were rarely found in the activity where they were
encountered, but rather in a previous activity executed by a prior actor, often
operating on a higher organizational level. Third, waste and problems are
largely caused by myopic control of the construction supply chain. Many
actors in the chain seem to be not able or interested to see the impact of their
behavior on other (i.e. later) activities in the chain. In most cases, actors are
not prompted to consider the effects of their activities. Instead, they are
encouraged to optimize their own part of the chain, not taking into account
other activities and actors in the supply chain.
The conclusions are based on three case studies. In order to underpin the
conclusions, the case study results are being compared to findings in existing
research.
4: Case 1 - Time measurement of concrete wall elements
Time buffers
Time

Process
Elements
Sand production Site
Time use
fabrication assembly

Wasted time use

(about 70%)

Non-value-adding time
use
(about 10%)
Value-adding time
use
(about 20%)
Process

36
 Inaccurate data
Information needs are not Long search for
met needed
Adversarial bargaining information
Incorrect
documents.
Main contractor Waiting long time Defective supplies
for approval of Order changes
Job design changes Complex delivery
preparation procedures
Engineer
Problems Design and Long storage
engineering Inferior packing Inflexible
system deliveries
Indirect supplier Large Uneasy
Problems Assembly shipments packing
System
Complex
Subcontractor ordering
procedures
Problems Transport
and delivery

Main contractor

Problems
Site
Problems
installation

Figure 5: Case 2 - Problem analysis of composite façade elements

COMPARISON OF CASE STUDY RESULTS WITH FINDINGS IN EXISTING
RESEARCH
Jarnbring (1994) found in his study on material flows in Swedish
construction that the value-added time of those flows is only 0,3% to 0,6%
of the total flow time. Various studies show a cost reduction potential
varying from 10% to 17% of the material costs (i.e. purchasing price) by
means of improved logistics (e.g., Asplund and Danielson 1991, Jarnbring
1994, Wegelius-Lehtonen 1995). Most researchers argue that chances for
these cost savings would increase if contractors and suppliers would co-
operate to identify joint opportunities to improve logistics. However, in a
study into construction logistics, Wegelius et al. (1996) found that the
purchasing price is still the dominating criterion for supplier selection,
which is confirmed by Jarnbring (1994). Särkilahti (1993) found that, in
general, subcontractors are also selected on the basis of price.

37
 The tenor of these findings support the conclusion from the case studies
as for the existence of considerable waste in construction supply chains (i.e.
the part of the chain involving contractors and suppliers). Also, the argument
that joint improvement of logistics would be more efficient (i.e. less costly)
when actors in the supply chain would cooperate demonstrates the fact that
adversarial bargaining is wasteful. When taking the whole supply chain into
consideration, and all possibilities for improvement, the amount of avoidable
waste and problems must be considerably higher.
Laitinen (1993) found that each actor of the supply chain adds a time
buffer for himself in the schedule, and often produces in a different sequence
or speed than the next or previous actor, optimizing just his own activities. It
is also customary to use material inventories as buffers against variations
and uncertainties in the supply chain (O’Brien 1995). In a study on
deliveries of concrete façade components, Laitinen (1993) found several
problems causing variation and uncertainty in the delivery process. For
instance, design information was often deficient, and difficult design issues
were often not detailed. In addition, design changes were caused by non-
available, late, wrong or incomplete information, and they were often not
being communicated to the factory.
The case studies showed that most of the waste and problems found were
caused by another actor in another stage in the supply chain. The case
studies as well as the findings in existing research indicate the causal
relationship between problems in one stage of the supply chain causing
waste in another (i.e., the next) stage.
Jarnbring (1994) found that deficient planning and deficient information
on the needed amount of material are characteristic for materials purchasing
in construction. In a study on the implementation of lean production in
construction component manufacturing, Koskela and Leikas (1997) found
that there is a tendency to place construction component orders with missing
information due to incomplete design. According to Jarnbring (1994),
decision making on logistical solutions is often constrained to those
solutions one has experience of or insight in.
Thus, the causes of waste and problems in construction supply chains, as
mentioned earlier, include decisions that are made with a lack of information
or understanding. This appears to be valid for operating the supply chain
itself, but also for finding solutions (e.g., for logistics).
Comparison of the results of the case studies with prior research justifies
that waste and problems in construction supply chains appear to be
extensively present and persistent. Due to interdependency in the supply
chain, the occurrence of waste and problems is interrelated with causes in

38
other stages and levels of the supply chain. Myopic control of the
construction supply chain reinforces waste and problems, and complicates
their resolution.
ROLES OF SUPPLY CHAIN MANAGEMENT IN CONSTRUCTION
The generic concepts, methods and lessons learnt, which have been
developed in the framework of SCM, can be used in different ways for the
improvement of construction supply chains. In the following, we illustrate
how the methodology of SCM can contribute to the understanding of
construction supply chain problems, and in giving direction to improvement
efforts. The bottom-line is the effective resolution of interdependency-
caused issues in the construction supply chain, including basic problems and
myopic control.
SUPPLY CHAIN MANAGEMENT’S CONTRIBUTION TO RESOLVE BASIC
PROBLEMS IN CONSTRUCTION: UNDERSTANDING CONSTRUCTION
SUPPLY CHAIN PROBLEMS
The case studies and existing research show that problems in construction
supply chains are largely characterized by interdependency. Myopic control
of the construction supply chain, combined with traditional trading and non-
cooperative relationships, reinforces the problems, and complicates their
resolution.
Above, SCM has been introduced including an appropriate methodology
to resolve the basic problems in the construction supply chain. The first step
of the methodology suggests a chain assessment to uncover the nature and
causality of the problems, which has been demonstrated earlier in the case
studies. Understanding existing problems is an absolute necessity to be able
to resolve them effectively. The goal is to become totally aware of the real
basics of the problems (i.e. seeing the “big picture”), and approaching the
issue properly (i.e. holistically) in order to unlock possibilities for effective
improvement of the supply chain. In fact, it’s a matter of making waste and
problems visible and tangible, and identifying and detecting the root causes
to make it possible to resolve them all.
ARGUMENT FOR SUPPLY CHAIN MANAGEMENT IN CONSTRUCTION:
FULFILLING THE SUPPLY CHAIN METHODOLOGY
Based on the insight gained by means of supply chain assessment, the SCM
methodology needs to be fully applied to resolve the problems that were
found in the construction supply chain. Because most problems spread
across (a considerable part of) the supply chain, solutions are needed that

39
equally cover multiple stages of the supply chain, including the actors
involved. The range of the solutions and the part of the supply chain
involved depend on the scale of the problems.
After having assessed the supply chain, the SCM methodology suggests
redesign (reconfiguring the supply chain’s structure), control (coordinating
the supply chain according to the new configuration) and continuous
improvement. For instance, towards suppliers, the methodology could
include reengineering the procurement process, installing joint coordination
of logistics and recurring product development programs. Typically, such
activities include joint activities between separate actors in the supply chain.
Supply chain arrangements counteracting adversarial relations with other
actors (e.g., partnership) are needed to enlarge the magnitude of the SCM
methodology, and clear the way for resolution of interdependency-based
problems and myopic control. In fact, actors are dependent on each other for
implementing the supply chain methodology successfully. Supply chain
development should take place in co-operation with a growing number of
actors tackling a growing number of issues (Figure 6). The actors involved
should have a common development goal, share the same view on the
development, and adopt the same approach to issues such as grasping
concrete and objective performance information, and searching for
improvement opportunities cooperatively (Wegelius-Lehtonen and Pahkala
1998).
It is interesting to compare the development issues of SCM, as defined by
Lin and Shaw (1998), to the actual practice of construction (Table 4).

40
 Improve Assess

Control Redesign

issues covered
Number of supply chain

Improve Assess

Control Redesign

e nt
lopm
eve
ain d
ly ch
p
Improve Assess

Sup
Control Redesign

Number of supply chain

actors involved

Figure 6: General Approach to Supply Chain Development

Table 4: Development Issues of SCM According to Lin and Shaw (1998)

Developm Description of the Actual construction practice

ent issues development
Order The issue is how to It is not rare to find that the
information manage the order placing of a subcontract or
transparen information material order is delayed due to
t propagation to improve price negotiations. As a result,
the supply chain. the order information
propagation is effectively
halted.
Reduction The issue is how to Changes to orders, originating
of reduce variability and from the sphere of the client,
variability how to make the the design team or the main
supply chain robust contractor, are quite usual.
when facing
uncertainty.
Synchroniz The issue is how to It is not uncommon to see that
ation of synchronize the materials are produced in an
material availability of materials order suitable for the supplying
flows for assembly. factory, and delivered to the
site in a mode minimizing the
transportation costs. Thus,

41
 other considerations than the
needs of assembly dominate.
Managem The issue is how to In the traditional design-bid-
ent identify critical build procurement in
of critical resources, lay out a construction, where the parties
resources critical path network are selected based on price, it
and put the effort on often is impossible or difficult to
reducing the workload objectively identify critical
of critical resources. resources of the supply chain
in advance.
Configurati The issue is how to This kind of continuous and
on evaluate and then long-term improvement of the
of the change the chain. supply chain is out of question,
supply because for each project, a
chain new supply chain is configured.

Introducing the four roles of supply chain management in construction

The characteristics discussed above also have an impact on the management
of supply chains. Four major roles of SCM in construction can be
recognized, dependent on whether the focus is on the supply chain, the
construction site, or both. Firstly, the focus may be on the impacts of the
supply chain on site activities. The goal is to reduce costs and duration of
site activities. In this case, the primary consideration is to ensure dependable
material and labor owns to the site to avoid disruption to the workbox. This
may be achieved by simply focusing on the relationship between the site and
direct suppliers. The contractor, whose main interest is in site activities, is in
the best position to adopt this focus .Secondly, the focus may be on the
supply chain itself ,with the goal of reducing costs, especially those relating
to logistics, lead-time and inventory. Material and component suppliers may
also adopt this focus. Thirdly, the focus may be on transferring activities
from the site to earlier stages of the supply chain. This rationale may simply
be to avoid the basically inferior conditions on site, or to achieve wider
concurrency between activities, which is not possible with site construction
with its many technical dependencies. The goal is again to reduce the total
costs and duration. Suppliers or contractors may initiate this focus. Fourthly,
the focus may be on the integrated management and improvement of the
supply chain and the site production. Thus, site production is subsumed into
SCM. Clients, suppliers or contractors may initiate this focus. It should be
noted that the roles as identified above are not mutually exclusive, but are
often used jointly .This paper's focus is the supply chain of a main
42
contractor. However, there is a important role that lies beyond the scope of
this paper, namely management of management of the supply chain and the
construction site. The so include open building (Van Randen, 1990) and
sequential procedure (Bobro! and Campagnac, 1987). From a production
point of view, the basic beneath of open building is in the postponement of
the decisions of users regarding the interior of the building. This is realized
by separating the from the structure. This also provides adaptability for the
remaining life cycle of the building so that users can the space as their needs
change. In the sequential procedure, the idea is to structure the site work as
successive realizations of autonomous sequences(this resembles group
technology as developed in manufacturing).In both of these approaches, the
goal is to replace construction's usual temporary chains with permanent
supply chains. Pre-engineering is another related approach, where the
customer may choose a pre-engineered building from a certain range of
options (Newman,1992). The supply chains for such buildings are typically
stable. Design build arrangements (Bennett et al., 1996),although more
restricted in scope, can also be classified in this group. In critical terms, prior
initiatives on construction SCM have had only limited impact on the
industry, and their wider application has been slow. Some of the so
initiatives are so new that it can be argued that they are in the stages of their
typically following an S-curve, which tends to grow slowly in its early
phases. Even industrialization, the oldest initiative that exists, has
nevertheless not generally made the breakthrough into building construction
(Warszaswki,1990). A better understanding of construction supply chains is
clearly necessary in order to comprehend the reasons for the difficulties of
SCM's advance within construction.

Practical initiatives to advance construction supply chains

The following section discusses practical initiatives to advance construction
supply chains in each of the two roles.
Role 1: Improving the interface between site activities and the supply
chain: The clearest initiatives of SCM in construction have been in the
"field of logistics (e.g. As pound and Danielson, 1991; Wegelius-Lehtonen
and Pahkala, 1998). Here, there has been a focus on the co-operation
between suppliers and contractors for improving the total flow of material,
whereas traditional treatment of construction logistics and material handling
has predominantly concentrated on activities occurring

43
Role 2: Improving the supply chain: This topic includes initiatives aimed
at the development of specific supply chains, such as prefabricated concrete
elements (Laitinen,1993) or elevators (Luhtala et al., 1994). In-depth cost
and time analyses are important for identifying potential improvement and
for developing supply chains(Wegelius-Lehtonen, 1995). When developing
the supply chain, the trade between transportation, inventory and production
costs should be borne in mind in order to achieve global improvement.
Productivity and supply chain performance is decreased by the following
factors: uncertainty in the supply chain, varying site conditions and varying
capacity conditions (O'Brien, 1995, 1998).

HR Management in Construction Supply Chain

An important but often overlooked angle of human resource management in

construction has also been analyzed by scholars (Chan and Greenwood,
2006). The scholars have brought out that there is a lack of research aimed at
understanding the role of human resource management in the effective
management of supply chains. Alongside this gap, there are also calls for the
consideration of Human Resource Management (HRM) across
organizational boundaries. The research attempts to plug these gaps with a
two-phase research methodology. The first phase comprises a series of
exploratory interviews conducted with senior managers in stakeholder
organizations (client, contractor, subcontractors and suppliers) within the
supply chain of a typical project in the Northeast of England. This is to
capture the perceptions of exploitation of HRM in managing construction
supply chains and to elicit from the participants areas of consideration for
enhancing the use of HRM in managing construction supply chains for
delivering project success. The second phase involves the conduct of six
case studies that enabled the research team to delve deeper into the issues
identified during the exploratory phase and to advance a model of HRM in
construction supply chain management. The researchers have reported that
strategic fit within supply chains tends to emphasize taskbased numerical
flexibility, rather than genuine consideration and development of human
resources. On the other hand, HRM has, until recently, rarely taken into
account interorganizational characteristics that typify the construction
industry. Therefore, this research intends to plug the gap by examining the
use of human resources in construction supply chains, with a view of
developing good practice for HRM in construction SCM.

44
Organizational Structure in Construction Supply Chain

The organizational structure of construction SCM is an area which has now

generated interest amongst the researchers. Drawing inspiration and
legitimacy from the traditions of organizational theory and in particular
alternative mechanisms of organizational governance, the researchers
(Tennant and Fernie, 2012) have explored an emergent, clan form of client-
led supply chain governance in UK construction. Clan mechanisms of
organizational governance are described as hybrid structures of exchange,
neither pro-market nor organizational hierarchy. Not to be mistaken with
alternative mechanisms of exchange such as networks, clan forms of client-
led supply chain management are readily distinguishable by their highly
socialized marketplace, enduring relationships and community of practice. A
qualitative research strategy is adopted for this exploration of clan forms of
client-led supply chain governance. In contrast to much of the prevailing
work in construction supply chain management research, the findings draw
specific attention to a hybrid form of organizational governance, viz., clans.
In light of challenging economic conditions, the recognition and potential
contribution of clans as an alternative mechanism of governance is a timely
and valuable contribution to the ongoing construction supply chain
management debate.

RESULTS AND DISCUSSION

The foregoing account of literature review reveals that since the beginning
of the documented idea of application of SCM in construction for better
costing and coordination (O’ Brien, 1995) wide variety of research works
have been carried out by various scholars. The researchers have been very
keen in developing and perusing various decision making models on very
specific areas of construction supply chain, such as, risk management
(Kumar and Viswanathan, 2007), time -cost trade off (Jian-hua and Wan,
2010), etc. Another area where the researchers have been keen is the supply
chain integration and coordination. The theories for application of ebusiness
model (Eddie et al., 2001), collaborative models (Hu, 2008) and maturity
models (Meng et al., 2011), have been propounded for integrations of
construction supply chain. The optimum level of supply chain integration
models (Khalfan and McDermott, 2006) has also been explored. As the of
flows of material, information and funds is an important ingredient in the
supply chain construction projects, the emphasis on material flows (Spillane
and Oyedele, 2011) and information flows (Harsha et al., 2013) are other

45
areas which have been explored by the researchers. The scholars have also
worked on the feasibility of application of SCM in particular geographical
application. The application of SCM in UK (Spillane et al., 2011), UAE
(Albaloushi and Skitmore, 2008), Indonesia (Dewilarasati, 2010), and New
Zealand (Tran and Tookey, 2012) construction industry have been carried
out. These studies are primarily based on the data collection and interviews
to explore the extent and feasibility of application of construction industry.
However the in-depth analysis of the literature reveals that the there are only
few attempts made by the researchers (Hu, 2008) for presenting a total
solution of application of the application SCM methods in construction. The
models developed focus on very specific areas and these are short of
offering a comprehensive solution. The case studies for the implementation
of SCM methods in construction have also not been documented. Most of
the models and hypothesis propounded by the researchers (Tran and Tookey,
2012) have yet to be experimented on ground.

CONCLUSION
It can therefore be deduced from the literature survey that the
documentation of ground experimentation of SCM methods in construction
based on the real case studies is not available in plenty. The research works
and papers published on the subject are mostly academic studies inspired
from the success of SCM technique in manufacturing sector. The case
studies has mostly remained confined to building and real estate sectors with
SCM tools being used sporadically for procurement, subcontractor relations,
cost control, etc. Another most important aspect of application SCM tools is
in execution of construction projects in constrained and uncertain
environment which has not been explored by the researchers much. The
application of SCM in large infrastructure projects such as ports, highways
and bridges, etc., have also not been documented. Such infrastructure
projects are highly machinery intensive and require coordination from
various disciplines of engineering. The optimization of machinery and
equipment output their synchronization is essential for the infrastructure
projects. The Indian construction companies have so far remained more or
less aloof from the latest approach to the construction project management.
The construction companies contemplating for their ventures abroad must
gear up to accept the global challenges and the SCM techniques can be
prove to be very useful in this regard. The case studies of the some of the
construction firms who have successfully accomplished the projects in some
Central Asian countries and the documentation of their SCM approach
would be very helpful tool for Indian construction companies. The heavy

46
mechanization of highway and runway construction has most of the time
being ignored by the researchers. The optimum utilization of machineries
and the SCM approach in the integration with the work execution is the
essence of success. There is need to develop comprehensive manual and
blue print for application of SCM methods in execution of for construction
projects in uncertain and constrained environment.

47
Summary
Actual practice in construction not only fails to address issues of supply
chain, but rather follows principles that make supply chain performance
worse.
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 analyze, 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 realize 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 actors. Due to its recurring character, the SCM
methodology implies a continuous improvement process of which the scope
can be enlarged over time, involving an increasing number of areas of
application.
Some areas of application, which may be, and to a certain extent have
been subjected to SCM, include the reduction of costs (especially logistical
costs), lead-time and inventory in the supply chain. In view of the large
share of these costs in construction, this focus is often fully appropriate.
Secondly, the focus may 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 (and labor) flows to the site for
the sake of avoiding disturbances in the workflow. Thirdly, the focus may be
on transferring activities from the site to upstream stages of the supply chain.
The rationale may simply be to avoid the inferior conditions of site, or to
achieve wider concurrency between activities, which is not possible in site
construction with its many technical dependencies. Here, 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 requisite that the resultant, more complex
supply chain is orderly managed and improved in order to have the benefits
intended.
In view of these roles, gaps in prior initiatives to advance the supply
chain can be identified. For instance, the logistics initiatives, stressing
(average) costs, have often failed to address the impact of supply chain
variability on site assembly. In addition, industrialized construction, with its

48
long and complex supply chain, has often been lacking even basic principles
of SCM.
The generic body of knowledge accrued in the framework of SCM leads
to improved understanding of the characteristics of construction supply
chain problems, and gives direction for action. However, the practical roles
for SCM have to be developed in construction practice itself, taking into
account the characteristics of construction and the specific situation.
Cooperation between research and practice may be instrumental in this
endeavor, as argued by Wegelius and Pahkala (1998).

REFERENCES
Asplund, E., and Danielson, U. (1991). Räta ut Byggsvängen (Straightening
the Building Roundabout). SBUF, Stockholm, Sweden.
Bechtel, C., and Yayaram, J. (1997). “Supply Chain Management: a
Strategic Perspective.” Intl. J. of Logistics Mgmt., 8 (1) 15-34.
Christopher, M. (1992). Logistics and Supply Chain Management:
Strategies for Reducing Costs and Improving Service. Pitman Publishing,
London, UK.
Cooper, M.C., and Ellram, L.M. (1993). “Characteristics of Supply Chain
Management and the Implications for Purchasing and Logistics Strategy.”
Intl. J. Log. Mgmt., 4 (2) 13-24.
Cooper, M.C., Lambert, D.M., and Pagh, J.D. (1997). “Supply Chain
Management: More Than Just a New Name for Logistics.” Intl. J. of
Logistics Mgmt., 8 (1) 1-13.
Davis, T. (1993). “Effective Supply Chain Management.” Sloan Mgmt. Rev.,
Summer, 35-46.
De Toni, A., and Tonchia, S. (1996). “Lean Organization, Management by
Processes and Performance Management.” Intl. J. of Opertns. and
Production Mgmt., 16 (2) 221-236.
Hines, P., and Rich, N. (1997). “The Seven Value Stream Mapping Tools.”
Intl. J. of Operations and Production Mgmt., 17 (1) 46-64.
Jahnukainen, J., Lahti, M., and Luhtala, M. (1995). LOGIPRO: Towards
World Class Make-To-Order Supply Chains. Helsinki University of
Technology, Espoo, Finland.
Jarnbring, J. (1994). Byggarbetsplatsens Materialflödeskostnader (Material
Flow Costs on the Building Site). Rapport 94:01, Lunds Tekniska
Högskola, Institutionen för Teknisk Logistik, Lund, Sweden.
Jones, D.T., Hines, P., and Rich, N. (1997). “Lean Logistics.” Intl. J. of
Physical Distribution and Logistics Mgmt., 27 (3/4) 153-173.

49
Koskela, L. (1992). Application of the New Production Philosophy to
Construction. Technical Report 72, Center for Integrated Facility
Engineering, Department of Civil Engineering, Stanford University, CA.
Koskela, L., and Leikas, J. (1997). “Lean manufacturing of Construction
Components.” Alarcón, Luis (ed.). Lean Construction. Balkema,
Rotterdam, The Netherlands, 263-271.
La Londe, B.J., and Pohlen, T.L. (1996). “Issues in Supply Chain Costing.”
Intl. J. of Logistics Mgmt., 7 (1) 1-12.
Laitinen, M. (1993). Elementtijulkisivun tietovirrat ja toimitus (Information
Flows and Delivery of Concrete Façade Elements). Kehitys ja tuottavuus
12, Rakennusteollisuuden keskusliitto, Helsinki, Finland.
Lamming, R. (1996). “Squaring Lean Supply with Supply Chain
Management.” Intl. J. of Operations and Production Mgmt., 16 (2) 183-
196.
Lehtonen, J-M. (1995). “Logistics Performance Measurement: an
Application to Pulp and Paper Industry.” Proc. Intl. Federation for
Information Processing Working Conf. on Reengineering the Enterprise,
University College Galway, Ireland, April 20-21, 319-327.
Lin, F-R., and Shaw, M.J. (1998). “Reengineering the Order Fulfillment
Process in Supply Chain Networks.” Intl. J. of Flexible Manufacturing
Systems, 10 (1998) 197-299.
Luhtala, M., Kilpinen, E., and Anttila, P. (1994). LOGI: Managing Make-To-
Order Supply Chains. Helsinki University of Technology, Espoo,
Finland.
O’Brien, W. (1995). “Construction Supply-Chains: Case Study, Integrated
Cost and Performance Analysis.” Lean Construction, A.A. Balkema,
Rotterdam, The Netherlands.
Proverbs, D., and Olomolaiye (1995). “Organizational Productivity: a Case
Study of Materials Management in UK Construction Firms.” Proc. First
Intl. Conf. on Construction Project Mgmt., Singapore, January 1995, 455-
463.
Scott, C., and Westbrook, R. (1991). “New Strategic Tools for Supply Chain
Management.” Intl. J. of Physical Distribution and Logistics Mgmt., 21
(1) 23-33.
Scholman, H.S.A. (1997). Uitbesteding door Hoofdaannemers
(Subcontracting by Main Contractors). Econ. Instituut voor de
Bouwnijverheid, Amsterdam, The Netherlands.
Shingo, S. (1988). Non-Stock Production. Productivity Press, Cambridge,
MA.

50
Särkilahti, T. (1993). Rakennushankkeen Aliurakat 1993 (Subcontracts in
Construction Projects 1993). Rakennusteollisuuden Keskusliitto,
Helsinki, Finland.
Van der Veen, J., and Robben, H. (1997). “Supply Chain Management: een
Overzicht.” (Supply Chain Management: an Overview) Nijenrode Mgmt.
Review, 6 (1997) 62-75.
Vrijhoef, R. (1998). Co-makership in Construction: Towards Construction
Supply Chain Management. Thesis of Graduate Studies, Delft University
of Technology/VTT Building Technology, Espoo, Finland.
Wegelius-Lehtonen, T. (1995). “Measuring and Re-engineering Logistics
Chains in the Construction Industry.” Intl. Federation for Information
Processing Working Conf. on Reengineering the Enterprise, Galway,
Ireland, April 20-21.
Wegelius-Lehtonen, T., Pahkala, S., Nyman, H., Vuolio, H., and Tanskanen,
K. (1996). Opas Rakentamisen Logistiikkaan (Guidelines for
Construction Logistics). Rakennusteollisuuden Keskusliitto, Helsinki,
Finland.
Wegelius-Lehtonen, T., and Pahkala, S. (1998). “Developing Material
Delivery Processes in Cooperation: an Application Example of the
Construction Industry.” Intl. J. of Production Economics, 56-57 (1998)
689-698.
Womack, J.P., Jones, D.T. and Roos, D. (1990). The Machine That Changed
the World: The Story of Lean Production. Harper Perennial, New York,
NY.

51