How Design-Build can Help Streamline Supply Chain Management
What is supply chain management in Construction?
Supply chain management (SCM) in the construction industry is the relationship between the suppliers and the contractors involved in the overall project. SCM is an integrated approach where all the stakeholders have a fully engaged understanding of the resources, logistics and human resources required for the project and schedule to be delivered on time and budget.
The major challenge for all construction projects, especially in a post-Covid world, is the escalating costs of materials and the scarcity of skilled labourers. One of the tactics for combating this is intelligent and informed commercial management processes, experience and governance. Sound commercial management is a foundation to project success as it keeps the project plan on track and ensures the timely identification of delays or risks. Putting collaboration at the heart of agile construction supply chains is the primary key to its success.
“Supply chain management (SCM) in the industry can play a crucial role in improving coordination between the stakeholders while ensuring the quality and profitability of a construction project.”
Closely linked to having strong governance is having a successful construction supply chain strategy, which will start well before construction commences with cooperation and competition at its heart. It engages stakeholders, and ultimately, it is predictable and forward-looking.
More commonly, speed is the ultimate driver of procurement. Reduced tender periods, concurrent design processes, and faster operations are examples of enabling more immediate returns on investment, especially when the cost of borrowing is so low, and capital expenditure can be depreciated over long periods. With this comes the need for many decisions to be made in real-time. Overlaid by an economy with rapidly changing customer demands, there is a significant need for flexibility and adaptability in processes.
With a greater emphasis on speed and flexibility, suppliers must be well informed, well stocked, close to site and ready to respond. Design-Build providers are better equipped to stay involved in all stages of the process and can add value by being a solutions provider when changes are encountered. Long-term trust-based relationships must be formed that are facilitated by clear lines of communications. This is where collaboration is fundamental to a successful supply chain management strategy in construction.
The Challenges of SCM
Design changes, estimate errors, and lack of trust among the stakeholders can be a hurdle in the effective implementation of SCM. Poor quality of materials and equipment, inadequate training of subcontractors and workers are some of the other challenges. Further, there are no tools to efficiently measure the performance of all the parties involved in the project, and therefore, everyone involved must be committed to the common goal of successful project completion.
“Organizations can reduce uncertainty related to materials, equipment, and logistics within the supply chain by creating long-term alliances, which further leads to reduction in costs. SCM also provides equal opportunities to all vendors and enables the formation of repeat alliances with reliable suppliers.”
Overcoming those Challenges
Successful implementation of SCM in construction can only be achieved when all the parties involved are receptive to change across all aspects of the supply chain. Such change can be brought about through a cultural shift and an understanding among all parties on how SCM can benefit and generate profits. The benefits of having well chosen Design-Build partners ensures quality, clearer communication and improved project management. These efficiencies can ultimately reduce cost and lead times.
Organizations can reduce uncertainty related to materials, equipment, and logistics within the supply chain by creating long-term alliances, which further leads to reduction in costs. SCM also provides equal opportunities to all vendors and enables the formation of repeat alliances with reliable suppliers.
Improvement of communication and trust between the stakeholders is essential to manage the risks and unexpected events throughout the project development. Involving all parties in the supply chain during the early stages of the project can help understand the timelines, risks, and requirements.
References:
Valle, Gio, BuilderSpace, Benefits of Supply Chain Management in Construction
Bray, Liam, Turner and Townsend, Supply chain strategy – what do construction and infrastructure have in common with retail?, 2018, August 30
Designing Buildings, Supply chain management in construction, 2021, June 11
