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This article can be downloaded from http://www.ijmrbs.com/currentissue.php

Int. J. Mgmt Res. & Bus. Strat. 2014 Ranjan Tiwari et al., 2014

SUPPLY CHAIN MANAGEMENT IN

CONSTRUCTION: A LITERATURE SURVEY

Ranjan Tiwari1*, Henry Shepherd2 and R K Pandey3

Construction project involves various disciplines of engineering and a network of entities for theexecution of quality work. The requirement of the client which is the basic objective of anyconstruction project revolves around the reliability and quality of runway pavements and alliedconstructions. If the time constraints are severe and the uncertainties are inherent, the traditionalproject management techniques have to be redesigned reconceived to achieve the desiredservice parameters and time limits under these circumstances. The Supply Chain Managementtechniques are now being increasingly applied in the execution of such construction projects.The paper outlines the basics of Supply Chain Management and compiles literature review ofsupply chain management in construction. It analyzes the existing state of research in applicationof SCM in construction and explores the areas in which SCM techniques may be successful.

Keywords: Supply Chain Management (SCM), Construction, Material flow, Information flow,Fund flow, Project

*Corresponding Author: Ranjan Tiwari � [email protected]

INTRODUCTION

The execution of large infrastructure construction

projects involve complex issue specific to

geographical, atmospheric, topographical

constraints and end user attributes. The work

execution in modern construction projects is

highly mechanized. The optimum utilization and

output of machineries is essence of the

international quality work. The construction of

such jobs becomes more challenging if it is to be

executed under stringent time constraints in a

country with meager resources. The mobilization

1 Executive Engineer (SG), Border Roads Organisation (Under Ministry Of Road Transport and Highways, Govt. of India), Tezpur, Assam,

India.

2 Department of Mechanical Engineering, Sam Higginbottom Institute of Agriculture, Technology & Sciences, Allahabad, UP, India.

3 Department of Civil Engineering Sam Higginbottom Institute of Agriculture, Technology & Science, Allahabad, UP, India.

Int. J. Mgmt Res. & Bus. Strat. 2014

ISSN 2319-345X www.ijmrbs.com

Vol. 3, No. 1, January 2014

© 2014 IJMRBS. All Rights Reserved

of the resources, the execution of work without

compromising the quality and reliability requires

an integrated approach of execution.

The basic Supply Chain Management (SCM)

techniques have been used extensively in

production industry and these are finding its way

in construction industry as well. The SCM

approach in mechanized construction of large

infrastructure projects an upcoming field having

tremendous scope for further research and

experimentation. SCM techniques have been

successfully implemented across the globe by

8



Figure 1: Generic Configuration of a Supply Chain in Manufacturing

various construction companies. Some of the

Indian companies have also applied SCM

technique in construction of airport runways in

some central Asian countries.

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).

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, 1993). According

to some authors (Cooper, 1993), the shift from

traditional ways of managing 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).

The application of SCM in the construction

industry has been tried with varied degree of

success. The application of SCM concepts to

construction sector require the supply chain

managers to break the traditional SCM shells of

manufacturing industry and make the supply

chain project centric rather than organization-

centric. This is due to the fact that the construction

projects have highly customized requirements

and the supply chain has to adapt and redesign

itself according to the client’s priorities. However

the generalized requirement of the client of any

construction project may be broadly summarized

as under.

• Time bound execution of project with the

completion of all works within the defined

scope in the contract agreement.

• Quality of the execution as per standards and

specifications defined in the contract

agreement.

• Cost of execution to be kept within the project

9



cost and no cost overruns allowed. The

savings by stringent cost control will accrue

as profit to the company.

• The construction supply chain management

aims to fulfill the client’s requirement by taking

a systems view of all the construction activities

and the agencies involved in the project.

LITERATURE SURVEY

The SCM concepts have been extensively

researched and applied in the manufacturing

industry. The application of supply chain

management in construction is comparatively

new subject and so far only limited studies and

research have been conducted. Although the

technique has been applied practically with varied

degrees of implementation, the documentation

of the case studies and experiences are found

wanting. The available literature on the applicability

of SCM techniques in construction field have been

discussed here.

SCM As Tool for Effective ConstructionProject 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 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

10



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 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 (Vrjhoef and Koskela, 2000) 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

11



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 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 (London and Kenley,

2001) 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’ (Saad et al., 2002). 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 UK

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 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

12



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 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

13



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.

A compilation work (Pryke, 2009) related to UK

construction industry gives the insight into the

basic concepts of construction SCM and the

extent of applicability of SCM in a particular

geographical surroundings.

Integration and Coordination inConstruction 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 (Khalfan and McDermott, 2006) 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 UK 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

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 buildability 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

14



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.

Decision Models in Construction SupplyChain

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 IT-

enabled 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.

15



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

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

16



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. 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 SupplyChain

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 UK/

Irish 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

17



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 SupplyChain

Moving on further in a bid to improve coordination

in construction supply chain and flow of

information amongst various entities an e-

business 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 e-

commerce 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

18



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 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 short-

term 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 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

19



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 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

20



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 inConstruction

The benefits of SCM in construction and barriersin its implementation, has been very welldocumented by the researchers (Ahmed et al.,2002). The scholars have summarized thebenefits of construction supply chainmanagement as under.

• It looks at the enterprise as a whole. It includesnot only relationships with other functions withinthe firm but also with all trading partnerrelationships outside the firm. For this reasonSupply Chain Management is said to have‘Visibility’ and allows development of aconsistent supply and demand plan from thecustomer to the supplier.

• Hence a planner, by taking a holistic view ofthe process from start to finish, can devise acomplete plan for the movement through thechain of a specific product. This kind of planningcould take place between the various functionalgroups (sales/marketing, manufacturing,distribution) of a vertically integrated enterpriseor between several independent companiesin the distribution channel (raw materialsuppliers, manufacturers, third party logisticsservices).

• This can provide better service, reduceinventories, reduce paperwork, helpconsolidate distribution centers, and reducetransportation 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 withsupply 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.

21



• 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 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 towardsactivities where the knowledge ‘gained’ is stored,shared and applied to the next activity. Currently,all efforts are focused on looking forward to thenext project rather than attempting to learn fromprevious activities and applying the lessons learntto a general raising of value adding activities.

The whole Supply Chain must look to improvethe 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 lookto drive change through all areas of the Chainthrough:

• Education process.

• Cultural change.

• An understanding that all parties will benefit /profit

• Open and shared approach to the dissectionof the ‘associated benefits’ of improved supplychain performance.

• An attitude of ‘if your in, you win’ with regard toenhanced approach to Supply Chainparticipation.

• Pre-planning and visibility opportunitiesprovided by a visible client forward workloadwell into the future that is shared by the SupplyChain ‘family’.

• Where possible freeze expectations butinclude change where necessary through jointagreement through the use of contingencyplans.

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

22



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’

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 practise 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 (Albaloushi and

Skitmore, 2008) 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

23



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 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

organizations some guidance in designing and

24



implementing their supply chain improvement

program.

HR Management in Construction SupplyChain

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.

Organizational Structure in ConstructionSupply 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

25



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 e-

business 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

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

26



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

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.

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