Supply chain management within construction projects and the use of IT within them. By Terry Stocks and Peter Masonbrook
The use of IT, new business models, collaborative working environments and a sustained focus on supporting the SME community has driven significant changes in supply chain design and management. It is acknowledged that the procured contract environment and the construction industry sub contract employment practice has, and will continue to impact the make–up and approach of the supply chain environment. The construction supply chain appointment and engagement process can be fragmented and often involves various parties with different objectives. This environment can then affect the supply chains attitude to the project, promoting an environment of protectionism and mistrust rather than collaborative working and open book.
New methods of project delivery including Building Information Modelling (BIM), off-site manufacture, modular construction, Lean project management and delivery require an environment of collaborative working to realise the benefits to the client and supply chain alike. The publication of BS11000 – Collaborative Business Relationships, help set the framework for collaborative working and the development of supply chain management software supports a clear and structured approach from the initial design, through construction and aftercare. A positive and consistent supply chainmanagement (SCM) approach will benefit the delivery of projects through improved quality, reduced time and improved cost, as it would promote open relationships, make expectations clear from the outset and build trust. A basic principle of SCM is ‘integration’ however, SCM as an ‘end to end’ software system (i.e. from design to operation) is still an emerging practice within the construction industry. The potential of applying a co-ordinated and IT led approach to SCM will support the implementation of new design and delivery practices, which together support an improvement in the construction industries pressing problems of project overruns, claims and a reduced number of defects at handover.
It has been publicised that over the last 20 years the integration of IT into the management of the supply chain within the manufacturing industry has demonstrated an increase in productivity and reduced costs, allowing companies to reduce/ eliminate inventory and improve lead-times from their supply chain. The construction industry has been slower to integrate supply chain (SC) IT systems and standardised supply chain management practices. Different reasons could contribute to this.
- The number of different services required (e.g. designers, projectmanagers, quantity surveying, roofers, brick layers etc.)
- The different types of supply chain partners (designers, material suppliers, facility management companies)
- The different types of sectors (e.g. Health, Education, Blue light etc) • The differing size of subconsultants that can make up the supply chain
- The contract / delivery environment driven by the project procurement
However, given the construction industry relies on the current tapestry of suppliers and specialists to deliver projects, such complexities need to be overcome and a concerted SCM strategy and management process is the best answer.
There is increased focus, especially within the public sector, on the integration of micro, small and medium-size enterprises across all parts of the supply chain. It is therefore important that any practice imposed on design and management does not adversely impact this sector. Clients and the tier one (large multinational organisations) contracting chains need to ensurethe benefits can be achieved from these approaches, without prejudicing smaller organisations.
Supply Chain Collaboration –
The first major challenge when developing a new business model using an integrated supply chain (SC) IT tool (or any other collaborative software) is the requirement for companies to change from their currenthistorical approaches and to migrate to new ways of working. This may include a cultural change in their approach, from a ‘them and us’ to a collaborative and inclusive mindset. Supply chain collaboration is key to achieving e-business success, allowing all parties to openly engage to help resolve issues and help improve delivery and construction sequencing and therefore reduce wasted time and effort which often results in conflict and sub optimal outcomes.
Creating an environment where supply chain partnersoptimise their responsiveness and efficiencies through a knowledge of live and open data on the project progress, openly agreeing future demand and resource levelsand correct inventory levels etc. will enable the supply chain tobest deploy their staff, specialists sub-contractors and when to order materials. An integrated SCM system supports this throughimproved and open forecasting and scheduling, helping supply chains to better plan and therefore reduce the waste andcost inherent in the current project process.
Early engagement and Supply Chain Co-ordination –
Where organisations work closely and engage early with designers it is easier to maximise the benefits of an integrated SCmodel. This approach supportsa clear understanding of the design and construction phases and facilitates specialist subcontractor conversations prompting informed project planning, material specification and ordering. It also helps takeadvantage of any opportunities of early task commencement, which in turn supports a higher certainty of on time project completion. The SCM IT system can be used to share information on future demands across the whole supply chain helping suppliers forecast material and service requirements. There has been a high number of examples within the construction industry where material has run short due to manufacturers reducing productivity due to the slowdown in the number of new construction projects, plus an increased in raw material demand within China and the Far East. Linking supply chain industry expertise, co-ordinated through a SCM IT system helps future materials forecasting prompting mitigating actions through respecification, new standardised approaches etc.
Supply Chain Best Practices –
Evidence across other sectors (manufacturing, aerospace, car manufacture etc.) has shown that with a high level of collaboration between clients, contractors and supply chains, companies consolidate into true supply chain communities whose members share common goals and objectives across and among enterprises. The supply chain community streamlines business transactions across partners to maximise growth and profit and grows an understanding of client requirements to best serve the desired outcomes. Procurement within construction does not afford this level of supply chain engagement. There is an element of mistrust and with the uncertainty of future market growth and main contractors having to compete most subcontractor packages, supply chain management and relationships built in other industries are likely to be a long way off in being the norm in construction. New forms of construction procurement including two-stage open book, integrated project insurance (IPI) and cost led approaches will lead construction in the right direction. With the continued adoption of Building Information Modelling and advances in plant sensors and data technology, construction can make advances and a continued championing of active supply chain management followingBS11000 principals supported with SCM IT systems will see improvements in construction relationships and projects being delivered with increased certainty of outcome.
Terry Stocks is UK head of public sector, and Peter Masonbrook is supply chain and performance manager at Faithful+Gould, a world-leading integrated project and programme management consultancy. Operating at the forefront of the industry for more than 65 years,Faithful+Gould is a part of Atkins and has 60 offices worldwide.
For more information, please see www.fgould.com