The Point by Buyers Meeting Point
Book Review: Supply Chain Management & Logistics in Construction
Done well, the use of supply chain companies brings technical superiority and innovation to the project, and their specialist knowledge and experience brings enhanced efficiency, quality and consistency of delivery. However, there can also be increased risk if the strengths and weaknesses of the third party companies are not fully understood and managed.” (p. 78)
Supply Chain Management & Logistics in Construction: Delivering Tomorrow’s Built Environment (Kogan Page 2015) contains the collective knowledge of seventeen highly qualified contributors representing a number of roles within the industry – including its suppliers. Greger Lungesjö, listed as the book’s author, serves a double role as contributor and editor.
It is important to clarify that logistics has a different meaning in the construction industry than it does in others. Logistics is the term used to describe the movement of materials, people, and supporting services around a project site – not getting the materials, equipment, and people to the building site. You might even think of logistics as the ‘indirect spend’ of a construction site/project. It is absolutely critical, but it does not become part of the final structure. Fear not however, supply chain is still supply chain – an area of investment from which the industry is just starting to realize the potential for benefit.
In their effort to improve supply chain management, the construction industry has looked primarily to manufacturing and retail for leadership. But the project-oriented nature of construction, as well as the role of sub-contractors who divide both risks and costs among themselves, adds to the complexity and makes the needs of construction unique.
Whether you know construction as a primary activity or a sourced one, it is a critical contributor to any national economy as measured by percent of GDP, job creation, or gross value. Broad trends such as urbanization, sustainability, data modeling, and just in time management have major impacts on construction projects.
The four sections of the book break the chapters down as follows:
- Strategic Perspectives (chapters 1-5) – Note: Anyone with a more traditional supply chain perspective serving or working in the construction industry is likely to get the fastest value from chapters 4 and 5 which address supply chain management in general and then, more specifically, risk considerations.
- The Impact of Building Information Modeling (BIM) and New Data Management Capabilities (chapter 6)
- Construction Logistics and Sustainability (chapters 7-8)
- Logistics Operations (9-13)
One of the most undeniable takeaways from the book is the importance of timing: both in logistics and supply chain. Connecting the two efforts better for the sake of efficiency will require a focus on throughput (think about the limited mechanisms for moving materials) and storage (particularly in urban settings) constraints. Materials, people, and equipment must be available when needed, but not a second too soon or a minute too late. Efforts to incorporate prefabrication have relieved some of the strain of site logistics, but only to a certain extent. 3PLs are underutilized, according to the contributors, and are an area of significant future potential.
Although there is some case study content, it is ‘anonymous’ and generalized in terms of numbers, which is too bad. That being said, it is better to have that information included than not.
In a more general connection to our supply chain management coverage, suppliers and providers are playing an increasing role in project delivery and completion. We are familiar with the general contractor vs. subcontractor construction management approach, but that does not mean that the balance of labor and oversight has stayed the same. And as we well know, the more risk, responsibility, and cost is tied up in those subcontractors, the more important the process for selecting them. Any procurement professional can relate to that.