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Roles of Supply Chain Management in Construction
Scott J. Mason, Ph.D.Fluor Endowed Chair in Supply Chain Optimization and Logistics
Professor of Industrial Engineering
Overview
• Construction supply chains full of waste and problems caused by myopic control– Due to interdependency largely interrelated with other stages of the supply chain
• Practical SCM solutions must be developed in practice– Theory alone won’t cut it– Need to take into account specific characteristics and local conditions
• Interesting that both authors are academics!
Scott J. Mason, [email protected] 2
Motivation
• Dutch construction industry statistics indicate main contractors purchasing more labor and materials than before– 24% turnover– Follows that remaining 76% turnover due to suppliers and subcontractors
• High reliance on parties with high turnover motivates a renewed focus on supply chain management principles
Scott J. Mason, [email protected] 3
European Case Studies
1. Analyzed time buffers for concrete wall elements in a residential building (quantitative)
2. Identify and locate controllability problems in façade elements in a residential building (qualitative)
3. Assess cost impact of a main contractor’s trading methods for purchasing materials
• These three studies were meant to examine interdependency effects– Only first two are actually discussed in detail
Scott J. Mason, [email protected] 5
Case Study 1 Overview
• Time measurement to detect and analyze time buffers in a part of a supply chain process of concrete wall elements– Excavation and delivery of sand– Fabrication and delivery of elements– Site installation of elements
• Objective: Analysis of the time used along the process in order to get insight in the time buildup, and the magnitude and location of time buffers
Scott J. Mason, [email protected] 7
Case Study 1 Methodology
• Decomposition of the process in sub‐processes and activities
• Time measurement of the activities• Categorizing time use per activity
– Wasted, non‐value‐adding, value‐adding
• Locating and quantifying time buffers• Composing the process time buildup
Scott J. Mason, [email protected] 8
Case Study 1 Results
• It appeared that at the beginning and the end of the sub‐processes remarkable time buffers occurred– Due to inventory and delays
• The share of the time buffers compared to the total lead‐time was quite large (70‐80%)
• Underlying problems of the time buffers included separate planning
• Problems referred to various root causes including inter‐organizational barriers
Scott J. Mason, [email protected] 10
Case Study 2 Overview
• Involves problem analysis to identify and locate controllability problems in part of a supply chain process of composite façade elements– Job preparation– Price bargaining– Engineering– Assembly– Site installation of the elements
• Objective: Analysis of the controllability problems along the process in order to get insight in the occurrence and causality among the problems and their causes
Scott J. Mason, [email protected] 11
Case Study 2 Methodology
• Decomposing the process in sub‐processes• Uncovering the controllability problems per sub‐process
• Identifying and locating the causes• Finding connections between the problems and causes– Mason’s Take: Sounds like an effective Capstone strategy
Scott J. Mason, [email protected] 12
Case Study 2 Results
• Numerous controllability problems• Root causes included
– Non‐collaborative working relations between parties– Adversarial bargaining
• Most problems that were encountered on an operational and managerial level were caused by strategic and cultural issues– Lacking common targets– Reluctance– Opportunism
Scott J. Mason, [email protected] 14
Main Conclusions
• Even in normal situations much waste and problems exist in the construction supply chain– In the supply chain, most players appear to be managing just their own parts, securing their own businesses
• Most of the waste and problems are caused in another (i.e. earlier) stage of the construction supply chain other than where they are found– Root causes of the waste and problems were rarely found in the activity where they were encountered
– Often found in a previous activity executed by a prior actor, often operating on a higher organizational level
– Mason’s Take: Passing the buck?
Scott J. Mason, [email protected] 15
Main Conclusions (2)
• 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, players optimize their own part of the chain, not taking into account other activities and actors in the supply chain
Scott J. Mason, [email protected] 16
Your Takeaways
• SCM is a continuous process, not just a one time thing
• Local decisions can have positive and/or negative cascading impacts up and down the supply chain
• Analysis based on averages vs. studies that explore/characterize variability concerns
• Effective construction SCM requires a number of soft skills– Leadership– Teamwork– Communication– Collaboration
Scott J. Mason, [email protected] 18
