Supply chain management in construction industry.

Byline: Nazir Ahmed Shaikh

There is no doubt that construction sector always has a strong impact on the entire economy and social activities of any country and the application of supply chain strategies are considered to be helpful in achieving higher competitiveness of construction companies. Construction is a worldwide activity with many special characteristics and it includes projects of dramatically different types, sizes and complexities. It seems that the generic supply chains should be simple and linear, however, the construction sector is quite different. The construction supply chains and markets need to be integrated by any construction firm when it delivers a solution to an end customer/client.

Predominantly the concept of Supply Chain Management (SCM) was originated from Just-In-Time (JIT) production and logistics, from manufacturing. However, now the SCM represents an autonomous managerial concept and covers the whole latitude of the supply chain. Furthermore, it deals with the approaches and methods to achieve the broader perspective in the supply chain.

Broadly speaking, the supply chain is "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."

The ever growing problems of supply chains in construction industry are due to the narrow approach and myopic control. The waste and problems in construction supply chains are persistent due to interdependency; largely interrelated with causes in other stages of the supply chain. The physiognomies of the construction supply chain strengthen the problems in the construction supply chain and may well hinder the application of SCM to construction.

The practical solutions offered by SCM should have been developed in construction practice itself and taking into account the specific characteristics and local conditions of construction supply chains. The ingenuities belonging to the domain of SCM have been rather partial covering a subset of issues like transportation costs in a limited part of the construction supply chain.

There are two broad categories in construction industry; General Building Construction and Engineered Construction.

General Building Construction comprises of residential, commercial, institutional and industrial buildings. This includes residential construction produces buildings for human habitation, single family houses, cooperatives societies, town houses, flats and apartments and high-rise apartment buildings. The commercial construction includes retail and wholesale stores, markets...