It has been shown in several studies that a possible way of increasing efficiency in construction is to work with modern methods of planning, execution and control the supply chain. However it seems that the construction companies in Sweden show moderate interest in construction supply chain management (cSCM). How come?
In the research group I’m associated with (read more here) we have stated that the core of construction is to provide a service to the client. It is about selling hours and materials. If it is only about selling time and material with a reasonable surcharge; what is then the competitive advantage on a mature market?
The contractor has to both have the lowest bid in the tendering phase but also be able to increase the project efficiency after been awarded the contract. The contractor has to be able to handle cash flow better than its competitors, where the actual profit will be the slack between billing and the actual completion. The contractor has also have to have a strategic procurement capability to purchase and manage contracts with subcontractors or suppliers to a lower cost than calculated.
These approaches should be a driving force towards:
- Flow utilization, where throughput is prioritized over resource utilization
- Management of temporary and flexible supply chains
- Dynamic planning
- Innovation of methods and materials that increase efficiency
cSCM can contribute to all these elements, but has received little or no attention within the construction sector in Sweden the last twenty years. Lately however I have received some increased number of questions regarding cSCM. My interpretation is that one of the reasons is that house building demand is increasing to levels that are well above total national capacity and the contractors need a strategic approaches such as cSCM in order to be able to pull projects off. Another is that there has also been some breakthroughs by international competitors of size and there is an urgent need to increase the competitive advantage.
House-building in Sweden was one of the sectors that was driving the research and development of planning, execution and control of the supply chain during the sixties. Perhaps we are heading back there – first we need to catch up.
This text has been published January 3rd 2016 in Swedish on my blogg.
jarkkoerikshammardotcom 