Towards supply chain maturity in construction

Abstract

Purpose Several studies have underlined the potential of Supply Chain Management (SCM) in meeting the formidable challenges associated with fragmentation, adversarial relationships and insufficient customer focus in the delivery of construction projects. However, properly documented examples of successfully implemented SCM initiatives, particularly at the lower tiers of the supply chain, are scarce. This paper aims to extend the existing debates by adopting an alternative approach focusing specifically on the internal SCM organisation of both main contractor and subcontractor organisations, and their direct inter-relationships. Design/methodology/approach This study sets out to explore the enablers and barriers to the implementation of SCM at the lower tiers of the construction supply chain, particularly the problematic collaboration between main contractors and subcontractors. SC Maturity levels are formulated according to relevant SCM concepts and based on Holti et al.’s (2000) seven principles of SCM organisation, and transformed into a conceptual model. An explorative study is conducted based on interviews from eight large main contractor and subcontractor organisations in the Dutch construction industry. Findings Discouragingly, across the organisations, more barriers than enablers to SCM are identified. Organisations are found to be particularly struggling to compete through superior value, manage costs collaboratively, and develop continuous improvement within their supply chains. The findings also underline the low SC Maturity of main contractors and their inability to play the essential role of supply chain managers. Practical implications The study underlines the need for a greater degree of contractor leadership and improved internal organisation of both types of firms in order to achieve greater collaboration at the lower tiers of the construction supply chain. Originality/value The study contributes to the subject of SCM in construction in two respects. First, the findings should prove valuable to both policymakers and industry practitioners interested in the delivery of performance improvement in construction. Second, the developed SC Maturity Model can form the conceptual basis for the development of an applicable improvement framework towards successful SCM implementation.

Supply chain relational capital and the bullwhip effect

“…The impact of customers' dependence on suppliers is seen to be particularly strong in the consumer durables industry, but not in other industries. These results are not entirely surprising given that different industries could be at different stages of supply chain maturity (Dellana and Kros, 2014;Broft et al, 2016) which has an impact on the willingness of supply chain partners to collaborate (Lockamy and McCormack, 2004). Consumer durable manufacturers, such as automotive producers, have become increasingly dependent on suppliers due to significant reduction in the number of suppliers in the last few decades (Helper, 1991).…”

Supply Chain Management in Construction From a Production Theory Perspective

“…This value includes time, costs and quality. In SCM, all supply chain actors need to be able to make a full contribution to ensure that the client's needs are fulfilled and that value creation is maximised (Broft et al, 2016). This implies a collaborative customer focus and a higher quality of the delivery of each subprocess.…”

“…As a consequence of the uncertainty faced by main contractors in obtaining continuous work and the need to accommodate the different, increasingly specialised and complex, requirements of each project (Tam et al, 2011), most of the subprocesses known in a construction supply chain are outsourced or subcontracted to specialist organisations, suppliers (Broft et al, 2016), focusing on the production of a specific subprocess ( Figure 1).As a result, the main contractor, the principal construction organisation that manages a construction project, executes only a small part of the product by its own personnel and its own production facilities (Dubois & Gadde, 2000). From a transformation perspective, subprocesses are considered independent from each other and subsequently, the cost of the total process can be minimised by minimising the cost of each subprocess.…”

“…Despite the successful examples of Supply Chain Management (SCM) initiatives at the higher tiers of the construction supply chain, relationships at the lower tiers seem to remain traditional and the SC Maturity of construction firms continues to be low (Broft et al, 2016). The quality of a main contractor-supplier relationship affects the main contractors' ability to perform on projects (Kale &Arditi, 2001).…”

“…The increasing percentage of project turnover which is spent on buying goods and services provides opportunities for contractor-supplier collaboration, and emphasises the importance and significance of managing suppliers (Bemelmans et al, 2012). Main contractors are willing to develop closer relationships, but implementing SCM seems a long-term, complex process and requires a certain level of understanding and therefore learning throughout the supply chain (Broft et al, 2016). In the last decades, various supply chain concepts have emerged in parallel in generic theory and manufacturing practice -all 1 highly related, leading to a high ambiguity between the definitions of the different concepts and reflecting the cross-functional nature of SCM (Ellram& Cooper, 2014).…”