Logistical Principles in Construction Supply Chains

Abstract: Supply chain management and logistics management have proven successful in the manufacturing industry, with improved productivity as a consequence. However, in the construction industry these issues have not been high on the agenda. This may be one reason why the construction industry lags behind the manufacturing industry in terms of productivity. The good thing is that there is a growing interest for managing the construction supply chains. The basic idea in this thesis is not to come up with new logistical principles, but to learn from the existing performance in the manufacturing industry. A theoretical framework concerning general supply chain management and logistics issues is presented. This includes nine logistical principles, which have been acknowledged by the manufacturing industry. Previous academic reports concerning supply chain management and logistics in the construction industry are analysed with the general theoretical framework as a basis. In addition to this literature review two case studies have been conducted. Both case studies involve a supply chain starting at the manufacturer and ending at the client. The first case regards radiators and the second case regards installation cable. Common for both cases is that they represent groups of material which have shown a historic high cost increase. The results confirm that supply chain management has still not been widely spread, and was not implemented in either of the two supply chains studied. However, there were signs among the client and the building contractor in the first supply chain of an emerging focus on the supply chain performance, which very well may lead to the adoption of supply chain management. Both case studies show similar results that the wholesalers offer excessive service when delivering stocked material within a day from receiving the order. This is a consequence of the contractors’ lack of establishing detailed delivery dates early in the projects. This thesis has come up with several suggestions for improvements in the supply chains, which all together shows that there is much to gain in starting to manage the supply chains and avoiding sub-optimisation.