Supply chain management within the construction industry

We have all seen the construction sites and their many workers and machinery. How they move, work, and even how they have lunch. Have you ever wondered, where do all those things come from? How do they get there?

Well, there is a thing called construction supply chain management. This type of logistics focuses on supplying construction sites with all the things they need, from materials to machinery and staff. It is a hidden operation where people only see the surface of it.

In this occasion, we are going to take a look at some the special characteristics construction supply chains have and the roles the supply chain plays in the construction operations.

Some special characteristics that can be seen in construction supply chains can be summarized in these 3 points:  

  • It will always be a two sites operation. It is about directing all materials to the construction site and more or less assemble the product at the second site. There is one main site where all the products arrive, different from the manufacturing operation where a lot of products pass through the factory, and are then  sent to many clients in the world.  
  • The construction supply chain is always a temporary supply chain. It will suffer many reconfigurations of project organisations and it will most of the time be unstable, fragmented and distant, especially when it comes to the gap between the design and the construction of the object.
  • This type of supply chain is a typical make-to-order supply chain, with every project creating a new product or prototype. There is no room for repetition, but there are exceptions.

Now, understanding the previous, we can then say there are four areas where the supply chain is very important for construction sites. The first area is the impacts the supply chain has on site activities. Here the correct use of the supply chain can reduce costs and duration of site activities. A simple relationship between the site and the direct suppliers can be an easy and fast solution. So the role of the supply chain in the construction site in this case is to try to improve the interface between site activities and the supply chain where co-operation between suppliers and contractors is vital to ensure total flow of material. The supply chain becomes more active, in contrast to the traditional treatment of construction logistics where material is concentrated on activities occurring on site.

The second area where they supply chain is important is in the supply chain itself in order to reduce costs focusing on logistics, lead-time and inventory. the players that tend to adopt this focus are the material and component  suppliers. Here the role of the supply chain is to self-improve itself.  For example, companies can develop specific supply chains for things, such as prefabricated concrete elements, or elevators. If the supply chain is carefully planned, costs such as transportation, inventory and production will be reduced and the uncertainty in the supply chain will be less.

construction materials_transportation_logistics_construction industry_supply chain management_david kiger
Image courtesy of Dennis Jarvis at

The third area is a very important one and one that is being used and applied nowadays. It is about transferring activities from the site to earlier stages of the supply chain. This is because there are some things that can be done in the way. The goal is to reduce the total costs and duration and suppliers or contractors can take advantages of transferring activities from the site to the supply chain with ideas such as industrialisation, especially prefabrication and customization. The ´previous can be used directly to eliminate on-site activities from the total production chain.

And the fourth and last area is the integrated management and improvement of the supply chain and the site production. Here the role of the supply chain is to integrate itself with the construction site itself.  This could be done in two ways: the open building strategy and the sequential procedure strategy.  The open building strategy is where the infill is separated from the structure. This gives the users the possibility to change the layout in the future and provides adaptability for the remaining life cycle of the building. On the other hand, in the sequential procedure, the idea is to structure the site work as a group of autonomous sequences, more or less like a manufacturing operation. The idea in either approach is to replace construction’s usual temporary chains with permanent supply chains that can be operated on site and can deliver certain products that are constantly needed. Pre-engineering is another related approach that is being used at the moment but the supply chains for such buildings are typically stable so they are not very similar to the other construction sites.

After reading this post, be sure to also check this article on the benefits of digitalizing the supply chain


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