A Study On Supply Chain Management In Construction

CHAPTER 6: Results and discussions

6.1 Forecasting
During fabrication phase in the project, it is important to forecast the weekly steel
requirements at the site to optimize the onsite inventory. In this research, since the existing
daily fabrication data does not follow any trend, we had followed exponential smoothening
model to forecast. The weekly forecast values for different values of are shown in Table 6.1.
The forecasted values show less deviation from the actual data in the 2 nd and 3rd week, while
it shows large variations in the 1st and 4th weeks.

Table 6.1: Weekly forecast values

6.2 Value stream mapping

Value stream mapping is a very useful tool in identifying bottlenecks and smoothening the
workflow. It helps in reducing intermediate inventory and overall lead time. According to the
schedule, a total of 66 elements were to be produced in a time span of 35 days. The entire
project was divided into three phases as shown in Table 6.2.On plotting the current state
value stream map the total cycle time for a single element was determined to be 146.67 hours.
The net value added time amounted to just 8.67 hours. Therefore the percentage value added
time, which is calculated as the ratio of net value added time to the total cycle time was
5.9 %.

Table 6.2: Phase wise production of elements

Phase No. of elements Days Allotted

1 33 19

2 27 10

3 6 6

Department of Civil Engineering, RVCE Page 24

 A Study On Supply Chain Management In Construction

Figure 6.1 represents the current state value stream map. It is known from the current state
VSM that 15 men are employed for a period 35 days irrespective of the demand. This leads to
unwanted inventory and overproduction. This fact is verified by the intermediate inventory
which adds a total lead time/non-value adding time of 138 hours, which amounts to 94.1% of
the total cycle time. Applying demand control to each of the three phases helps in smoothen
the workflow and in ensuring that the production is carried out in accordance to the demand.

Phase 1 of the fabrication process required the production of 33 elements in a period of 19

days. On applying demand control techniques the number of laborers required for each
activity was determined. The total number of men employed was 12. The value stream map
for phase 1 of the fabrication process is shown in figure 6.2. The total cycle time for the
production of a single element was calculated to be 60.61 hours out of which the net value
adding time was 5.96 hours. This gives the percentage value adding time to be 9.83 % which
is greater than 5.9 % that is proposed by the current state value stream map. Nonetheless, the
demand for 33 columns is met in 19 days.

Phase 2 of the fabrication process required the production of 27 elements in a period of 10

days. The demand rate in phase 2 is higher when compared to that of phase 1. Therefore,
using demand control techniques the number of men required at each stage of the fabrication
process is recalculated to meet the new demand. The total number of men employed in phase
2 is 18. The value stream map for phase 2 of the fabrication process is shown in figure 6.2.

Figure 6.1: Current state value stream map

Department of Civil Engineering, RVCE Page 25

 A Study On Supply Chain Management In Construction

Figure 6.2: Value stream map for Phase 1

The total cycle time for the production of a single element was calculated to be 57.93 hours
out of which the net value adding time was 3.88 hours. This gives the percentage value
adding time to be 6.70 % which is still greater than 5.9 % that is proposed by the current state
value stream map. Nonetheless, the demand for 27 columns is met in 10 days.

Phase 3 of the fabrication process required the production of 6 elements in a period of 6 days.
The demand rate in phase 3 is lesser when compared to that of phase 1 & phase 2.

Therefore, using demand control techniques the number of men required at each stage of the
fabrication process is recalculated to meet the new demand. The total number of men
employed in phase 3 is 6.

The value stream map for phase 3 of the fabrication process is shown in figure 6.4. The total
cycle time for the production of a single element was calculated to be 70.58 hours out of
which the net value adding time was 11.87 hours.

This gives the percentage value adding time to be 16.82 % which is much greater than 5.9 %
that is proposed by the current state value stream map. Moreover, the demand for 6 columns
is met in 6 days.

Department of Civil Engineering, RVCE Page 26

 A Study On Supply Chain Management In Construction

Figure 6.3: Value stream map for Phase 2

Figure 6.4: Value stream map for Phase 3

Department of Civil Engineering, RVCE Page 27

 A Study On Supply Chain Management In Construction

Table 6.3: Comparison of Man hours between Current state VSM and Proposed VSM

Phase Current State VSM Proposed VSM

1 285 228

2 150 180

3 90 36

Total 525 444

The total man hours involved in the current state value stream map is 525 man hours.
Similarly, the total man hours involved in the proposed value stream map works out to be 444
man hours. The total reduction in man hours from the current VSM to the proposed VSM is
81 man hours i.e., a percentage reduction of 15.43. This bolsters the fact that value stream
mapping streamlines workflow and reduces lead time.

Total man hours saved = 525 - 444

= 81 man hours

Percentage reduction in man hours = (81/525)*100

= 15.43 %

6.3 Economic batch quantity (EBQ)

This project required the production and erection of 23 columns, 8 Jack beams and 35 rafters
in a period of 43 days. A period of 7 days was used for setting up.

Figure 6.5: Present inventory model

Figure 6.5 represents the present inventory model. Using the total inventory cost equation, the
present cost of inventory was determined to be Rs 14063.76.

Department of Civil Engineering, RVCE Page 28

 A Study On Supply Chain Management In Construction

Figure 6.6: Proposed inventory model

Figure 4.5 represents the proposed inventory model. This model is developed based on the
economic batch quantity. Using the total inventory cost equation the cost of the proposed
inventory model is calculated as Rs 10964.22. Therefore the total savings in cost is given as

Total cost savings = 14063.76 - 10964.22

= Rs 3099.54

Percentage reduction in cost = (3099.54/14063.76)*100

= 22.04 %

Thus the savings in cost on applying the proposed inventory model over the present inventory
model is Rs 3099.54 ie, 22.04 % savings in cost over the present inventory model.

CHAPTER 7: Conclusions

Department of Civil Engineering, RVCE Page 29

 A Study On Supply Chain Management In Construction

Steel plates form a very important raw material of our project and incur large cost. In order to
control material wastage at site and reduce inventory cost, a reliable forecasting model is
required. In our research, we used exponential smoothening forecasting model to forecast the
steel plate requirements for fabrication in kg. The exponential smoothening model presented
satisfactory results with the increase in input data points. However, large deviation in the
forecasted values was seen towards the end of the fabrication phase. The site engineers were
interviewed in order to determine reasons for the deviation. It was concluded that, since
during the end of the project the setup was to be removed and hence simultaneous fabrication
were conducted and finished at an earlier stage. This lead to a sudden spike in the fabrication
data and hence the deviation.

Value stream mapping is one of the lean tools used in manufacturing to identify bottlenecks
that is, stages at which inventory is built up. These bottlenecks once identified are rectified
and workflow is streamlined so that there is a smooth flow of material from one state to
another. The present project taken up consisted of seven stages .Using value stream mapping
it was identified that a large amount of inventory was getting built up at the end of marking
and cutting. The painting phase was another bottleneck as the paint had to dry for a period of
8 hours prior to the application of the subsequent Coat. These bottlenecks when left
uncertified lead to build up of lead time which reduces the overall efficiency of the process.

This study uses value stream mapping to perform demand control. Knowing the productivity
at each stage of fabrication, the available time and the number of units to be produced to meet
the demand, workers were assigned such that the overall demand was met as well as the
inventory built up at intermediate stages was reduced to a bare minimum. But the bottleneck
identified at the painting face was not rectifiable, as the paint used in the process remained
the same. This bottleneck can be rectified by using paints having lesser drying time. Value
stream mapping effectively reduced the overall labour man hours, reduced the intermediate
inventory and help in meeting the required demand.

Economic batch quantity (EBQ) is a concept that is used to identify the optimal batch size of
a product in manufacturing industries, where the products are simultaneously produced as
well as consumed/ dispatched. As the present project involved the fabrication of Steel
elements at the site, it more or less resembled the manufacturing environment. Therefore
EBQ was decided to be the most suitable model to be applied to the present project. The
production system followed at the site involved a lot of uncertainty. Large quantities of
elements were produced at a stretch and later consumed, which lead to large inventory build
up. This fact became evident when the inventory versus time graph for the present inventory
model was plotted. As the project involved three different kinds of elements namely columns,
jack beams and rafters, economic lot

Scheduling model was utilised to promote simultaneous production and consumption of

various elements involved in the project. On applying the EBQ model it was observed that
the peak Inventory of all the elements reduces drastically. Nevertheless, simultaneous
production and consumption prevented idle labour. On calculating the total inventory cost for
the present as well as the proposed inventory models, it became evident that the EBQ model,

Department of Civil Engineering, RVCE Page 30

 A Study On Supply Chain Management In Construction

if employed if would drastically reduce the total inventory cost. As the project involved
customer financed warehouse/ site, the cost incurred towards this was neglected. The savings
in cost would have been greater is the warehouse cost was born by the Builder.

Department of Civil Engineering, RVCE Page 31