Running Head: Analysis of Supply Chain of Construction Industry

Increasing trend of imported cars in Pakistan during 2007-2017

Muhammad Tauqier
Umar Farooq
Umar Mehmood

Instructor name: Mehreen Rehmani

Supply Chain, G
MGT 403
April 14, 2021
Lahore School of Economics
Running Head: Analysis of Supply Chain of Construction Industry

Global Perspective

Supply chain management is a concept that has flourished in manufacturing,

originating from Just-In-Time production and logistics. Today, SCM represents an
autonomous managerial concept, although still largely dominated by logistics. All issues are
viewed and resolved in a supply chain perspective, taking into account the interdependency in
the supply chain.

COVID-19 has impacted the global construction industry with projects facing labour
shortages, supply chain issues and financing pressures. The effects are rippling across the
sector from the initial crisis in China to construction sites around the world. According to a
report, the global construction growth slumped to 0.5 percent from CAGR from 3.1 percent
growth in 2020.

Companies with worldwide supply chains have seen tier 2 and tier 3 suppliers highly
affected by disruptions related to the pandemic. The construction industry has experienced
constant supply issues surrounding construction equipment and materials from Europe, and
America. The concern for the construction sector is that most of it has already been facing
monetary stress, shrinking orders and tight working capital.

As a result of COVID-19, many companies in various trades have revised their

scheduled capital expenses due to shrinkages in product demand, lesser commodity prices
and, also substantial, uncertainties around supply logistics and the supply of materials. The
consumption and production of materials like steel, cement, carpets, luxury vinyl tiles, etc.
have dipped globally along with trade restrictions amongst countries. The impact is medium-
high for construction materials as exports of steel, wood, plaster, aluminum, glazed partition
systems, cement and cementitious products, paints, electrical equipment, and light fixtures
from China are expected to be delayed. Cement prices fell in 2020 globally after rising for
straight months.

However, that is not to understate the impact of the pandemic on construction

businesses themselves. Results from an ONS survey in November 2020 showed that the
construction industry had the second highest percentage of businesses with only between
zero- and three-months’ cash reserves.

Construction is an essential component in the recovery of the global economy,

constituting a key contributor to GDP for most countries and a vital source of demand for raw
Running Head: Analysis of Supply Chain of Construction Industry

materials. Therefore, many governments across the world have provided tax reduction on
construction projects to get back on the stand. This has helped the construction industry to
comeback with a boost, and huge investments are being done in this segment.

Nevertheless, there is a silver lining. The nature of the external pressures exerted by
the pandemic has meant that the industry has been forced to work differently. Businesses
have been adopting remote working, embracing new technology to help productivity,
ensuring work is carried out in accordance with evolving health and safety rules, or reviewing
contracts to better understand and manage the risks posed by unforeseen events. Although
2020 was one of the most challenging years in living memory, it has presented opportunities
for the construction industry to not only survive the current challenges, but to improve in the
long-term and overcome its historic barriers.
Running Head: Analysis of Supply Chain of Construction Industry

Pakistani Perspective
Supply chain department is often called as the backbone of any business or industry,
in construction industry we also see that supplies of the product are necessary and are
accommodated by the supply chain department. Every industry has its own sources, its own
materials that are used for making the product. It plays an important part for real-estate
business and for any construction company. The market of the construction company is
mostly local and highly volatile. The long durability of the construction product contributes
to the volatility. Before a product is developed or made there are few stages from where the
process has to go through, there are different levels of specifications such as what sort of
material is needed, how much quantity is to be ordered, what sort of engineers are required to
perform the desired tasks etc. Other than basic materials and human labour, we need high
tech machinery in construction to make the work more efficient.

The three basic techniques used for the production of product and processes are: 

 Converging at the construction site where the object is assembled from incoming
materials
 Temporary producing one-off construction projects through repeated reconfiguration
of project organizations separated from the design 
 Typical make-to-order supply chain, with every project creating a new product or
prototype
In the last year, Covid-19 pandemic has affected every sort of industry around the
globe, some are facing front-end problems i.e., service industries and some are having back-
end problems i.e., manufacturing industries. The COVID-19 pandemic continues to impact
all facets of the global economy, disrupting supply chains and work forces, and straining
contractual relationships between businesses. These issues are especially important in the
construction industry, which traditionally relies on precise schedules of workers and material,
and endeavours to limit potential delay claims in order to ensure profitability.

In construction industry, alongside other industries workers faced a lot of difficulties,

the impact of the pandemic a huge loss for the construction companies around the globe
because of changes made by government executive orders, sick or quarantined workers, and
other supply chain interruptions. Whole of the processes were jammed just because of this
pandemic either of producing cement sacks in the cement industry or in steel industry,
everyone had to shut their businesses for a while. This pandemic squeezed supply chains and
Running Head: Analysis of Supply Chain of Construction Industry

created difficulties including late or cancelled deliveries, and price escalation from suppliers
in regard to machinery, materials or human labour. Throughout the world many restrictions
were made for any sort of industry, proper SOPs were followed which was a new thing and
for persons working in construction industry it was a bit tiring to wear masks throughout their
shifts as they already have a physically hard job. 

In Pakistan, government supported the construction industry very well, many laws
and SOPs were made so that this big industry in Pakistan carry out their work in open areas
and the industries associated with them were also made into active positions so that there is
no shortage of material and supply chain doesn’t get affected. Provided the solutions they
were made alert and all allied industries such as steel and building materials etc. got
opportunity to open again. Pakistani government has justified the move by stating that the
Construction Sector generates jobs for the most impacted such as the daily wage earners,
many of whom have lost their livelihoods due to the pandemic. Many changes were made and
some of the initiatives helped the construction industry in Pakistan, some of them included;
providing subsidy to housing societies, providing proper facilities for construction and their
affiliations, consideration on tax rate was made, parameters of working so that it does not
involve close contacting. etc. 

Locally in Pakistan we manufacture many of the materials used in the construction

but some of the things are usually imported from China which was a big deal as all the
shipments around the globe were jammed, this made a rise to many new businesses in
Pakistan which started to manufacture products or materials that were lately imported from
China. This made a huge impact and helped the economy of the country. However, the major
advantage Pakistani construction industry got was regarding the less intense impact of
coronavirus in Pakistan that many of the construction activities were carried on maintaining
and observing the given SOPs. These things helped the industry to catch back to their level
and let the workers get back to their routine. The biggest advantage which Pakistan had was
that we have local labour and mostly local engineers which didn’t made a big issue as there
were travel bans all around. Countries like UAE, Qatar etc. had a big loss just because they
hire labour from south Asian countries which couldn’t travel at that time. The labour, the
materials used for construction, the high-tech machinery used for efficiency of workload and
the hiring of proper engineers come under the supply chain management department of
construction industry.  
Running Head: Analysis of Supply Chain of Construction Industry

Recommendations

1. Purchasing real estate

Currently, it’s difficult to purchase property with physical engagement of some sort,
but state governments may initiate online tools, for example allowing documents to be signed
electronically. This will speed up the process of buying and selling real estate, and has the
power to disrupt, displace and eliminate traditional service providers in the transaction life-
cycle.

2. Limited Employees on site

Fewer workers on construction sites at a time will make it easier for safety managers,
foremen, and site superintendents to monitor workers and ensure that not only are all
COVID-19 safety guidelines are being followed but also all other safety rules are regulations.

3. Artificial intelligence
Robots should replace humans for many jobs, just as innovative farming
equipment replaced humans and horses during the industrial revolution. This will be helpful
in lowering employees’ number.

4. Real Estate should get Comfortable with Virtual Home Tours

Even before the pandemic, buyers wanted the option of virtual tours. Pre-recorded
walk-through video and 360-virtual tours. This is the least interactive digital option.
However, it does give interested buyers a better perspective on the layout of the home and
spatial awareness, rather than images alone. Typically, agents, photographers, or
videographers slowly walk through the entire home, then add descriptive text in post-
production or share their insights as they go from room to room. All the dealing can be
finalised through a video call.

5. Post Covid-19, Do Not Neglect Digital Marketing

People have been at home, they’re consuming media at an all-time high (I.E., more
reach for your marketing. Real estate should consider following tools.

 Start a podcast—or be a guest on other real estate shows.

 Develop video content for YouTube, Facebook, and Instagram.
Running Head: Analysis of Supply Chain of Construction Industry

 Start hosting real estate webinars for buyers or sellers.

 Optimize your LinkedIn profile and post regularly.
 Make your website mobile-friendly.
6. Level Up Your Real Estate Business and educate client Post-Covid
The pandemic has altered much of our life, but people still need to buy and sell their
homes. you can recover and even increase your real estate business while offering clients an
exceptional experience. Buyers and sellers have no idea what’s going to happen with the
economy or how to navigate constant changes. Educate and reassure your clients on what
they can expect, for example, one of the best advantages of buying post-Covid is historically
low-interest rates. Ensure that your clients understand that purchasing power will increase
and significant savings over the next 30 years.

7. Personal Protective Equipment

Most construction workers are unlikely to need Personal Protective Equipment
beyond what they use to protect themselves during routine job tasks. Such Personal
Protective Equipment may include a hard hat, gloves, safety glasses, and a face mask.

8. Government Scheme for Construction Industry

Take Advantage from different government schemes in term of Loans, Tax free
investment for the Construction Industry. Reinforce the company's financial position.