Course: Strategic Construction Management

Lecture 9: Supply Chain Management

By: Dagnachew Adugna (PhD)

22 July 2023 1
Group Assignment two (15%)
1. Take two Grade 1 construction industries in Ethiopia and assess the existing construction
management systems (or approaches) in these two Construction industries for their:
Construction materials management
Construction machinery and equipment's management
Financial management
Human resource management
Compare the management systems of the 2 industries based on issues mentioned
under a, b, c & d.
2. Then, using the concepts of internal and competitive benchmarking prepare a detail
"bench marking" which could fill the management gaps of the two construction industries
you selected under No. 1, above.
3. Finally, find one "Generic Benchmarking" across the world which should be prepared in
the sense to fill the management gaps identified under No. 1, above.
Tips:
- prepare checklists before you go to the companies
- the reports should follow scientific write up procedures (Introduction, Problem
statement, Objectives, Literature review, Methodology, Results & Discussion & Bibliography)
- search for best practices across the globe
- you can get letter of support for data collection from the "Post Graduate" office
- the report shall not be less than 18 pages
Submission Deadline: July. 29, 2023 (no extension) 7/22/2023 2
Contents of the presentation

Brainstorming
Supply chain (SC)?

Lecture
Introduction - concepts of supply chain

concepts of SC, SC mgt, SC mgt process?

Supply chain management

SC in the CI

SC vs Logistics

Q&A
Introduction - Supply Chain (SC)
Introduction …
Concepts of SC, SCM, SCM process?
 Concept of Supply Chain …
Or

SC is the management of a network,

which is used to deliver products & services, from the raw-material to the
customers, through physical distribution, flow of information, & cash.

• A supply chain comprises of a network of both processes & entities.

 Three “entities” that perform the processes can be business or governmental
organizations or (at least in theory) individuals.
They can also be departments or functional areas or individuals within a
larger organization;
there are internal & external supply chains.

• The entities may also include raw material extractors, service &
component suppliers, a material product manufacturer or a producer
of services, distributors, & end customers.
Most work on supply chains, both theoretical and applied, involves :
a manufacturing firm in the middle (although service firms also have supply
chains) with a supplier of materials or
components on the upstream side and
a customer on the downstream side.
- SC consists of

Supplier Manufacturer Distributor Retailer Customer

Upstream
Downstream

- SC aims to Match Supply and Demand,

profitably for products and services
SUPPLY SIDE DEMAND SIDE
- SC achieves

The right
Product
+ + + + +
The right
Price
The right
Store
The right
Quantity
The right
Customer
=
The right
Time
Higher
Profits
 Concepts of SC/M …
A supplier, a provider of goods or
services or a seller with whom the
buyer does business, as opposed to
a vendor,
Vendor is a generic term referring
to all sellers in the marketplace.
The supplier provides materials,
energy, services, or components for
use in producing a product or
service.
These could include items as
diverse as industrial metals,
roofing nails, electric wiring,
natural gas, electrical power, or
transportation services.
Flows in a Supply Chain
Material

Information
Supplier Customer
Funds
SCM objectives vs outcomes?
 Components of the Supply chain

E
X
A
M
P
L
E
Upstream vs Downstream of Supply Chain?
SC

E
X
A Chemicals
Ingredients
M Admixture

P
L
E
Demand Driven Supply Chains - The Push vs Pull Model

More on next slide

The Push vs Pull Model
(Challenges)
Some
Cisco = American multinational technology company
Global

E
X
A
M
P
L
E
Benefits for Cisco
 Supply Chain in the Construction Industry
o Every industry incorporates a traceable and manageable “supply
chain” hierarchy wherein:
the linkage between companies converts a sequence of necessary
services, products & materials into a finished product.
o In principle, construction contractors, material suppliers, service
crews and other involved parties:
collaborate in a mutually beneficial program designed to secure a
conclusive build asset.
o Supply chain management merely provides structure to the
formality of the arrangement.
o According to reports from
Constructing Excellence, a group
established to help collaborate the
standard for infrastructure & build
environment, products and services
account for roughly 80% of
construction project costs.
o Effective management concerning
the actual when-and-how
procurement of these resources:
can greatly affect the success,
quality, functionality and
profitability of any construction
project.
Benefits of Modern Construction Supply Chain Procurement Methods

Under the traditional form of construction procurement,

the link between contracts & suppliers have typically concerned specific
products and services priced to the lowest bidder.
Thus multiple players have often functioned according to separate contracts
with the client.
Now we move toward integrated supply chains wherein the members establish
long-term relationships and group objectives.
The benefits of a modern supply chain procurement process include:
Higher overall profitability through lower real costs
Reduced margins for equipment maintenance
AN increase in repeat pairing with progressive clients
Better long-term project planning and coordination
Better responsiveness from delivery facilities
Fewer material defects
Improved client satisfaction
& the ability to establish great industry presence and reputation.
 Supply Chain in the CI
The supply chain is the focus for more effective ways of creating value for
clients;
as a vehicle for innovation & continuous improvement, integration of
systems and perhaps even improved, industry-wide, profitability
levels.
In construction we observe clients, consultants, contractors & suppliers in
the broadest sense positioned as nodes connected by linkages comprising:
knowledge transfer,

information exchange,

directions and financial &

contractual relationships (refer Figure 1, below)

1
 Logistics vs Supply Chain Management
Logistics can be
thought of as a
planning orientation &
framework that seeks
to create a single plan
for the flow of product
and information
through a business.

SCM builds upon this

framework and seeks to
achieve linkage & co-
ordination between the
processes of other
entities in the pipeline,
that is suppliers &
customers and client
2 organization itself
(Christopher 2005, p. 4).
 Logistics vs Supply Chain Management …
Logistics is the management of all activities which facilitate movement and the
coordination of supply and demand in the creation of time and place utility.
(Hesket, Glaskowsky and Ivie, 1973)

Logistics is the technology of control of the physical flow of materials and

goods and related information that a firm sends, transfers and receives. (Colin
and Fabbe-Costes, 1994)

Logistics is an application-oriented scientific discipline. It analyses and models

division-of-labour economic systems as time-based and location-based flows of
objects (above all goods and people) in networks, supplying recommendations
for action on the design and implementation of these networks. (BVL, 2010)

Logistics management is that part of supply chain management that plans,

implements, and controls the efficient, effective forward and reverse flow and
storage of goods, services, and related information between the point of origin
and the point of consumption in order to meet customers’ requirements.
(CSCMP, 2013)
 SCM vs Logistics …. Cont’d
It can be argued that SCM is not just another name for logistics.

SCM goes further & includes elements that are not typically included in a
definition of logistics, such as:

information systems &

the integration & coordination of planning and control activities.

Logistics primarily deals with the flows to, in and out of companies, with an
intra-organizational perspective,

Conversely, SCM is a development that deals with the inter-organizational view

of logistics alongside the intra-organizational perspective.

SCM as the chain linking each element of the manufacturing and supply process
from raw materials to end users, encompassing several organizational
boundaries
Use of internet in SCM
Future internet driven supply chain operates like a digital
nervous system
 Thank you so much for your attention

22 July 2023 40