Supply Chain Management (SCM) originated in armoury practices of the late 19th century, and was later used in the production methods of Henry Ford in the 1920s. It describes the management of a supply flow over multiple chains. Supplies can range from materials to labour or information.
Chains describe the link between different parties, companies or people involved in the delivery or distribution. In other words, Supply Chain Management tries to understand and improve the complete process of all resources needed to deliver a product. Therefore, people dealing with the topic need to have a holistic perspective, way beyond their organisational boundaries, and a deep understanding of the dependencies between different players of the supply chain.
While other industries already implemented a sophisticated SCM, the AEC industry is just picking up speed towards a completely monitored supply chain. The reason for this is that the industry is traditionally working in an extremely project-driven manner.
Additionally, each project is said to be a unique prototype which will never be done in the same way again. While we at Sablono think that might not be completely true when it comes to work processes (best practices and standardized workflows also exist in the AEC industry), we must agree when talking about project teams.
Complicated bidding processes, a mixture of healthy competition and potential job specialisation ensure that in most construction projects companies are collaborating which have never worked together before and might not work together again afterwards. This fact is what makes SCM in the construction industry so difficult.
While in other industries, partners and suppliers are working together for years – giving all involved parties the time to not only implement but also benefit from an SCM – in construction relationships are usually short-termed.
The steep hierarchies of General Contractors, Sub-Contractors, Sub-Sub-Contractors, etc. also make it hard to overcome initial biases. In our experience, companies down the supply chain are often not willing to share the kind of information needed for proper SCM with their superiors because they are worried about what transparency might do to their business.
Rui Pinto analysed in his blog post four potential ways to tackle Supply Chain Management in the construction industry, each one leading to a different outcome. To quickly summarize:
In my personal opinion, it doesn’t matter which way you try to implement SCM in construction. What matters is that you start doing it. If you compare the AEC to, for example, the automotive industry, you must realize the enormous potential a sophisticated SCM offers: It could not only save time and money but also heavily increase reliability.
By doing this, it will make delivering projects that much easier and even more fun, since you know when to expect delays and how to deal with them- even on the most complex projects. If, for example, you need to bring in another supplier you would be sure that he will be able to deliver on his promises beforehand, since you have tracked their performance in a previous project.
As we know, the industry won’t change just like that from one day to the next, but working at Sablono and observing our customers use our Lean Construction platform, including projects spread over different parts of the world, to track their processes from fabrication, to delivery and installation on site gives me hope for a better, more productive future in the long term.
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