Emergence of supply chain management

The origination and growth of the supply chain management (SCM) concept was done in the manufacturing industry. In, just in time delivery system which was the part of the Toyota production system, there were first visible signs of SCM. Regulation of supplies to the Toyota Motor factory just at the right time and the right small amount was the main aim of this system. However, effective regulation of suppliers' interaction with the production line and drastic reduction in inventories was the main goal of this system. The concept of supply chain management was also found in the quality control field. In 1950, to address Japanese industrial leaders it was also suggested by Deming that, to decrease production and improve the quality, a supplier could be worked as a partner in a long-term relationship of trust and loyalty (Vrijhoef & Koskela, 1999).

A group of organizations that are connected through upstream and downstream, in distinct activities and processes which generate value in the form of service and products to the final customer is termed as supply chain (Christopher, 1998). The general configuration of the supply chain is shown in the figure below (Vrijhoef & Koskela, 1999).

Figure 1

General configuration of supply chain

In order to sustain and survive the objectives of growth, many organizations are imposed to add their global market share. Meanwhile, those organizations' domestic share market should also defend themselves from international competitors. However, the expansion of distribution and global logistic network is very challenging, for proper shipment of the products to the consumers who demand in rapidly and dynamically changing set of channels.13, 14, 15, 16, 17, 18, 19

The supply chain needs to be effective and efficient (Domenica, 2002). Efficient, in this case, refers to the minimization of resources that are used to accomplish specific outcomes wherein, effectively refers to the design of distribution channels. Service needs and service quality can be measured by effectiveness, wherein product quality, backorders, delivery performance, and inventory level can be measured by efficiency (Klemencic, 2006). 2.2 Four Roles of Supply Chain Management in Construction:

Figure 2

Four roles of supply chain management in construction (Adopted from: Vrijhoef & Koskela, 2000)

In the first case, the main concern will be the influence of the supply chain on the activities at the site. The main aim here is to reduce the duration and the cost of the site activities. The main concern is to make sure that the dependent labor flow and materials do not disrupt the flow of the work. In order to achieve this, the focus should be given to maintain the relationship between the site and direct suppliers (Vrijhoef & Koskela, 2000).

In the second case, the main focus is on the supply chain and the aim is to reduce the cost mainly on those that are related to lead-time, logistics, and inventory. This focus can also be taken by component and material suppliers (Vrijhoef & Koskela, 2000).

In the third case, the activities are transferred to the initial stages of the supply chain from the site. This can be adopted for wider concurrency within activities or to avoid the inferior conditions that are generally not feasible due to technical dependency on the construction site. This focus can be initiated by contractors or suppliers with the main aim to decrease total duration and cost.20, 21, 22, 23, 24, 25

In the fourth case, improvement in site condition, supply chain, and integration of management can be the major focus. This can be initiated by suppliers, clients, and contractors (Vrijhoef & Koskela, 2000).

Research design

Research design is a guideline to specify the methods and procedures for collecting and analyzing the data to produce the best outcome which can address the research problem. To make a comparative study of supply chain management in building construction projects, various literature and articles on supply chain (published as well as unpublished) were reviewed. The primary and secondary data were collected through the methods of observation and questionnaire. The questionnaire survey obtained from the concerned stakeholders was then analyzed and interpreted to achieve the research objective. This basic research methodology was carried out for obtaining research objectives as the flow chart is shown below.

Figure 3

Research methodology process

Research approach

The approaches that were used in this study is qualitative research approaches as the collected data were presented and analyzed with proportion. In order to, measure the degree of agreement between the public sector respondents and private sector respondents regarding the importance of the supply chain management, its existing challenges and best approaches and solutions for the supply chain management qualitative approach was used.

Study population

The study population is the public building projects that are in commercial operation and are at the construction stage. However, the study purposively selected sixteen projects from two clients, Department of Urban Development and Building Construction (DUDBC) and the National Reconstruction Authority (NRA). Among sixteen projects, seven projects were under DUDBC and rest nine projects were under NRA. Another eighteen projects from private builders/real estate were selected for the study.

Sample size

From those sixteen public building projects, three members from each project, i.e., client, contractor, and consultant were considered. In the case of private builders/real estate, one member from each project was considered. All the respondents who were considered for the purpose of the study are here taken as sample population.

Data analysis

This analysis was used for ranking the criteria concerning their relative importance. The relative importance index (RII) has been calculated as follows:

Here, w = weight as assigned by each respondent on the scale of 1 to 5 where 1 implies the least and 5 implies the highest. A= highest weight and N is the total number of samples.

Akadiri (2011), stated that from RI values, we can transform five levels: High (H) (0.8 ≤RI ≤1), High-medium(H-M) (0.6 ≤RI ≤0.8), Medium (M) (0.4 ≤RI ≤0.6), Medium-low(M-L) (0.2 ≤RI ≤0.4) and Low (L) (0 ≤RI ≤0.2). (Rooshdi, 2018)

Also, for further statistical analysis, 16 questionnaires were analyzed by using MS Excel.

The degree of agreement between the public sector respondents and private sector respondents was determined by using Kendall’s coefficient of concordance. The degree of agreement can be determined by using the following equation. (Shaban, 2008)

W = 12Um2N*(N-1)

Where, W = Kendall’s coefficient of concordance

U = ∑(R-RN)2

m = Number of Judges

N = Number of Problems

Validity

The constructed validity index was computed to ensure the appropriateness of the research instrument. The construct validity index computed using SPSS shown in the table below:

Here, r = critical value for the Pearson correlation coefficient

Df = degree of freedom = n-2 = 66-2 = 64

In this study, the assessment of supply chain management in building construction projects was obtained from the literature review. A pilot survey was conducted before the questionnaire was distributed to the respondents.

Reliability

The most common measure of internal consistency (“reliability”) is Cronbach’s equation. Researchers mostly use this equation to determine the reliability of the Likert scale used in survey questions/questionnaires. The formula for the standardized Cronbach’s alpha is given by,

Where N is equal to the number of items, c-bar is the average inter-item covariance among the items and v-bar equals the average variance.

In this study, Cronbach’s alpha was calculated by using SPSS and found to be 0.926 which is more than acceptable for a social science survey.

The summary of the research methodology followed in this study is presented in table below:

Factors that enhance supply chain in the organization

According to the relative importance index (RII), it was found that the public body puts a high emphasis on improved quality assurance with the value of 0.840 to enhance the supply chain in the organization. Whereas, private builders emphasized on satisfaction to the client with the RII value of 0.882. Thus, it has been found that improved quality assurance along with satisfaction to the client is more important to enhance the supply chain in any construction industry. However, the above-listed common factors cannot be neglected for the growth of supply chain management in the construction industry.

Factors that affect successful growth of supply chain relationship between clients and suppliers

The factors affecting the successful growth of the supply chain relationship between clients and suppliers have been assessed through RII. It has been found that four of the factors are common to both sectors. Whereas, the public sector stressed a factor related to simplifying the bidding process as the fifth important factor to maintain the successful growth of the supply chain relationship. In contrast, private-sector advocates on a factor related to ease in the construction process as the fifth important factor.

Factors that create a barrier in supply chain management

Among the factors listed above, the public body emphasis more on factor related to delay in delivery, delivery of inferior quality of materials as the main barrier for the integration of the supply chain. Whereas private builders emphasized more on delay in payment as the main barrier for the integration of the supply chain. Hence, it has been found that these two factors should be focused on great importance to create good supply chain integration. However, the above-mentioned common factors are to be considered while planning supply chain management.33, 34, 35, 36, 19, 37

According to the relative importance index (RII), it was found that the cost of the material with RII value 0.750 affects the efficiency of supply chain management most in the case of the public body. Whereas cash to cash cycle with RII value 0.767 affects most in the case of private builders. However, other common factors also affect the efficiency of supply chain management.

Solutions for the challenges encountered in the supply of materials

According to figure 4.7 below, it was found that the public body puts a high emphasis on a factor good communication system as a solution to eliminated the problems of supply of materials. Whereas, private builders have emphasized both factors good communication system and ordering at the right time to maintain the inventory as a solution to eliminated the problems of supply of materials.

Figure 6

Frequency of solutions for the challenges encountered in the supply of materials

Measures to be adopted for better supply chain managementTable 9

According to the relative importance index (RII), it was found that the public body puts a high emphasis on identifying alternative suppliers with a value of 0.558 for better supply chain management. Whereas, private builders have emphasized identifying the wastages and elimination of non-value activities as well as terracing the performance of the project for better supply management with both the factors having an RII value of 0.656. However, identifying the capacity of suppliers, proper resource planning, and developing good relations with suppliers and sub-contractors were other important factors considered by both the public and private sectors.

Differences and mutual grounds in the implementation of supply chain management between public and private sector building construction projects

For the public sector, the most important factor to enhance the supply chain in the organization is improved quality assurance. Whereas, to private builders, the most important factor is satisfaction of the client.

For both public and private sectors, the most affecting factor for the successful growth of supply chain relationship with client and supplier is relation between demand and supply.

Hypothesis testing shows that there is a significant degree of agreement between public and private respondents regarding the high importance of supply chain management in the construction industry. However, there is a varying degree of perceptions in relation to the priority of contributing factors.

Existing challenges in the supply chain management process

For the public sector, the most contributing factor that creates a barrier in SCM is ‘delay in delivery/delivery of inferior quality of materials.’ Whereas, for private builders, the most contributing factor is ‘delay in payment’.

For the public sector, the efficiency of SCM depends on the cost of materials. Whereas, for private builders’ efficiency of SCM depends on the cash-to-cash cycle.

For the public sector, the main challenge for material management are associated with the changes made in design during the construction process. Whereas, for private builders, the most challenging factor for material management are ‘designer’s lack of knowledge about the availability of sizes and alternative products in the market, and, changes made in design during construction the process’.

Hypothesis testing shows that there is a significant degree of agreement between public respondents and private respondents regarding the factors such as delay in delivery, delay in payment, changes made in design and drawings, delay in approval and delivery of inferior quality of materials as the existing challenges or barriers in supply chain management process in building construction projects.

This also shows that there is a moderate degree of agreement between public respondents and private respondents regarding the factors such as cost of materials, procurement process, cash to cash cycle, perfect order, poor road condition and shortage of transporting means are the existing challenges for inefficient supply chain management process in the building construction projects.

Similarly, this also shows that there is relatively significant degree of agreement between both public and private respondents that material management is one major existing challenge facing supply chain management process in the building construction projects.

Approach and solution for supply chain system

The approaches and solutions for supply chain systems in the construction industry have been assessed using three different questions related to roles of SCM, measures taken to mitigate the problems of supply of materials and then to be adopted for better SCM.

For both the public and private sectors, the best method of SCM to be implemented in the construction site is to improve integrated management between the supply chain and project site.

The public sector felt that existing challenges in SCM could be overcome by establishing a good communication system within the organization or between related parties. Whereas, the private sector thought that existing challenges in SCM could be overcome by establishing a good communication system and ordering at the right time to maintain the inventory.

While public sector viewed 'Identifying the alternative suppliers’ as a prime measure for better supply chain management, the private-sector considered ‘Identifying the wastages and elimination of non-value activities’ and ‘Tracing the performance of the project’ as more impactful measures.

Hypothesis testing showed that there is a significant degree of agreement between public and private respondents that improved integrated management between supply chain and project site is the proper approach in implementing supply chain management in building construction projects

Recommendation for further study

This study has explored the knowledge related to the problems of supply chain management on a limited scale. There is a lot of fields for further study and research.