Supply Chain Management Process

Supply chain management is a process to manage and optimize the flow of products, materials, services, and information starting from the creation/inception of need/ demand until its installation/usage for specified purpose to achieve high level of performance for organizational success. It is a process for reducing cost, enhancing quality, and reducing operation time.

Supply chain management process starts from the inception of need and covers all the stages and systems till the installation/fixing/implementation of the product, material, and services.

Figure 1.12 illustrates supply chain management process.

FIGURE 1.12 Supply chain management process.

Supply Chain Stakeholder

Supply chain management has involvement of many participants. Following are the main stakeholders and participants involved in supply chain management process:

• 1. Owner
• 2. Designer/specification developer
• 3. Purchasing/procurement department
• 4. Finance department
• 5. Manufacturer/supplier
• 6. Quality department
• 7. Dispatch section
• 8. Transportation
• 9. Receiving party
• 10. Incoming inspection
• 11. Material handling
• 12. Storage
• 13. Installation/usage

Table 1.16 illustrates matrix of stakeholders’ responsibilities in supply chain management.

TABLE 1.16

Stakeholder's Responsibilities in Supply Chain Management

Source: Abdul Razzak Rumane. (2017). Qua lit)’ Management in Construction Projects, Second Edition. Reprinted with permission from Taylor & Francis Group.

Supply Chain Management Processes

The following are the major processes that need to be implemented and monitored in supply chain process to achieve optimal result:

• 1. Product specification
• 2. Supplier selection
• 3. Purchasing
• 4. Product quality
• 5. Product handling
• 6. Improvement
• 1.8.3.1 Product Specification

In order to achieve efficient and smooth supply management process, it is essential to develop product design and specifications based on the customers’ need/product requirements, goals, and objectives. The following are the major points that the designer has to consider while developing the design and product specifications:

• • Suitability to the purpose and objectives
• • Performance parameters and compatibility
• • Sustainability (environmental, social, and economical)
• • Availability
• • Reliability
• • Safety and security
• 1.8.3.2 Supplier Selection

The selection of supplier mainly depends on the following:

• • Experience in supply of similar type of product/services
• • Quality management certification
• • Technical capability
• • Current work load and capacity to supply future requirements
• • Resources such as manpower and material
• • Financial capability and stability
• • Track record in timely execution of the past orders
• • Product/supply rejection record
• • Litigation record
• 1.8.3.3 Purchasing

Purchasing process starts with identification of potential suppliers who can deliver the needed product/material on time at competitive price conforming to the product/ material quality.

Figure 1.13 illustrates purchasing process.

FIGURE 1.13 Purchasing process.

1.8.3.4 Product Quality

It is essential that both suppliers and customers are involved to ensure quality compliance of the product/material. The customer must discuss with the supplier about the acceptable level of product/material quality/performance. A quality metrics and method of inspection and quality control should be prepared for acceptance level. Quality management process to meet the customer requirements of the specific product/material should be placed in order to ensure smooth supply. Both parties should establish inspection and testing procedure to be mutually agreed and to be followed. Supplier and customer should work together to achieve zero defects policy.

1.8.3.5 Product Handling

Product handling is important to ensure the customer gets right quantity in right time. The following points are considered for proper handling of the product:

• • Proper packing
• • Product traceability and verification
• • Proper shipping documentation
• • Safe and risk free handling of the product
• • Safe loading/unloading
• • Shortest and reliable mode of transport to ensure product delivery in time
• • Appropriate mode of shipment/transportation
• • Maximum/minimum batch size to meet the ordered quantity
• • Avoid breakage/damage during handling
• • Safety during handling
• 1.8.3.6 Improvement

For competitive advantage, continual improvement is essential. The supplier has to ensure performance improvement. Customer feedback is necessary to improve the product performance. Supplier has to maintain proper communication with the customer to know the problems or potential problems related to the supplied product and take necessary steps to improve the quality and customer satisfaction.

Supply Chain in Construction Projects

Supply chain management in construction project is managing and optimizing the flow of construction materials, systems, equipment, and resources to ensure timely availability of all the construction resources without affecting the progress of works at the site. Figure 1.14 illustrates supply chain management process in construction projects.

In construction projects, the supply chain management starts from the inception of project. The designer has to consider the following points while specifying the products (materials, systems, equipment) for use/installation in the project:

• • Quality management system followed by the manufacturer/supplier
• • Quality of product
• • Reliability of product
• • Reliability of manufacturer/supplier
• • Durability of product
• • Availability of product for entire project requirement
• • Price economy/cost efficient
• • Sustainability
• • Conformance to applicable codes and standards
• • Manufacturing time
• • Location of the manufacturer/supplier from the project site
• • Interchangeability
• • Avoid monopolistic product

Product specifications are documented in the construction documents (particular specifications). In certain projects, the document lists the names of recommended

FIGURE 1.14 Supply chain process in construction project.

manufacturers/suppliers. However, in order of continuous and uninterrupted supply of specified product, the contractor has to consider the following:

• • Quality management system followed by the manufacturer/supplier
• • Historical rejection/acceptance record
• • Reliability of the manufacturer/supplier
• • Product certification
• • Financial stability
• • Proximity to the project site
• • Manufacturing/lead time
• • Availability of product as per the activity installation/execution schedule
• • Manufacturing capacity
• • Availability of quantity to meet the project requirements
• • Ti mel i ness of del ivery
• • Location of manufacturer/supplier
• • Product cost
• • Transportation cost
• • Product certification
• • Risks in delivery of product
• • Responsiveness
• • Cooperative and collaborative nature to resolve problem

In major construction projects, the following items are required in bulk quantities:

• • Concrete
• • Concrete block
• • Conduit
• • Utility pipes
• • Light fixtures
• • Electrical devices
• • Plumbing fixtures

The contractor can follow just-in-time method to procure these items and avoid large inventory at project site. The contractor has to select reliable manufacturer/supplier for these products and to ensure that the manufacturer/supplier is capable of maintaining continuous flow of these items at a short notice. The contractor can sign agreement with the manufacture/supplier for entire project quantity with agreed- upon delivery schedule as per the requirement at site.

In order to ensure supply chain payments are made promptly, the cash flow system should be projected accordingly as the supply chain may affect due to interruption in payments toward supply of products.