Supply Chain Management in Construction: a lean-based
conceptual framework
Diego Souza, PhD 2023
F e b
SCM Lecture
Bio
2
16+ years of multi-industry and global exposure in the field of supply chain management;
Experienced in Steel-making, Capital & Infrastructure, FMCG, Medical Devices, and Pharmaceutical
industries;
Functional background in Procurement, Logistics, and Planning areas. People leader of diverse teams
based in multiple geographies;
Expertise acquired in Supplier Development, Category Management, Portfolio and Project
Management, Process Excellence, Data Analytics and Digitalization, Strategic Planning, New Product
Introduction, Product Life-cycle Management, Cold-chain Management, Distribution Mode Changes,
Customer Experience, Customer Analytics and Insights, and Integrated Business Planning;
Certified in Lean, Six-sigma, and Design Thinking;
BSc in Industrial Engineering (UFRGS – BR), MSc in Industrial Engineering (UFRGS – BR), and PhD in
Supply Chain Management (University of Salford – UK);
UCL – The Bartlett Faculty of the Built Environment
SCM Lecture
Research in Construction Supply Chain Management
UCL – The Bartlett Faculty of the Built Environment 3
Case-studiesPhD Thesis
Company A Company B Company C
Country Brazil UK UK
Nature Private Private Public
Revenue/CAPEX (per year) £ 150 M
(Revenue)
£ 900 M
(Revenue)
£ 4,000 M
(CAPEX)
Employees (number) 2,500 3,300 N/A
Supplier Base (number) 4,200 1,200 N/A
Suppliers in the Research Process (number) 11 N/A 6

SCM Lecture 5
From Operations Management to Construction Management
Product-process matrix (Krajewski et al. 2007) Production strategies and the OPP (Olhager 2003)
Key-factors to be considered:
• Market-related (i.e. demand volatility, volume)
• Product-related (i.e. modular design, materials)
• Production-related (i.e. lead-time, layout flexibility)
UCL – The Bartlett Faculty of the Built Environment
SCM Lecture 6
Project-based production system
• Temporary mind-set
• Autonomous units of production
• The role of project managers
• Fixed-position layout
• Two managerial levels
• Converging logistics
Multiple and concurrent projects
• Limited capacity
• Increased complexity
• Amplified level of conflict
• Poor commitment
• Limited benchmarking
• Limited exploitation of synergies
Dispersed site locations
• Common needs of communities everywhere (i.e. energy,
water, transport)
• Remote locations
• Site construction
• Complex logistics
Uniqueness of schemes
• Highly customized
• Specific materials and components
• Highly specialized subcontractors
• Wide scope of work (design, project management,
manufacturing, assembly)
• Long lead times
General
Characteristics of
Construction
From Operations Management to Construction Management
UCL – The Bartlett Faculty of the Built Environment
SCM Lecture 7
Construction
Company
1
2
n
Project/SiteSuppliers
How construction supply chains work in practice?
Understanding Construction Supply Chains
UCL – The Bartlett Faculty of the Built Environment
Common characteristics of construction supply chains
• Project-based chains
• Specific network design
• Multiple Interfaces
• Broad supplier base
• Fragmentation
• Limited demand visibility
SCM Lecture 8
A long list of problems and a storm of not foreseeable situations coming from supply chain affecting the Project/Site directly!
UCL – The Bartlett Faculty of the Built Environment
Late orders
Non-conformances
Damaged packaging
Incorrect product shipped
EHS&S documentation not adequate
Contractors not well trained
…
Understanding construction supply chains
lack
Operations Management & Supply Chain Management
1. Evolution of product-process concepts;
2. Development of tailor-made manufacturing solutions to
match production strategies;
3. Industry-wide (MTS) companies need to evolve into supply
chain modelling back in 1990’s:
• Value Chain vs Supply Chain
• SCOR
• GSCF
Construction Management & Supply Chain Management
1. Focus on site efficiencies;
2. Temporary view (fixed-term projects) undermining long-
term supply chain strategy;
3. Industry-wide (ETO) companies need to evolve into supply
chain modelling taking into consideration:
• OPP
• Long-lasting production stages
• Unique schemes
SCM Lecture 12
Multiple approaches in the literature helped frame the theoretical and practical problems
Tackling the missing link: leveraging production theory concepts
UCL – The Bartlett Faculty of the Built Environment
1 2 3 4 5TFV
1.1. Production template
• Design
• Operation and Control
• Improvement
1.2 Principles
• Transformation
• Flow
• Value
Lean and Agile Logical Factory Project vs Enterprise Matching Production
and Supply Chain
(Koskela, 2000) (Luhtala et al, 1994)(Naim and Barlow, 2003) (Childerhouse et al. 2003) (Childerhouse et al. 2003)
SCM Lecture
Flows and Interfaces
17
Project/SiteSuppliers
Construction
Company
B A
C
A Enterprise Level -
Project Level
• Information Flow
Information Flow
• Request for Quotation, Request for Proposal, Purchase Order, Supplier Portal, EDI, e-
mails, etc.
Physical Flow
• Materials, equipment, spare parts, contractors, staff, etc.
Financial Flow
• Invoices, wire transfers, credit notes, debit notes, etc.
B Enterprise Level -
Supplier Level
• Information Flow
• Capital Flow
C Project Level -
Supplier Level
• Information Flow
• Physical Flow
Defining logistics flows and interfaces
UCL – The Bartlett Faculty of the Built Environment
SCM Lecture
Problems at the interfaces might be similar or unique - they should be categorized under each one of the flows.
21UCL – The Bartlett Faculty of the Built Environment
- Flow -
Information
and Capital
- Flow -
Information
- Flow -
Physical and
Information
ProblemsProblems
Problems
Positioning the flows at the interfaces to help locate problems
SCM Lecture
Examples of practical problems found in Case Study 1 (Company A)
22UCL – The Bartlett Faculty of the Built Environment
- Flow -
Information
and Capital
- Flow -
Information
- Flow -
Physical and
Information
• Increased RFPs
• Rushed RFPs
• Rework in RFPs
• Poor evaluation of suppliers
• Delayed reply of RFPs
• Rework in RFPs
• Increased Pos
• Rushed Pos
• Rework in Pos
• Expansive supplier
• Delayed approval
process of POs
• PO released to
suppliers prior to
internal approval
• Rework in invoices
• Stressful negotiations
• Reduced economies
of scale
• Delayed payment of
suppliers
• Limited information about
suppliers’ performance
• Limited synchronization with
site scheduling
• Increased transportation
damages
• Poor delivery performance
• Poor quality performance
Positioning the flows at the interfaces to help locate problems
SCM Lecture
Industry feedback helped refine the initial version. Framework currently in application both in BR and UK major players.
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Why the conceptual framework is important?
UCL – The Bartlett Faculty of the Built Environment
1 2 3 4 5Clearly identify the
Parties in a
construction supply
chain
Defines flows and
main points of
contact/friction in
Interfaces
Helps to locate
and position the
problems
Brings a novel and
centered application
of SCM to
construction
Addresses practical
problems
1. Supply Chain Governance
2. Supply Chain Flexibility and Risk Management
3. Performance Management
4. Early Supplier Involvement
5. Category Management
6. Supplier Development
7. Prequalification of Suppliers
8. Supply Chain Strategic Alignment
8 best-practices developed with industry partners to ensure sustainable long-term improvement
SCM Lecture
A particular set of best-practices to be adopted in the long-run is located at each one of the Interfaces.
24UCL – The Bartlett Faculty of the Built Environment
- Flow -
Information
and Capital
- Flow -
Information
- Flow -
Physical and
Information
Positioning the best-practices where the problems happen!
SCM Lecture
Contact
28
Diego Souza
diego.souza@outlook.com
UCL – The Bartlett Faculty of the Built Environment