Issues Faced by Construction Industry in Adopting Supply Chain Practices

OPERATION
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................7

TOPIC: Discussion on the issues faced by construction industry in adopting supply chain
practices developed in manufacturing sector? How these difficulties can be overcome by the
construction industry.
INTRODUCTION
Supply chain management (SCM) can be defined as the management of flow of goods
and services. Most of the industries are implementing SCM practices in order to improve
efficiency level of operations. Supply Chain Management has supported companies in enhancing
their profitability and productivity to a great extent. There are many automotive industries and
manufacturing firms that have introduced a significant way of working in partnership with
suppliers (Christopher, 2016). Present study will discuss development and application of SCM
techniques adopted by manufacturing industry. It will describe the issue faced by construction
industry in adoption of SCM practices and the way these issues can be resolved by implementing
supply chain principles.
MAIN BODY
Issues faced by construction industry in adopting supply chain practices
Previous studies show that construction industry is facing many issues related with flow
of material. Due to these problems, cost of the operations get increased in this sector.
Construction sector is unable to implement the SCM principles (Dubey and et.al, 2017).
One of the major factors that dominate the construction industry is that unique nature of
products. In such condition construction firms have to make connection with different suppliers
in order to meet requirement of project. This is the main reason that construction industry has to
invest a lot of amount in resources. Furthermore, construction industry has application of low-
bid- win tendering. Their focus is on cost reduction and thus, they fail to focus on innovation
(Govindan and et.al, 2017).
In addition, demand of each consumer in construction industry is different from others
and thus, management of inventory is a difficult task. As each project has unique characteristics,
thus, uncertainties arise in each project. Statistical records show that holding cost of this sector is
20-40% of average inventory value. Due to uncertainties in demand, cost of this industry gets
increased and in order to manage this cost, companies have to reduce quality of services so that
they can complete the construction project within given budget (Gattorna, 2017).
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