By Anisa Pinatih
The construction industry now aims for efficient supply chain management to reduce cost, lower greenhouse gases and deliver construction projects faster. The trend is to move towards digitalisation that allows for a collaboration between the planning team, supply chain trade contractors and site management in carrying out procurement, pre-construction and construction activities, including access and egress for logistics movement.
Prefab suppliers, along with the entire manufacture sector, are heading in a similar direction—digitalising their value chain to make their businesses more resilient. In respond to the COVID-19 disruption, some have decided to regionalise their markets in a bid to make the supply chain more resistant to global shocks. Either way, a framework for an efficient supply chain management continues to be sought after by industry stakeholders.
INTERNAL AND EXTERNAL INTEGRATION
It’s a common understanding that profit can be optimised through self-integration within the construction enterprise—during the production plan, purchasing decision and supplier selection. Procurement decision-making, including supplier selection, could use rigorous evaluation criteria to assess the procurement process, operational efficiency, relationship coordination and strategic adjustment.
External integration focuses on supply chain cooperation and information communication. What suppliers and contractors often seek from this is a reasonable model of cost-sharing, as well as risk and benefit distribution. Real-time communication also aims to reduce delay and waste, ensuring that all participants in the supply chain can get real-time updates to better help each other to achieve profit objectives and sustainable economic development.
THIRD PARTY LOGISTICS
To assist with the logistics, researchers at Nanjing Tech University mentioned that a contractor could employ third party logistics professionals. This can help to centralise the control and management of prefabricated components from multiple suppliers and avoid the inconsistencies caused by the producer’s separate responsibility for the transportation of their own products.
Subsequently, external integration between third-party logistic professionals and suppliers can optimise delivery time and production cost. This creates a logistics management platform that allows suppliers and contractors to share information, thereby avoiding uncertainty and reducing operating and total supply costs.
RADIO FREQUENCY IDENTIFICATION (RFID)
Automated data collection technologies, such as Radio Frequency Identification (RFID), promise efficient tracking of components in construction supply chains. This will avoid problems commonly encountered in manual material tracking methods such as late deliveries, missing components and incorrect installations.
RFID can automatically identify tags attached to the components’ panels and monitor them throughout the supply chain. RFID technology that is integrated with GPS will be used to track their location as well. RFID may be fully- or semi-automated. In the semi-automated process, the RFID tags that are attached to the panels are individually scanned by the workers who carry handheld readers. Either way, RFID minimises human intervention and thus avoids errors.
CASE STUDY: PREFAB CONCRETE EXTERIOR WALL PANELS
Researchers at the Department of Civil Engineering, Istanbul Technical University, compared cases that are handled with and without RFID in a supply chain of prefabricated concrete exterior wall panels. The 3,500 pieces of prefabricated concrete panels were produced for a 126,000-square-metre residential building project. The comparison is as follows*:
|Number of incorrectly shipped or identified pieces
|Number of missing panels
Table 1: Comparison of the number of errors
|Number of savings
|Unit price (US$)
|Total saving (US$)
|Incorrectly shipped panels
|Incorrectly transferred panels
Table 2: Cost savings
According to the simulation results, incorrect shipments and missing panels were eliminated by the utilisation of RFID technology. Cost savings in the RFID cases were observed due to:
- The reduced number of missing panels, and thus the reduced number of remanufactured panels;
- The reduced number of incorrectly delivered/identified panels, and therefore, the decreased number of transfers; and
- The reduced duration of some activities, resulting in decreased labour costs.
The use of automated data collection technologies does not only predict cost savings, but also map out the error locations in the supply chain. Knowing this can help stakeholders determine and analyse not only the benefits and related cost savings for each party, but also a cost sharing ratio for distributing the technology investment cost among parties. Ultimately, this will improve the external integration and create a logistics management system that benefits both contractors and suppliers, as well as other players along the value chain.
*Source: Demiralp, G., Guven, G., & Ergen, E. (2012). Analyzing the benefits of RFID technology for cost sharing in construction supply chains: A case study on prefabricated precast components. Automation in Construction, vol. 24, pp. 120-129
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