Review of the Model-Based Supply

Chain Management Research in the

Construction Industry

Aspasia Koutsokosta Civil Engineer, MSc, PhD student at Democritus University of Thrace

Stefanos Katsavounis Assistant Professor at Democritus University of Thrace,

Department of Production Engineering and Management

1

World Academy of Science, Engineering and Technology

ICIEOM 2015: 17th International Conference on Industrial Engineering and Operations

Management, Athens, 20-21 July 2015

Athens, 20 July 2015

Aspasia Koutsokosta Civil Engineer, MSc, PhD student at Democritus University of Thrace

Dept. of Production Engineering and Management

Stefanos Katsavounis Assistant Professor at Democritus University of Thrace,

Dept. of Production Engineering and Management

Goals

• Provide a broad knowledge of models for Supply Chain Management in the

construction sector: modeling approaches, contextual factors, applicability,

common tools for modeling and problem solving

• Foster understanding of an emergent, multi-disciplinary and multi-faceted

research field which merges construction management, supply chain

management, logistics, decision-making and modeling

• Interpret, rationalize and compile the available body of knowledge which spans

qualitative and quantitative model-based research

• Highlight the role of modeling in improving the performance of the

construction sector

• Facilitate the implementation of Supply Chain Management in construction

through structured methods and Operations Research tools

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Contents

• Construction Supply Chain Management terminology

• Peculiarities and performance problems of the construction industry

• Construction Supply Chain Management as a remedy

• The role of modeling in Construction Supply Chain Management

• Conceptual models

• Optimization models

• Simulation models

• Assessment of the model-based literature

• Conclusions and future research

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Construction Supply Chain (CSC)

Construction Supply Chain Management (CSCM)

• CSC: network of organizations and

relationships (client/owner, designers,

contractor, subcontractors and

suppliers) including information flows,

capital flows and material flows

• CSCM: management of the total flows

and integration of key construction

business processes, from the demands

of client, design to construction

• SCM originated in the manufacturing

industry during 1980’s encompassing

logistics, Just-in-time principles, total

quality management, etc.

• Benefits: cost and time reduction,

performance improvement, added

value

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Source: Pryke (2009)

Construction peculiarities and problems

• Criticism for high fragmentation, large quantity of waste, low productivity,

cost overruns, schedule delays, economic uncertainty, opportunism,

temporary and adversarial relationships

• Problems stem from CSC interfaces and can be ascribed to:

inadequate conventional management practices

peculiarities of the construction industry

• Fragmented and temporal nature of CSCs, traditional project-based approach

of construction management instead of supply-based

• Features of construction: uniqueness, the immobility and size of construction

projects, the decentralized and discontinuous production which is confined to

shifting sites, the creation of temporal multi-organization networks, etc.

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The role of modeling in CSCM

• Modeling reduces a complex real-life problem to a more understandable and

manageable problem which can answer the same questions imposed to the

initial problem

• Modeling the SCs is a prerequisite for effective SCM and integration

• Modeling offers valuable analysis tools that help construction managers to

realize opportunities, eliminate bottlenecks and make informed decisions by:

describing and understanding complex CSC systems

structuring and solving decision problems in the CSCM context

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Conceptual models for CSCM (1/4)

Author Title Scope Building blocks/key elements

Cheng et al.

(2001)

An e-business model to

support supply chain

activities in construction

Improving communication, coordination and information management

• E-business infrastructure • Network CSC structure

Lin & Tserng (2001)

A Model of Supply Chain Management for Construction Using Information Technology

Achieving real-time

information and efficient

communication

• Information technology, such as

Internet, intranet, extranet,

mobile devices, bar coding,

scanning and XML

Love et al. (2004)

A seamless supply chain

management model for

construction

Achieving inter-organizational

collaboration and integration

of design and production

within a construction project

• Horizontal organization project structure

• Cohesive project team with shared responsibilities and joint planning

Fengyu &

Shengyue

(2006)

The Research on the

Application of Supply

Chain Management in

Construction

Solving problems of stock

management, procurement

and information interchanging

in the Chinese construction

industry

• Strategic partnering relationships

• Internet-based information management platform

• Third-party logistics

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Conceptual models for CSCM (2/4)

Author Title Scope Building blocks/key elements

Du

(2006)

A 3D communication

model for the

construction supply

chain - a route to

construction industry

integration

Restructuring the CSC with

respect to its

communication network

to achieve real integration

and communication

• Information and communication hub as a 3rd party connecting directly with every CSC member

• communication network relatively

independent of the CSC

Vaidyanathan

& Howell

(2007)

Construction Supply

Chain Maturity Model –

Conceptual Framework

Providing a roadmap to

realize the benefits of

CSCM and presenting the

current status quo of a

firm as well as possible

improvement steps

• Four maturity levels of CSCM

against assessments of process,

technology, strategy and value

• Maturity along functional, multi-

project and multi-firm integration

London

(2008)

Industrial organization

object-oriented project

model of the facade

supply chain cluster

Describing structural and

behavioral characteristics

of supply chain

procurement

• procurement modeling across CSC

• object-oriented modeling

• industrial organization economic

theory in order to model

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Conceptual models for CSCM (3/4)

Author Title Scope Building blocks/key elements

Meng et al.

(2011)

Maturity Model for

Supply Chain

Relationships in

Construction

Measuring and improving

the relationships between

the key partners of CSC

• Four maturity levels: price competition, quality competition, project partnering and alliance

• Assessment criteria of procurement, objectives, trust, collaboration, risk allocation, problem solving, etc

Khalfan et al.

(2011)

Supply Chain Capital

in Construction

Industry: A

Conceptual Model

Creating a learning supply

chain that manages

knowledge in CSC on long

term basis and achieving

an integrated CSC

• Knowledge management • Supply chain capital resulting from

many years of collaboration, knowledge and experience

• Trust, commitment, collaboration

Yan &

Zhangong

(2012)

Study on the

Information

Technology-Based

Lean Construction

Supply Chain

Management Model

Solving problems of high

procurement and

inventory costs and

ineffective information

exchange in CSC

• Lean thinking adoption

• Information Management Platform

with several sub-platforms based on

internet/ intranet

• Good quality inter-company

relationships among CSC parties

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Conceptual models for CSCM (3/4)

Author Title Scope Building blocks/key elements

Aloini et al.

(2012)

A conceptual model for

construction supply chain

management

implementation

Facilitating the

implementation of SCM to

construction and foster

understanding

• Building elements characterizing the adoption and implementation of CSCM: antecedents, approaches, benefits and contextual factors

Thunberg &

Persson

(2013)

A logistics framework for

improving construction

supply chain performance

Reducing costs and increasing productivity by mapping material and information flows between CSC members

• Builder´s SCOR model: adaptation of Supply Chain Operations Reference Model

• CSC performance measurement

Koçtaş & Tek

(2013)

Construction Supply Chains:

A proposal to develop a

new conceptual model

Adapting SCM concept to construction with focus on the information flows between CSC actors

• Principles of lean thinking • Information sharing • open information channels

Dike &

Kapogiannis

(2014)

A conceptual model for

improving construction

supply chain performance

Improving information exchange and collaborative working practices in CSC

• Building Information Modelling (BIM)

• Collaboration principles

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Remarks on qualitative models

• 57% (8 models) focus explicitly on information flows and aim to improve the

communication and coordination between CSC members

• 14% (2 models) refer to the progression of SCM adoption in construction in a

maturity scale

• Other issues addressed: structural and behavioral aspects, knowledge

management, mapping of flows

• Descriptive and not specific enough to be tested by means of case studies

and pilot projects neither can be easily expressed from a quantitative point

of view

• Conceptual frameworks that contribute adequately to theory building in

CSCM rather than soft OR approaches for practical decision problems

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Simulation models for CSCM (1/3)

Author Title Performance metrics and alternative scenarios

Simulation approach or software

Hong-Minh

and

Strohhecker

(2002)

A system dynamics model

for the UK private house

building supply chain

Impact of re-engineering policies on demand amplification

System dynamics based on Inventory and Order Based Production Control System models

Walsh et al.

(2004)

Strategic Positioning of

Inventory to Match Demand

in a Capital Projects Supply

Chain

Impact of inventory

management and positioning

scenarios on the delivery time

SIMPHONY

Sobotka and

Czarnigowska

(2005)

Analysis of supply system

models for planning

construction project logistics

Impact of outsourcing logistics

on material acquisition costs

not defined

Xue et al.

(2005)

An agent-based framework

for supply chain

coordination in construction

Impact of interactions among agents on several quantitative and qualitative attributes for supply chain coordination

multi-agent simulation and multi-attribute negotiation protocol and utility theory, ZEUS agent building toolkit

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Simulation models for CSCM (2/3)

Author Title Performance metrics and alternative scenarios

Simulation approach or software

• Vidalakis

and Tookey

(2006)

• Vidalakis et

al. (2011)

• Conceptual functions of a

simulation model for

construction logistics

• Logistics simulation

modelling across

construction supply chains

Impact of demand levels and vehicle fleet size on logistics costs (inventory and transportation costs)

discrete-event simulation modeling, Simul8

Hamzeh et al.

(2007)

Logistics Centers to Support

Project-based Production in

the Construction Industry

Impact of logistics centers and decentralized supply systems on material management costs

not defined

Voigtmann and

Bargstädt

(2010)

Construction Logistics

Planning by Simulation

Impact of alternative outfitting processes, such as diversified equipment, on logistic time and construction time

Tecnomatix Plant Simulation framework, Simulation Toolkit Shipbuilding

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Simulation models for CSCM (3/3)

Author Title Performance metrics and alternative scenarios

Simulation approach or software

• Cheng et al.

(2010a)

• Cheng et al.

(2010b)

• A service oriented

framework for construction

supply chain integration

• Modeling and monitoring

of construction supply

chains

Impact of information sharing and system integration factors on supply chain integration and collaboration

service-oriented framework (open standards, open source software and SCOR modeling framework), named SC Collaborator

• Ebrahimy

et al.

(2011a)

• Ebrahimy

et al.

(2011b)

• Simphony Supply Chain

Simulator: a simulation

toolkit to model the supply

chain of construction

projects

• Simulation modeling and

sensitivity analysis of a

tunneling construction

project's supply chain

Impact of several scenarios for production, storage, and quality control on the bullwhip effect and the duration of a tunneling project

SIMPHONY

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Optimization models for CSCM (1/3)

Author Title Objective and variables Analytical approach and method/ software

Xue et al. (2007)

A Two-Level Programming

Method for Collaborative

Scheduling in Construction

Supply Chain Management

• Maximization of profits • Indicative variables:

construction duration and materials lead time

• two-level nonlinear integer programming model

• simulated annealing and discrete search algorithm

Jian-hua and

Wan (2010)

Time-cost trade-off problem

in construction supply chain:

A bi-level programming

decision model

• Maximization of the

expected profit

• incentive intensity (money

unit/ per unit time) and

project’s duration

• two-level programming

model

• problem-specific

heuristics

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Optimization models for CSCM (2/3)

Author Title Objective and variables Analytical approach and method/ software

• Xu et al. (2011)

• Xu et al. (2012)

• Integrating Safety-Stock

and Crashing Decisions

for Recurrent Projects

• Project-driven supply

chains: integrating safety-

stock and crashing

decisions for recurrent

projects

• minimization of safety-stock and project crashing/delay cost per unit of time for recurrent projects subject to random material delays

• safety-stock decisions in material supply chains and crashing decisions in projects

stochastic multi-stage optimization model

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Optimization models for CSCM (3/3)

Author Title Objective and variables Analytical approach and method/ software

• Said and El-Rayes (2010)

• Said and El-Rayes (2012)

• Optimizing Material

Logistics Planning in

Construction Projects

• Optimal Material

Logistics Planning in

Congested

Construction Sites

• minimization of site logistics costs and minimizing of project criticality (by shifting noncritical activities to exploit interior space for material storage)

• material supply, interior storage plan, exterior layout, shifting of non-critical activities within float

• multi-objective optimization model

• genetic algorithms

Xu and Wei (2013)

Production-distribution

planning of construction

supply chain

management under

fuzzy random

environment for large-

scale construction

projects

• minimization of production and transportation costs and minimization of storage, transportation, and inventory penalty costs

• material quantities supplied from production sites to warehouses and from warehouses to concrete mixing plants

• two-level fuzzy optimization model

• artificial bee colony algorithm based on a fuzzy random simulation/ MATLAB

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Remarks on quantitative models

• 64% (9 models) are simulation models:

Main approaches: discrete-event simulation modeling, multi-agent

simulation or system dynamics

Main goals: investigate the impact of several factors on time and cost of CSC

• 36% (5 models) are optimization models:

Main approaches: mostly metaheuristics (simulation-based optimization) or

mathematical programming

main goal: profits maximization or minimization of costs along the CSC

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Assessment of the model-based literature

• Limited reference to multiple projects, multiple products and flows, predefined CSC

structures, limited reusability

• Optimization models are single-period or do not incorporate a time dimension and

simulation models describe only parts or individual relationships of the entire CSC

• Quantitative models do not easily go beyond the definition of the model (numerical

examples, interpretation of results, validation, sensitivity analysis, exhibition of

modeling techniques, justification of the algorithm used and the software selection)

• No explicit indication of the entity/ individual who manages and mobilizes the CSC,

nor of the final product of the CSC (entire project or only a construction material)

• Quantitative models fall under the hard Operations Research (OR) domain, but

qualitative models do not easily relate with soft OR approaches

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Conclusions and future research

• Need to manage CSCs end-to-end from a multi-dimensional, system-wide and

multi-project perspective with long-term implications

• Need to combine the supply demands of several projects, exploit project

similarities and use structured pools of subcontractors and suppliers in future

models

• Need to develop models that either are reusable or integrate flows of

construction processes across several projects and periods of time

• Focus on robust optimization models with dynamic nature

• Careful adaptation of SCM models from other industries with focus on ad-hoc

analytical models capturing the intrinsic construction features

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