1. Executive Summary
Supply Chain management is the network of activities where the raw material is purchased then transformed into the usable goods and then finally delivered to the customers through the distribution systems. Schriskoope is the Holland based fresh chicken supply Chain Company and has approximately two hundred employees. Holland is one of the biggest producers of the poultry in the European countries. They import the butchered chicken to the various parts of the countries. There are few issues that are faced by the company like the poor quality of the end products, high competition, supply and demand not able to meet and issues related to the 3PL and since the competition is growing, it is important to take actions on the issues. The goals of the company include understanding the strategies, fighting the competition, reduction of cost and also the logistics to be managed.
The report consists of the evaluation process of the performance of the supply chain management. The performance can be evaluated by the company with the help of quantitative and qualitative measures. The evaluation will help the supply chain company to overcome the poor performance. The performance measurement criteria consist of the customer satisfaction, supplier performance, integration of material flow and the information. The performance is also evaluated on the basis of finance of the company as well. It is analysed that the performance evaluation helps in further improving the strategies of the company for the better competitive advantage.
The report also analyses the strategies that the supply chain Management Company should adopt in order to perform better and improve continuously in the process and procedures of the supply chain management. The report gives the structure, benefits and the limitation of different strategies that can be used and applied to the company’s supply chain to improve the quality of the end product and services which will definitely increase the profitability of the company. The strategies explored in the report are lean and agile strategy which analyses the lean management followed by agile management. Next is a logistics strategy where the points are explored on logistic management that the company should apply. The purchasing and the procurement strategies as well as the marketing strategies for the supply chain are also analysed in the report.
It is vital for the company to have sustainability in the global supply chain as it will help in maintaining the competitive advantage. In this report the factors are considered that will help the supply chain in developing and maintaining the sustainability of the company.
Schriskoope is the Holland based fresh chicken supply chain Management Company. The company gets its chicken from the polish farms. Holland is one of the biggest exporters of meat products in the neighbouring European countries. The company had issues related to the logistics, cost of poor quality products and supply and demand of the products. The report is the analysis of strategies of the supply chain management and also the factors that can help in developing and maintaining the sustainability of global supply chain.
3. Structure and the Measures of the Supply Chain Management
3.1 Structure of the Supply Chain Management
Supply Chain management is the integration of supplier, manufacturer, distributor and the customer. The supplier sends the raw material to the manufacturer who in turns manufactures the products and then sends the delivery to the customers.
Holland is one of the biggest suppliers of poultry in the European continent and the production and processing of the poultry is one of the largest. (Green, N. M. (2004). The market of the poultry is so big that they export the poultry to the neighbouring countries like Germany and Britain and some of the other European countries. (Henry & Rothwell (1995). Poultry productions have gone up in the Holland as the consumption of beef has gone down in the European Country. The number of small manufacturing enterprises (SME) is still large in number throughout the supply chain. The firm is considered as small manufacturing enterprise if the number of employees is less and therefore the number of SME are more as they have around or more 100 employees like Schriskoope as it also have 200 employees working twenty four hours. The competition in the market is high as there are large enterprises that have almost 90 percent market share in Holland. The poultry market in Holland has more profit as compared to any other meat. (Beamon, BM (1998). Also the raw material in the poultry processing is cheaper. The size of the enterprises is small yet the number is more. Therefore, the competition in the market is tough. (Wijnands, Meulen & Poppe (2007). Also, the company is providing fresh chicken to the market hence the poultry sold is comparatively more as it is fresh. It is very important for the supply chain management to have their own transportation so that they do not rely on the outsourced companies as is the case with Schriskoope. The supply chain management is based on the demand management. (Buhr, B. L. (2003). As mentioned earlier, the demand of the poultry is high therefore it is vital for the company to cope with the demand and supply management in order to sustain in the market.
3.2 Measure the Performance of the Chicken Supply Chain management
Schriskoope can evaluate the Supply chain performance in terms of Quality and quantity and following parameters can help in evaluating the supply chain performance for the company:
3.2.1 Qualitative Measures would include the following:
Satisfied Customers: Customer plays an important role in the supply management as the end product goes to the customer. They should be happy and satisfied with the end product and also the services. (Chen, IJ & Paulraj, A (2004). The customer satisfaction can be divided into three elements like before transaction satisfaction, satisfaction at the time of transaction and satisfaction after the transaction. The customers who are satisfied will give more business.
Integration of material flow and the information: In the company the supply chain management should be able to communicate the information correctly and also the transportation of materials should happen smoothly. (New, S. (2004). The information exchanged should be accurate, adequate and timely.
Risk Management should be effective: another way in which the company can evaluate the performance is by the risk factors minimization as there are number of risks involved in the supply chain. If the risks are managed properly, they increase the sustainability of supply chain in the market. (New, S. (2004).
Supplier Performance: it is important for the company to have the supplier who is efficient and have good time management. Apart from this the relationship between the supplier and the company is also important. (Sadler & Hines (2002). It is important to have good relationship between the chicken supplier and the chicken processors.
3.2.2 Quantitative measure would include the financial and non financial performance measures like:
The non financial measures will include the level of customer service, level of inventory and utilization of resources. (Slone RE. (2004). Also the waste management is one of the evaluation factors in the manufacturing industry and especially in chicken supply chain.
The financial measures check the performance of the supply chain on the basis of maximum profit and minimum loss. (Henry & Rothwell (1995).
4. Supply Chain Improvement Strategies
It is important for the supply chain to produce and process the fresh chickens at the right place and at the right time in order to gain the competition advantage and also it is important for the survival therefore there is a need of strategies and their application. (Chopra S, Meindl P (2007). Once these strategies are understood by the company then only the application of supply chain will be successful. (Stacey, R.D. (2000). The strategies that can be applied to improve the supply chain in the Schriskoope include the following:
4.1 Lean and Agile Strategy to the Supply Chain: Leanness is used in the supply chain in order to increase the performance and improve the performance and also helps in competitiveness in the market. However agile is the next step to the leanness, which needs to be applied after the lean. (Askin & Goldberg (2002). The lean and agile together form leagile supply chain where they both are beneficial to the company and especially in the chicken supply chain as all the parts of the chicken can be used. The wastes of the lean production are essential for the agile production. Therefore, both of them clubbed together can be capitalised.
- The application of lean and agile in supply chain of the company will reduce the work time as the company will pay more attention to the value added work and less to the non value work.
- The quality of work is increased as the wastage is less and the value added activities are maximised.( Cousins, P., Lamming, R., Lawson, B and Squire B. (2008).
- It also facilitates the continuous improvement of the quality of product and services.
- Competitive advantage is sustained as the application of agile and lean will increase the productivity of the company.
- The training cost will be high.
- For lean and agile application, it is important to have skilled labour.
- Efforts for improvement have to be made at all level in supply chain. (Towill & Mccullen (1999).
4.2 Logistic Strategies: The key to success of the supply chain is directly related to the logistics of the company. Therefore it is vital for the company to have the logistic strategies in place. It is important for Schriskoope to make the decisions strategically on the logistics. The strategies need to be planned on the basis of distribution centres, transportation modes that the company will use. (Cousins, Lamming, Lawson and Squire (2008). The smaller companies like Schriskoope uses the third party logistics as it is more cost effective. It is important to choose the correct 3PL as logistics is the important part of the supply chain. If required, the company can change the outsourced logistic company and can contract the new logistic company. The company should check for the facilities offered by the logistic company, technological advancement of the company, the company’s storage space and also if the 3PL is financially sound.
- It is good for the smaller enterprises to have 3PL as it eliminates the investment in the logistics.
- Access to the resources, processes and technology increases.
- Customer satisfaction is increased.
- Logistics cost as well as the logistic operations can be identified clearly.
- With the 3Pl there is a possibility that they are flexible to the changing market trends.( Lummus, Krumwiede & Vokurka (2001).
- Because of the distance between the clients, the human touch is missed.
- It is the possibility that there is the difference in opinion and perception of the third party provider.( Heizer, J & Render, B (2005).
- Logistic functions are not controlled.
4.3. Purchasing and Procurement Strategies: Purchasing and procurement plays a vital role in the supply chain. The reduced rates of the raw material can increase the margin of profits in the end product that is chicken. If the fresh chickens are purchased as considerable prices, it is apparent that the profit will be more and this will increase the competitive advantage of the company. Also, it is very important to have the clear objectives for the purchasing and the procurement. (Lummus, Krumwiede & Vokurka (2001). Purchasing is related to the raw material purchase from the farmers and the procurement is related to the outsourcing companies. Total Quality Method (TQM) should be adopted by the company here the vendor provide the services and the products with zero defect and error. (Hitt M, Boyd B, Li D. (2004). The purchasing department should have a mix of farmers who supplies chicken so that the optimization is more.
- If the purchasing and the procurement strategies are followed, it is apparent that the operation cost will reduce as the purchase of the raw material will be at low price.
- The service quality is improved if the strategies are followed.
- The supplier relationship with the company will be stronger if both the departments will work effectively. (Hitt M, Boyd B, Li D. (2004).
- If the purchase strategies are wrong then the possibility of increased inventory will increase. In the industry of fresh chicken the company cannot afford to have more inventory as it will affect the business and the profits. (Wagner & Kaufmann (2004).
- Similarly, the procurement department made the contract without evaluating the third party can bring trouble to the company.
4.4 Marketing Management Strategies: The marketing strategies of the company should include the customer value, customer value delivery and customer value delivery process. (MacIntosh and MacLean. (2001). The strategies should include the understanding of the customer and their needs and requirements.
- Brand recognition is developed.
- The company will have a roadmap to reach to its targeted customers.
- The challenge is to understand the customer’s requirements and delivering the products with the consistency.
- Another limitation is the delivery of fresh chicken as requested by the customer; this could be affected if the logistics are not in place.
5. Sustainability of Global Supply Chain
The globalization had affected the ways in which the companies were managed strategically and also operationally. Though the globalization of supply chains has happened, the risks and challenges have emerged for the same. The risk starts at the poor quality of the product and ends at the supply distractions. (Meyer & Cramon-Taubadel (2004). To add to these risks are the political, social and the environmental issues which arises due to the work process. The issues and the impacts that are considered vary from waste reduction, recovery of the products, working conditions, child labour. (Handfield, Walton, Sroufe & Melnyk 2002). The companies that fail to addresses these social and environmental issues rendered themselves in operational risks. (Samaranayake P (2005). It is important to have a global supply chain in the company that can sustain the competition in the market. The sustainability can help the company in responding to the demands of the customers, can face any supply distraction and can mitigate the risks. In order to build a sustainable supply chain it is important to follow the framework that comprises of three steps. The steps involved are identification of the motivators, assessment of levers and improvement of practices. (Corbièr-Nicolliere, Ferrari, Jemelin, & Jolliet (2003).
Identification of Motivators: It is important to identify and address the social, political and environmental issues in the company’s supply chain. Once these issues are understood, it will be easy to set the goals and prioritize the work. The reasons that are cited are firstly the customers, as it is imperative for the company to retain the customer by providing the end products on time and of good quality. (Lee HL. (2004). Second is the compliance that is understand and following the rules and regulations and also the government laws. Third is the cost that is maximum productivity by correct purchasing, mitigation of risks and the efficiency to perform. Fourth is the competitive advantage, in order to have sustainable supply chain, it is imperative to have a competitive advantage over the other competitors. (Davis & Spekman 2004). Fifth is the conscience that is the company should follow the values and core principles of the company.
Assessment of Levers: There are total seven levers that can help the company to develop and maintain a sustainable supply chain. (Wawszczak, Hermans & Cesati, (2003). These levers are divided into internal and external levers. The internal levers include purpose, policy (the policies should be well documented and communicated widely to the employees) and people and the external levers include peer, partners, public policies and the power.
Improvement of practices: this will include code of conduct establishment, getting the third party certification, selection of the suppliers and monitoring of the suppliers.
Below is the figure showing the practices that are used in building and maintaining the sustainable supply chain.
Figure 1. Developing a Sustainability of Global Supply Chain
Creating the expectations meaningfully: It is vital for the company to enhance the capability of the company in order to foresee the issues and the challenges which may arise in the supply chain. (Manning, Baines & Chadd (2008). This can be done by scanning the issues related to the environment. Also, involve the stake holders while making the code of conducts so that the policies are more enhanced in terms of authority and applicability. It is very important to invite the suppliers to the company and have conversations with them. Try to figure the cultural and social issues if any with the supplier.
Selection of the Supplier: it is important of the supply chain to have the suppliers on the list. Also, the company should less rely on them and concentrate more on the consultation of the supplier and also the development. (Fisher, M. L. (1997). It is imperative for the company to have detailed key performance indicators in consultation with the supplier. These KPI’s should be benchmarked to the suppliers and also internally in the company for later scrutiny.
Supplier’s Evaluation and the Development: It is important to inform the suppliers of the expectations that is whether they are met or not. (Delgado, Narrod & Tiongco (2008). The suppliers should be evaluated on the basis of meeting the deadlines and processing the work.
Learning and Improvement: development of transparency and also the accountability is important in the supply chain. The company’s performance should be reviewed on the basis of practices of management and also the expectations. (Godfrey PC, Hill CWL. (1995). It is imperative for the company to continuously improve their supply chain practices through the communication and taking the quality measures.
In the above report, the analysis has been made on the strategies and there benefits and limitations. It is analysed that it is vital for the company to have the good strategies if they want to maintain their sustainability in the competitive market. The approaches to the application of the strategies are in concern with the chicken company that is Schriskoope. It is analysed that the company should use these strategies in order to maintain and improve the performance of the supply chain and also develop and maintain the sustainability of the supply chain. If these factors and approaches are applied by the company, they would be able to reduce the cost of the productivity and also meet the customer requirements. Company will also be able to enhance the logistics for the company and for the distribution system. The strategies for the operations will also help in the supply and demand management.
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Supply Chain Management
Supply Chain Management is responsible for developing partnerships and relations that are reliable between the stakeholders and the suppliers of the organisation. It can be said that Supply Chain Management (SCM) is responsible for improving the visibility and velocity of inventory in relation to advancement in the construction projects (Jap, 2001, pp.10). With appropriate application of methods of SCM, organisations are able to achieve benefits both in the short and long terms. A number of studies have proved that the correct tools of application of SCM are responsible for providing 10% enhancement in the annual turnover of an organisation (Jap, 2001, pp.19).
1.1 Research Background
SCM has flourished in the realms of manufacturing having its origin from production that is just in time as well as logistics. In current times, SCM is the representative of a concept of autonomous management though logistics still holds dominance (Akintoye et al., 2000). The issues are perceived and sorted in the perspective of Supply Chain with the consideration of the interdependence that is existent in Supply Chain. SCM today has been an accepted phenomenon that is widely applied across all industries starting from various industrial manufacturing sectors, to retail and even software industry. Construction industry is one such industry which has picked up this practice a little late .However, construction happens to be one of the most booming sectors in UAE and some of the most astonishing buildings and man made wonders like the Burj Dubai, the underwater luxury resort of Hydropolis, various man made islands, indoor ski resorts and breathtakingly large malls are found here. But the SCM practices were not known and applied in this country even in the late 1990’s. So it becomes an extremely important research topic how UAE metamorphosed itself into one of the most prominent building and engineering nations in such a short period of time and what exactly is the scenario of SCM practices in the construction sector in this country.
Typically, SCM for construction based projects includes architects, engineers, primary and sub contractors, supplier of materials who get together to build a single project for the client. The complex concept of Supply Chain has been characterised by means of short term relations that are adversarial and driven by a bidding process that is competitive. Construction based SCM extends focus upon the strategies related to lean construction that include evaluation of suppliers, purchase that is just in time, selection of sub contractors and their relationship management, acquisition of equipments, sharing of information and management of project quality.
The construction industry in the United Arab Emirates initially adhered to the traditional method. With the huge development that took place in the last few years, the industry was successful in implementing newer concepts along with inclusion of newer technologies. There has, however, been inadequate research in the application of SCM in the construction industry of the United Arab Emirates (Fernie and Thorpe, 2007). In order to fill this gap and also have knowledge regarding the implementation barriers. In the United Arab Emirates, awareness is required for implementation of SCM related practices. Such effective and appropriate implementation requires the identification of the practical benefits as well as the barriers in the industry (Titus and Brochner, 2005, pp.71).
SCM refers to the classification of processes and flows that are taken into account for meeting all the requirements specified by the client. A number of stages are taken into consideration for the process of decision making and subsequent implementation of the processes (Saad et al., 2002). In general terms, Supply Chain encompasses the producers and suppliers; however, there is dependence on the retailers, consumers, logistic operations and so on. So it can be summed that stakeholders are also included in the process of Supply Chain.
The method of competitive tendering is the core of the construction industry. SCM was initiated and then developed successfully in the industry of manufacturing. The primary reason for implementation of SCM was for the purpose of regulation of materials. The most important decisions related to SCM can be categorised as the supply chain related business process, the supply chain related management component and the supply chain related network structure. For successfully meeting the requirement of SCM, the construction industry of the United Arab Emirates needs to implement a number of steps with the effective SCM integration to the already existent systems (Davis, 2008). It is not always easy to implement SCM in any industry unless a proper structure prevails in the organisations. SCM may face hindrance in the form of opinion, raw or obsolete information and details pertaining to the process of SCM which lead to disparity in understanding the client specification (Jap, 2001, pp.19).
The robust nature of the Chain of supply was identified with the design of a Building Management System that is sophisticated with numerous points of monitor and control. In recent times, the bigger establishments offer continuity in the realm of construction with more interest in building relations that are beyond the suppliers in the first tier (Tah and Carr, 2001). Integrated teams of supply are applied in the description of an integrated total supply chain that involves project delivery. This encompasses the primary contractor, sub contractor, designers, facility managers, suppliers and others.
1.2 Research Aims and Objectives
The overall aim of the undertaken study is to effectively and efficiently understand domain of good Supply Chain Management practices pertaining to the construction industry in general and the papers that are relevant to the study on the application of SCM in the construction industry of the United Arab Emirates which has helped in shaping the country into one of the most prominent of nations in the world with significant construction achievements in the recent years to compete with the best structures in the world .
The objectives pertaining to the research has close association with the problem statement and need to be summarised which can be achieved by means of the study undertaken. The objectives of the undertaken study are specific in nature which will effectively break down the parts in general and analyse the different research problem aspects. The objectives are also instrumental in clearly specifying the intend of each stage that would be followed in the following study.
The objectives of the study include the following:
To review the significance of SCM in modern times.
To identify the significance of SCM in the construction industry with special emphasis on the United Arab Emirates
To review evidence that would be beneficial to provide direction to the construction industry pertaining to waste management and green construction practices.
To make appropriate recommendation for practice and research in order to understand the effectiveness of SCM in the construction sector of the United Arab Emirates so that in the future more economic, environmentally sustainable and faster construction procedures are followed.
To inform regarding policies and practices that are pertinent for SCM in The UAE and thereby understand the current gaps or lacking which may be improved by definite legislative measures by the government
1.4 Research Rationale
The undertaken study will make a systematic review of relevant literature which relates to the application of SCM in the construction industry of the United Arab Emirates. In general terms, SCM refers to the management related to the goods flow. This includes storage and movement of raw materials, the inventory that is included in work in progress and the final products right from the origin point to the consumption point (Vrijhoef and Koskela, 2000). There exist a number of networks, business nodes and channels that are inter connected and are involved in providing services and products that are required by the ultimate consumers on the process of Supply Chain.
SCM refers to the designing, planning, executing, controlling and also monitoring of the activities related to supply chain having the objective which involve net value creation, building of an infrastructure that is competitive, leverage of global logistics and synchronisation of demand and supply with performance measurement on a world wide scale (Cooper and Lambert, 1997).
SCM draws immensely from areas involving operations management, procurement, logistics, and information technology and so on with the inclusion of an approach that is integrated. Supply Chain is applied in the description of the interconnected hierarchy existent in supply related contracts that is required for sourcing the components that are included in the process of construction (Wandahl and Bejder, 2003). SCM involves proper understanding of the segmentation and tracing of the services and products, people, organisations, activities, logistics, resources and information that are effective in transforming raw materials into products that are complete and fit to serve the purpose.
Also the various systems of procurement place the different elements related to SCM with diversified organisations and disciplines. Performance and responsibility gets cascaded down the chain of supply to the different suppliers who are otherwise not known to the management belonging to the higher strata of the chain.
1.5 Problem statement
A significant problem of the industry pertaining to construction states that the first two tiers of the chain of supply include agreements that are fairly onerous as there is development in the chain which results in the decrease of the contractual liabilities till the suppliers at the other end of the chain do not lock in (Wong, 1999). Unlike the industry of automotives, there exists a peculiar difficulty in the construction industry which states that each building is unique. The industry effectively contracts and expands which acts as a significant regulator of the economy widely (Wang et al., 2007). The key pertaining to the chain is provision of a strategy that is aligned with the program of the project. This is initiated in the stage of design and scopes the work in packages. Evaluation is done early reliant on feedback from the chain result in huge benefits in terms of value and cost (Xue et al., 2007). Capacity and capacity related to production in the market that has control by demand and supply has significance in order to avoid the bottlenecks of the program. For example, shortage of materials like steel ideally should encourage the designers to take into consideration a frame made of concrete. There are many new age construction materials and techniques which are being used by the architecture and engineers to bend a way across a wall of difficulties and limitations to improve upon the construction practices and challenge the forces of nature like gravity ,earthquake ,wind and erosion.
2. Literature Review
2.1 SCM - An Overview
The competitive scenario in the global market has given way to an increasing significance to SCM (SCM). It is considered to be a crucial medium through which firms can attain competitive advantage in a business environment (Jacobs, et al. 2009). The evolvement of the SCM took place in the late 1980 in a manufacturing company, which gained momentum with a widespread usage in the 90’s. The traditional term used was logistic. While logistics is restricted within the boundaries of an individual firm, supply chain refers to the combined networking of various companies which work together towards the delivery of a product in the market. SCM can be defined as, “A process facilitating the functions of procurement of raw materials, transformation of the raw materials into products and further distribution of the finished products to consumers”, by Waters, C. (2010). SCM comprises of the stages and planning involved in the accomplishment of the request of a consumer. According to Lopez and Brands (2010), the perfect mix of logistics, production, location, transportation and information the five primary participants in the management of supply chain, helps in the attainment of an effective response in the target market of the suppliers. Companies involved in supply chain must take individual and collective decisions based on the five areas crucial for successful management:
Production – The how, what and when of production are the crucial questions for SCM. What is the product which the market wants? How much is the quantity in demand? By when are the products required? All the above three questions are the basis of production for any organisation. The activity requires the designing of master production schedules involving the production capacity of the manufacturing plant, quality control and maintenance of the equipment utilized in production (Xue et al. 2007).
Inventory – The required level and the type of stock maintenance at each level is the importance of inventory control in SCM. Whether the requirement is for raw materials, semi-finished or finished goods, the principal functionality is to act as a buffer at the time of need and improbability (Wang et al. 2007).
Location – The cost efficient place of production and storage of inventory is another crucial factor to be taken into account for the smooth flowing of products to the ultimate customer through the most probable paths available.
Transportation – The how of products supply from one place to another is the transport decision involved in supply chain. While air and road delivery is expensive, ship and rail account to less expense involved with delayed delivery time. The uncertainty of deliverance on time leads to higher stocking of inventory levels (Lambert et al 1998).
Information – Well-timed and correct information helps in effective decision making involving what and how much to produce, where to store and locate inventory and the best possible way to transport the same.
2.2 Construction Industry
An industry present in every developmental activity of an economy is the construction industry. Construction activities and its output play an integral part in the national economy of a country and its industrial development. The growing rate of urbanisation, economic growth and population has lead to an increased demand in specialized infrastructure in all forms. The demand for infrastructure is considered to be the driving force of the construction industry in present times (Aminah and Keith, 2009). A crucial part of any economy, the construction industry plays a major role in the employment of a country. The industry takes into account all businesses involving construction of buildings, roads, highways, bridges etc also those who are typically involved in the specialized work including contractors, architects, electricians, plumbers and masons (Wong, 1999).
The industry helps in the economic growth of a nation through its all round development in productivity, employment generation along with income generation and its redeployment. The construction industry plays a major role in satisfying the physical and social requirements of an economy through the creation of shelter, infrastructure and consumer goods. The issues which crop up in the industry primarily revolve around the four resource categories of management, capital, labour and materials. The management and education of the management staff in the industry is crucial for the industry growth. Due to the shortage in supply of management manpower along with the training and education system being time consuming and difficult, has lead to the lowering of the rate of availability of manpower in all nations. According to the study of Chen Y (2010), the capital issues crops ups mainly due to financing problems in the working and investment capital. High rate of interest, lack of adequate credit facilities available in the market for equipment purchase and supply of raw materials, unavailability of equipments and technologies through rent has lead to financial inadequacies for the industry. Despite the fact that the industry requires well-trained labour, accessibility problems have arisen due to immobility of labour force, remote construction sites away from developed areas, low productivity due to ill health and lack of nutrition etc (Waters, 2010). The availability of raw materials and required levels of inventory in the local market is another matter of concern for the industry (Pink, et al. 2013).
2.3 Construction Industry in UAE
The recent economic recession has affected the construction industry economic situation leading to a cosmic change in the nature of business along with rigorous competitive environment been created in the United Arab Emirates (UAE) along with increased entrance of international contractors and investors in the lookout for opportunities (O'Brien, 2009). The industry has received a boost in the early 2013 with an award of USD38 Billion worth of projects along with an expected award of projects valued at around USD46 Billion in 2014. The increase in the construction movement in UAE has lead to an increase in the demand factors related to construction equipments, raw materials required in construction and building, technology and tools (Benton and McHenry, 2010). Due to the numerous upcoming and ongoing projects and high demand of technological equipments for work accomplishment, a consecutive rise in the confidence of investors is noticed (Saad et al .2002) The same has shown way into increased rate of national and international investments flowing into the industry with new projects being announced (Petrovic-Lazarevic et al., 2006).
The UAE construction market has been successful in attracting international equipment and material manufacturers. The enormous competitive pressure has lead to an enhanced focus on innovation, creative strategies and technologies in a bid for growth sustenance and development in the UAE market. Roberts (2010) highlights in his research that the growing economy has lead to an all round infrastructural development in the emirates economy with special emphasis in Dubai. While Ben R, (2010), emphasizes on the primary advantage being enjoyed by the industry is the huge investment rates from the private and the public sectors, the studies of Barkhi and Daghfous (2009), shows that the industry has been facing significant risks based on disparate construction plans, political, social and cultural issues. The general trend in the industry highlights the fact that the risks should be distributed between the contractors and the owners of the construction industry but on the contrary the latter are quite reluctant in sharing the risks. The decision making problems arising out of time and cost related issues lead to the major factors of variation in the construction industry of UAE (Segerstedt, 2010). The disparity has lead to a gap in the demand and supply in the industry.
2.4 SCM, UAE Market
With the fast paced economic development of the UAE, the emphasis on the SCM is on the high. The urban planning council of Abu Dhabi stated in 2010 that through SCM, industries aim at improvising on the trust and association amongst the partners involved in the supply chain with further improvement in the product visibility and growth in the market. Huge investments in the growing economic sector of the UAE have lead to a maximization of performance to earn the maximum return on investments along with the satisfaction of customer requirements (McDonald, S. 2009). To take care of the best possible operational aspects along with the incorporation of the best possible practices throughout, the organisations in the UAE has been facing an increased demand in supply chain and its effective management.
As compared to other countries in the past, UAE had a lesser demand in the technicalities and adaptability of the SCM (Thomas and Griffin, 1997). But with an amplified competitive market scenario along with an increased emphasis on the productive efficiency, deliverance and operations has lead the economy to give importance to supply chain in the organisation strategy (Oakland and Marosszeky, 2006). The strategic objective of the organisations plan effectively to ensure the continuity of the demand and supply of inventories along with the maintenance of stock levels to protect supply issues arising during production. To necessitate the development of social responsibilities arising from the relationships built between customers and suppliers, supply chain plays a crucial role in smooth productivity flow and adhering to the corporate social responsibilities of organisations (Walker, 2007). An advanced strategic adaptation of the SCM is crucial for the UAE competitive market for a secure and smooth management and development of the organisations involved in the supply chain (Katzenbach R, 2010).
2.5SCM in construction industry
SCM is the technique of channelizing the raw materials into final products. It is a methodical approach which helps in reducing the overall expense of the organisation through apt management of the flow of product or services. It includes various ways in which the raw materials are stored, inventory maintained and the way a finished good is processed (Mentzeret al., 2010). The SCM is therefore defined by Mentzer as a “systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”
The concept of SCM developed in the manufacturing industry in 1980 and slowly influenced other domains. The concept originated from the production related to just in time as well as logistic In current times, SCM is considered to be a managerial concept that is autonomous in nature though the dominance of logistics is still notable (Mohamed, 2006). For a construction project, SCM typically would include primary and speciality contractors and subcontractors, engineers, architects, suppliers of materials who get together for building a project for specific owners. In the construction domain the supply chain typically refers to an end to end connection which exists between the stakeholders along with those who has joined as partners for the delivery of a particular project (Hugos, 2010). It includes the planner, construction manager, designer, owner, architect, general coordinator, distributor, subcontractor, manufacture and supplier.
Figure: Supply Chain in Construction Industry
Source: (Saad et al.2010)
SCM in construction encompasses key issues like demand of the client, design of the project and the way the business proceeds (London, 2008). It is an overall process to manage, monitor and control all logistics or inventory related activities. SCM in construction industry helps in reducing the overall expense of the industry by controlling logistics. The domain can easily enhance profitability by employing SCM system (Aloini et al, 2012). The principles of SCM typically focus on smoothen the process of construction and managing the process effortlessly.
In the construction domain the supply chain approach may be divided into two broad categories namely, material chain and construction chain. These divisions help in separating the procurement as well as the management operation. These two are connected to the central project which ensures smooth flow of the work by maintaining apt flow of information without any obstruction in between (Michael and McCathie, 2012). SCM in the construction industry extends focus on certain strategies related to Lean Construction that include purchasing on just in time basis, evaluation of the suppliers, selection of the sub contractors, relation management with the sub contractors, acquisition of equipments, sharing of information, management of project quality and so on (Walker, 2007
2. 6 State of SCM in UAE in general
SCM is defined as “coordination of independent enterprises in order to improve the performance of the whole supply chain by considering their individual needs” (Fernie and Thorpe, 2007). With the incessant growth of business in UAE, SCM approach is becoming important every day. Logistics has evolved as an integral aspect of the business. Thus, maintaining inventory and controlling it appropriately is a new challenge in UAE. It is here that the implementation of SCM in the industry may be identified as an effective tool to help managing the business effortlessly (Hugos, 2010).
SCM aims at improving the relationship between the chain partners, by handling inventory in a professional organised manner. Recently companies based in UAE have concentrated in employing SCM approaches (Crowder, 1983). Irrespective of the domain, supply chain approaches have been implemented in the UAE based companies. Health, hotel, construction, food & beverage every industry pillar has successfully implemented SCM to improve profitability by controlling inventory and monitoring chain of product or the flow of service offered (Harland, 2009).Though research suggest that many companies are yet to implement the SCM approaches yet those who have used it has benefited marvellously.
The global recession of 2009 affected the growing industries in Dubai severely (Fellows, 2011). It affected the daily business. About 230 companies in UAE came together to discuss the state of SCM in theindustry and identified the below mentioned points (Gorgenla¨nder, 2011);
SCM is the backbone of any company. Hence almost every company agreed to implement SCM approaches in the firm. It is a unique way of enhancing business by bonding better with the customer. One can easily reduce cost of production and reduce product price (Hugos, 2010). Thus satisfy the customers and offer quality services to improve profit earning.
Identified people as the vital asset of the organisation.
End to end visibility of services that will lead to customer satisfaction
Employing new age technology to achieve higher productivity.
Based on the situation, the management may implement approaches like the SCM approach, social system approach and systems approach to improve individual performance in the UAE construction site (Mentzeret al., 2010).
2.7 Pros and cons of SCM
There are various advantages and disadvantages of implementing SCM in a particular company.
Advantages of employing SCM system
Most modern organisations have employed this technique of SCM to achieve matchless success in the business.
Helps in reducing cost of the company: monitoring with the help of apt SCM approaches help in reducing the overall expense of the business by helping in structuring it appropriately. Boosting internal economy through cooperation and innovation helps in improving external economy (Michael and McCathie, 2012).
Reduce risk: risks along with uncertainties that are affecting the external market environment may be reduced with the help of implementing apt techniques like information sharing, commitments towards future, insurance of quality as well as quantity supply, sharing risk and building trust (Aloiniet al., 2012).
Enhance efficiency: Managing the flow of basic material and exchanging information in a particular organisation helps in increasing its performing efficiency by streamlining the information (Xiaolong, 2004)
Employing innovative technology: the regular technological innovation in the IT domain helps in fulfilling the demand of the market by fine tuning key aspects of business. Traditionally SCM was maintained on pen and paper, now it is maintained with innovative software. Thus every day there is an innovation which helps in simplifying the chain management (Michael and McCathie, 2012).
The probable savings that may be raised by wastage removal and improving on the supply chain include primary issues like decisions being made based on cost and not on price, modularisation of material and products as and when applicable for simplifying and standardizing the concept of supply chain, evaluation of the process activity with possible improvement as applicable (Brindley, 2004).
Disadvantages of SCM
Though implementation of SCM helps in reducing cost and improves profitability of the firm it is not a very easy process to implement. It even enhances the performance of the firm. However, the management system is not free from problems (Segerstedt, 2010). When the system is applied to the small or mid-sized firm it has found increasing the overall expense of managing the business operation. While the big firms can afford the additional expense, most mid-sized or small firms face challenges with the rise of overall expense (Albaloushi and Skitmore, 2010).
Secondly: Most companies use a general or basic system to manage their inventory, implementing a completely new and advanced system would hamper the pace of its steady growth. It can work as a hindrance to the already existing steady growth (Hugos, 2010).
Thirdly; staffs may refuse to accept this new complicated system as it happened in Nike. Lack of appreciation for SCM will fail to improve productivity of the business. People in Nike found the system complicated and training of using the software increased the overall expense (CrespoMárquez, 2010).
Thus, SCM though is helpful in controlling logistics and aims at improving profitability, however have limitations.
2.8 Benefits construction industry UAE has from SCM
After conducting an indepth research on the application of SCM in the construction industry in UAE, it can be said that the application of the system is still in the nascent stage. Though the SCM is not a new concept and other industries have already implemented it to enhance business, however, the construction experts generally practice the traditional methods in general. SCM has been employed by some key constructing firms who have experienced how this methodology has helped in achieving a myopic control over the waste management issue in the construction domain (Michael and McCathie, 2012).
Implementation of SCM in the construction industry of UAE has led to experience the below mentioned benefits over the years;
Firstly, the construction industry in UAE is exceptionally fragmented. Most companies have two distinct areas of specialisation, design and construction, and it is here the lack of cooperation crops up. Poor communication, lack of responsibility and differences in functional discipline leads to problems (Hugos, 2010). It is with the help of the SCM system the construction company has improved coordination among different departments. A well-structured system and planning in work execution has helped the UAE construction companies to develop some of the finest building in the world.
Secondly, cost reduction and improve profit earning is a key advantage of using SCM in the construction industry in UAE. The recession of 2009 has affected every business house. In such a crisis situation saving money which enhances work efficiency is important for every firm. Implementation of SCM approaches in the industry has helped in both streamlining the system and also increased profit earning of the firm (CrespoMárquez, 2010).
Thirdly, communication gap could be easily eliminated from a project by following a proper systematic approach.
Fourthly, it helps in developing better customer relation by offering desired services. When the overall expense of the product development has reduced the company can easily offer quality services or products to the customer at an economic rate (Hugos, 2010). Thus develop a better brand image with simple effort.
Thus it can be concluded that the construction industry is a fragmented area which has benefitted exceptionally from the application of SCM techniques in UAE. SCM is a significant contributor to the industry pertaining to construction. The concept offers guidelines that may be applied in the analysis, re engineering, adequate coordination and constant improvement the process of construction (Tah and Carr, 2001)
The chapter tries to integrate by parts all the various angles the topic of research can be approached from right from SCM in general to SCM of construction Industry in UAE. It is imperative to understand all the various ingredients pertaining to this research topic and context especially since it has three variables such as the field which is SCM , the industry in the form of construction sector which also is a less explored one when it comes to implementation of SCM and the third the country UAE which has been over the years one of the most prominent sites for latest construction.
3.0 Rationale for study design:
The premier purpose and idea behind this chapter is to analyse the materials that are accessible and chalk out the salient areas which require more in depth research .the research design will be systematic review. Higgins and Green (2005) opines “A systematic review is a scientific tool that has been developed for appraising, summarising and communicating the outcome and implication of or else uncontrollable quantities of research”. The major advantage of systematic review lies in the fact that systematic review can identify, summarise, garner information and analyse the researches previously done pertaining to the field of study in such a way that it is possible to zero in one those areas which have been duly addressed together with those points which have been missed out in previous researches.
The systematic review has thus the advantages of critically reviewing the literature and finding the salient points within the same and presenting it in the context of the research (Higgins and Green, 2005). A systematic review extends focus on the questions related to the research with the attempted identification, appraisal, selection and synthesizing of the superior quality evidence pertaining to the research that are relevant to the questions on hand. A high quality systematic review is effective in random collection of trials and studies that are crucial for evidence based studies. The data pertaining to the selected topic were restricted in number specially so the country had been mentioned and details pertaining to the United Arab Emirates were not adequate. Considering that the articles taken into account were published and been used for similar purposes in the past, their authenticity cannot be doubted. The philosophical stance that the researcher has taken for this particular research is positivism Positivism has been taken since the researcher believes that there is a definite outcome possible by studying the available literature although it is not quantitative in nature.
3.1 Search method for identification of studies:
In order to conduct this secondary data based research it was necessary to systematically search and skim not only Google in general but many data bases especially which contain academic materials and references. Some of these were Google Scholar, Ref Seek, Ref Repository, BASE, JSTOR, i SEEK etc. While searching the focus was primarily on previous research articles by various researchers and student articles regarding the subject were avoided for the purpose of better quality and reliability. For the purpose of search, specific keywords like SCM in construction were used to narrow the search from the broad category of SCM in general. Using the advanced search and Boolean search options available within these search engines helped to chalk out the most relevant of all articles, which were in line with the inclusion-exclusion criteria.
3.2 Inclusion and Exclusion criteria:
Considering the fact that SCM in the construction sector is a relatively new research agenda and study the researcher chose to select all articles that were published between the years 2000-2012. Another very important consideration was to select the articles to be review in English language only in order to avoid the hectic task of translation which would have been very tedious for the researcher. Moreover ,in order to do justice to the research the researcher had to avoid researches that were conducted on other countries pertaining to SCM practices in the construction sector like that of US,UK, China ,Australia etc. Understanding the geography of the region the researcher decided to include the neighbouring Middle East countries like that of Saudi, Kuwait, Bahrain, Doha, Qatar etc. Research articles that were conducted by students for the fulfilment of their degree were also carefully avoided.
It is necessary for every researcher to conform to certain policies or standards that have been laid down either by the university, government or the regulatory authorities and the interest of all concerned parties be protected(Smith, 2008). Although it is often assumed that secondary data analysis raises very few ethical considerations however it is imperative to make sure that the researcher does not in any way distort with the information or channelize the course of the study to some premeditated idea. It is also the responsibility of the researcher to conform to the rules and regulations stated within Data Protection Act (1998).the integrity of the researcher to the cause of the research is of utmost importance.
3.5 A Brief Insight into the Studies
Study 1: The four roles of SCM in construction; Vrijhoef and Koskela (2000)
It is believed that due to the peculiarities associated with construction, SCM plays specific types of role in the domain. The two pressing issues that are related to supply chain in construction include the increased weight economically of supply chain and the lag in development of productivity. The increase in productivity in relation to construction of building has been relatively slow though it cannot be considered adequate for compensation for the average level rise in the cost of labour. Relatively, primary contractors are involved in the purchase of higher material and labour. This constitutes 75% approximately of the turnover of such contractors. As a result of this, such contractors have increased dependence on the other elements in the supply chain of construction such as the sub contractors and suppliers.
It can be said that the study contributes towards knowledge the facts such as the explicit relation of generic methodology of SCM to the different initiatives that are existent in terms of development of construction supply chain, the empirical assessment of the current construction status in terms of supply chain, reliant on the new generic theories and empirical understanding of SCM, the role limitations and so on. The construction logistics and material handling should also be kept in mind. Another factor which affects the supply chain is the variance in the capacity of supply and ever changing on site demands. It can easily be taken into account that the knowledge related generic body that has been accrued in terms of the SCM framework tends towards better understanding of the problems of the construction SCM and guides towards the required direction that needs to be taken. It is required to implement the SCM practical methods for taking into account the specific construction situation and its related characteristics.
Study 2: Risk assessment model selection in construction industry; KarimiAzari et al. (2011)
A project is considered to be people who form an organisation being dedicated towards the deployment of a resource set having specific objective or purpose. Project management includes resource plan, directing, control for the achievement of objectives or goals that are specific related to the project on hand. There are a number of uncertainties in the industry of construction and such issues include the fluctuation in the profit margin of the organisation, the process of competitive bidding, alterations in the weather, productivity observed at site, political scenario of the nation, contract related rights, inflation, existing competition in the market and so on. Thus the number of risks in the construction industry is higher than the other industries. With the industry becoming more advanced, the uncertainties witness an increase also. It is required that the construction companies overcome such uncertainties for accurate assessment of the effect such sources have to determine the risks associated with each project and tackle them efficiently. A primary step in construction risk management is identification and assessment of the risks that are potential.
Though it is significant in the success of construction related project management, management of risks has not always got adequate importance as the other processes of the realm such as scheduling and scope. Risk management related process ideally includes identification of risk, assessment o risk and mitigation of risk. The method that has been proposed will be successfully able to discriminate among the methods of risk assessment with adequate clarity. The proposed method is the way of solving the TOPSIS of the risk assessment model under a fuzzy environment where there a number of decision makers and a committee to assess the minimum risk model The effective identification and subsequent assessment of project related risk formulate the crucial procedures that result in success. A number of techniques for the risk assessment related to construction project have been adhered to by the construction industry though adequate attention has not been given in the selection of a model that would be suitable for risk assessment.
Study 3: SCM in the United Arab Emirates Construction Industry; Albaloushi and Skitmore (2008)
SCM is considered to be for improvement of processes that helps in saving cost and enhances the revenue in terms of business strategy. Supply chain in terms of construction encompasses the processes of construction commencing from the primary demands of the client or the owner, then designing, constructing, maintaining, replacing and finally demolition. The different organisations who are part of the process of construction are also included such as the owner, the client, the designer, the general contractor, the supplier, the sub contractor and so on. Construction related SCM is considered to be the practice followed by the company groups as well as individuals who work within the network of processes that are inter related for satisfying the ultimate needs of the customers in a collaborative way while providing rewards to the chain members. SCM is most beneficial in the enterprise level involving a number of companies. SCM in construction does not refer to only the chain of businesses in construction with relations that are business to business but also refers to the network that includes a number of organisations and relations including information flow, material flow, products and services, fund flow that occurs between the designer, owner, general contractor, sub contractor and also the suppliers.
In United Arab Emirates construction companies involve foreign companies where each of them are associated with a minimum of one local company counterpart. Both the companies agree on the significance of SCM though the implementation is different for both. The approach is contrasting in terms of coordination and knowledge sharing. More awareness of the significance of these factors leads to the success in implementing of SCM later on. The Supply chain is not only related to single construction business but it is a multiple business and institution relationship where the entire UAE construction business is affected as they are interlinked to each other The difference in SCM of the two parties affects the supply chain implementation in the nation making it different from the other countries that are developed. This is mainly as the approaches are situation based different.
Study 4: A hierarchical framework of barriers to green SCM in the construction sector; Balasubramanian (2012)
The sector of construction is accountable for almost 40% of the total emission of carbon in the world as per the United Nations Environmental Program which is significantly higher in United Arab Emirates where the swift growth of the construction sector resulted in the rise of energy being used and subsequent greenhouse gas type emission. In the scope of framework development towards a model and adequate assessment of the barriers faced by GSCM in the construction sector of United Arab Emirates, there exists a gap in the knowledge which is significant to a nation like United Arab Emirates where the concept of GSCM is relatively new. The state government and the federal government require a framework for encouraging and regulating organisations in the adoption of a GSCM that can be termed as sustainable.
Hence if an efficient framework is lacking in the evaluation and modelling of the barriers it may lead to the lacking of a green initiative amongst the stakeholders of the construction industry. In order to determine the gap, the queries that need to be catered to include knowledge about the barriers that are critical for the adoption of an effective GSCM in the construction sector of United Arab Emirates, the contextual relation between the barriers, methods of developing a framework that would effectively and easily display the complicated interdependence of the barriers and the classification of the barriers depending on their importance and criticality. The interpretive structural modelling (ISM) is put to effective use for the purpose of modelling and subsequent analysing of the complicated influence of the different criterions and also for the purpose of creating a framework of hierarchical structure amongst such criteria. The demands pertaining to complexity science is thus met and a systematic structure is displayed. The Driving and Dependence Power Analysis (DDPA) is also applied. .These form the crucial barriers in the GSCM adoption in the construction sector of the United Arab Emirates. The internal barriers are reliant on the external ones. Policies are required by the government to attract right resources.
Study 5: SCM in Construction: A literature Survey; Tiwari et al., (2014)
Huge projects of infrastructure construction execution include issues that are complex in terms of the attributes such as geography, atmosphere, topography and other constraints. In modern times, such work are mostly mechanised with the optimum use of machinery for desired output in order to achieve work quality of international standards specially for the work that are considered to be challenging. Basic techniques of SCM have witnessed extensive application in the construction industry.
The approach included in mechanised construction of projects that involve large infrastructure demonstrate immense scope and successful implementation of the techniques all over the world have been achieved by a number of companies involved in construction. The concept application in the construction sector require the managers of supply chain to get out of the traditional mould pertaining to the manufacturing industry and make the idea of supply chain more centric towards the project than the organisation. This is required since the requirements of the construction project are immensely customised and supply chain need to adapt and duly redesign to match the priorities of the clients. The SCM provides the scope for constant improvement, better coordination at each level and a sense of coherent bonding in the whole process of supply chain. The various aspects of SCM includes the reduction in the onsite costing which can be done by ensuring a smooth flow of labour and work between the labours and contractors
The general requirements of the construction project clients include timely execution of the project with all work being completed as per the contract defined scope, standard quality in terms of execution in accordance to the terms of the contract, doing away with cost overruns and execution cost being within the project cost and the aim of the supply chain to fulfil the requirements of the client with a systematic approach to the activities of the construction and the project involved agencies.
This chapter identifies and presents the five major case studies that have been taken for this research which will help to understand the research in the best possible way. The studies are varied and have approached the research from various angles in order to eliminate the possibility of missing out on something. All the studies are very recent and thus are intrinsically linked to the research and will help to contribute positive findings. This chapter also lays down the methodology followed for this research and how and why the particular studies have been selected with all the inclusion and exclusion criteria as well as details such as ethics and rationale behind the approach of the research.
Chapter 4 – Result and Discussion
The study undertaken has brought together relevant findings from a number of research related articles having diversified methodologies which carves the pathway of the review study having a diversified characteristic. It has also been indicated by the research study that the strategies that work well for the application of SCM in the construction industry of the United Arab Emirates are effective for the nature of work included.
SCM (SCM) is the basic framework for the proper running and coordination in any construction business. The integration of SCM and the onsite activities in any construction site is an important aspect for the success of the venture and smooth transfer of products through the supply chain to the onsite location is required. But lack of conceptual deficiency and proper objectives the total supply chain is hampered, especially so in the United Arab Emirates where the availability of SCM is significantly inadequate. A strong understanding between the management related to the supply chain and the on site management and labour is necessary to manage with whatever resources are available and to put them to effective use. Improved, construction logistics and material handling leads to an effective SCM process.
Prefabrication and industrialisation are the ways to remove the onsite activities from the production chain. Mainly three case studies have been formulated to analyze the ways of improving the SCM. The case studies deals with the lag in the supply chain with the construction onsite which is also called the time lag. The various logistical problems faced by the workers, negotiations of the products being delivered onsite. Risk assessment is another important concept in the SCM. Proper communication between the various parties involved both offsite and on site, the contractors and subcontractors who does not share a common and similar work ethic. Thus a collaborative team work is required for the success of a project and minimizes the risk associated with it. Though project management is dealt with much importance in any project risk assessment is often neglected. TOPSIS provides a good method of identification and assessment of risk and is more appropriate than other models like MCDM.
The risk factor involved in a project includes three parts-risk identification, assessment and mitigation. The method that has been inducted is an effective way to deduce the risk assessment model with proper accuracy. To solve the TOPSIS of risk assessment model under a fuzzy condition where there are a number of decision makers to deduce the minimum risk model and work upon that model which would guarantee that minimum risk is involved. Another model is the matrix method of risk assessment. That basic difference of the risk assessment model and the proposed method is the method of choosing a fuzzy TOPSIS over normal TOPSIS which deals in precise number.
The fuzzy TOPSIS way of risk assessment is more flexible and accurate. But in spite of all these there is no optimum and full proof model that can be followed and the risk involved in each model varies. The SCM in UAE is different from that of other countries and the risk involved is drastic and no well formulated model is followed there. UAE being the largest construction site in the world with over 16,000 contractors and 34000 employees involved it is the largest business sector of UAE. SCM in UAE is not only limited to a single project but with the collaboration of different multinational enterprises and contractors failure in the implementation of a smooth SCM affects the total industry as each of them are interlinked. Improvement on site conditions and skilled management will help the supply chain. In UAE the current trend is the partnership between a foreign company and local contractors. As a result conflicting interest and difference in work ethics is prominent. So working towards a common goal with well defined guidelines will help in the improvement of SCM.
In the hierarchical framework there are certain barriers to implement the Green Supply Chain Management(GSCM) in the construction sites of UAE. These includes on one hand the failure of proper policy making by the government on the other hand lack of skilled professionals and lack of public awareness are also some of the reasons. The general public should be given the opportunity to choose from a range of sustainable options and for that the government has to take the initiative in encouraging them. GSCM policies are very much important as it reduces the carbon emission and helps in building the social responsibility image of the company following these guidelines
.But in UAE the lack of proper governance has so far limited the implementation the green initiatives among different enterprises and stake holders of that enterprises. There are further scopes for the improvement of SCM process by ensuring a smooth flow of labour between the suppliers and contractors which would eventually decrease the onsite duration of the project and thus reduce the total cost of the project. But on based on the literary survey it can be concluded further improvement in SCM is required as many aspects of SCM are still unknown and unexplored. While the construction industry of the United Arab Emirates display to the world supreme infrastructural projects that are unprecedented and picturesque, the inability to implement an effective system of SCM has in a number of ways hindered the projects which would with the existence of a streamlined method of supply chain been facilitated notably.
Case 1: The four roles of SCM in construction
As put forth by Vrijhoef and Koskela (2000), in traditional terms, it is not sufficient to have a control over the supply chain of construction but what is required is a shift in the methods for the management of such supply chain. There have been a number of initiatives related to SCM in the construction industry which were either partial or scattered. The roles that SCM plays include improvement of the interface present between supply chain and the site related activities, improvement of the supply chain, transfer of the activities to supply chain from site and lastly, integration of supply chain and site.
Reliant on the generic body and empirical analyses of the SCM related knowledge, there are objective and subjective limitations in the roles pertaining to SCM. The limitations that are subjective are because of the conceptual deficiency and the objective limitations are because of the environmental characteristics in terms of the addressed problem or construction peculiarities. It may be said that such limitations have hindered progress in the development of the construction related supply chain.
The fact that costs have been stressed in logistic initiatives is a limitation that is subjective. This resulted in the failure of addressing the impact of variability related to supply chain on the site assembly. The objective limitation includes the lesser focus on the role for improving the interface among supply chain and site activities in terms of the entire supply chain. In relation to the role of supply chain improvement, the objective limitation is caused due to the undisciplined and wayward nature of the activities of the customers. Both sides of the process of delivery have problems. Initially the definition of product is not complete and towards closure the date of delivery often is altered with chaotic conditions of installation. With regard to the role of activity transfer from site to supply chain, objective limitations are yielded. Pertaining to the role of integrating supply chain and site, a number of initiatives have objective limitations that are related to the characteristics of the constructed objects.
A number of existent initiatives have logic that is based upon the idea that the effectiveness of SCM is more with such chains that are stable having products that are standardised. This role has certain subjective limitations as well. All the four roles of SCM are implemented to improve and for the betterment of the entire supply chain. The real estate owners should maintain a cordial relationship with the management of the SCM so that the flow of the materials is smooth and well oiled. The various initiatives that can be taken by the management are the coordination between the management on site and the suppliers that are involved which the interface between the supply chain and the on site management. The construction logistics and material handling should also be kept in mind. Another factor which affects the supply chain is the variance in the capacity of supply and ever changing on site demands. With the improvement of these two factors the improvement in SCM is possible.
Prefabrication and industrialisation are the means of removing of removing the onsite activities from the production chain as a whole. To maintain the integration between the site and supply chain open building and step by step procedure which gives the users the opportunity to choose whether to postpone the construction of the interiors of the building or not. The SCM of pre engineered buildings are more stable as they have to choose from a limited set of options. The status of present construction chains have been observed in three case studies conducted in Netherlands and Holland. The first of the case study deals with the time required for the delivery and production in a housing project where the time buffer played an important role. The price negotiation, engineering, onsite installation was the major factors of the second case study which as a whole is known as the controllability problems. The issue of site logistics was the point of case study three where it dealt with the extra costs of logistics of building material in the site, bargaining and price calculations.
Thus as found in the literature review section SCM involves the primary and speciality contractors and subcontractors, engineers, architects, suppliers of materials who get together for building a project for specific owners. Now most of them belong to different set of organisations that ultimately the project manager has to handle in order to implement all the pieces of the jigsaw together in order to complete the project without any difficulty. The study basically emphasizes the fact that the basic framework of the SCM remains same as identified within the broad scope of the literature review with adjustments for the peculiar nature of the construction industry and taking the various environmental concerns into account.
Case 2: Risk assessment model selection in construction industry
As explained by Karimi Azari et al. (2011), construction related project would ideally require effective interaction between owners, contract based parties that are integrated, contractors, designers, suppliers, sub contractors, and so on who are not similar in nature. Hence collaborative team work is required where a common goal is shared for the completion of the project successfully. Aligned to the environment of group decision in terms of the problem, an effective yet simple mechanism is provided by the approach for making absolute judgements that are comparative in nature conventionally, which may discriminate methods of risk assessments with clarity.
Inspite of having significance in the realm of project management, risk management is not approached with as much rigor as the other processes of project management which include scheduling, scope and so on. The risk management process is inclusive of identification of risk, assessment of risk and mitigation of risk. The project related risk identification and assessment are considered to be procedures that are critical for the success of the project undertaken. A number of techniques of risk assessment pertaining to construction project are applicable in the industry of construction though the attention paid is insufficient in terms of a model that can be termed as suitable for the purpose of risk assessment. In order to suitably address this problem related to decisions, certain approaches of fuzzy TOPSIS have been developed including an algorithm that is effective for the improvement of effectiveness as well as quality pertaining to decision making.
Good evaluation has been provided by TOPSIS and is considered to have more appropriateness than other models of MCDM. The project of construction requires interaction to take place otherwise dissimilar but integrated by contractual element parties such as designers, owners, suppliers, contractors, sub contractors, manufacturers and so on. For such reason, construction is known to be a process of collaborative teamwork having parties who have diversified functions, interests and objectives ye they share a goal that is common – the successful completion of the undertaken project. Aligned with the problem of the environment of group decision, the approach undertaken is effective in providing a mechanism that would be simple as well as efficient for making judgements that are absolute and comparative conventionally. The method that has been proposed will be successfully able to discriminate among the methods of risk assessment with adequate clarity. The proposed method is the way of solving the TOPSIS of the risk assessment model under a fuzzy environment where there a number of decision makers and a committee to assess the minimum risk model.
Once the best model is chosen, the group of members make decision on which model to follow which would eventually minimize the risk and uncertainty element from the certain venture. Fuzzy set theory is one of the commonly practised methods which a fuzzy number A is defined. It is a subset of real line R and its member function f(a) represents the uncertainty related to a particular transaction of a process in a business. The normalised matrix method is another famous method of valuating the risk management aspect to the business and is commonly used. The MCDM ( multi-criteria decision making) problem have been proposed and improved upon by a number of scientists and researchers over the year but an ultimate and full proof algorithm has not been formulated yet and it varies from one company to another depending upon the dynamics and culture followed by them . The main difference between the risk assessment model and the proposed method is the method of choosing fuzzy TOPSIS over TOPSIS which deals in precise numbers. Fuzzy TOPSIS is more flexible in nature and more acceptable to the scientists.
The degree of satisfaction in each model is different though it deals with the basic three needs of risk management that is-risk identification, assessment and mitigation. The risk assessment is the initial step, followed by the assessment of the uncertainty followed by the mitigation of the risk by eliminating the risks involved through various proposed models and efficiency of the management. So the risk management of the uncertainty faced by them are completely different and indigenous to that institution itself.
This study is a special research of the collaborative risk at play in case of construction projects which inherently and evidently has a lot of risks and variables at play. Eliminating all the potential threats or chalking of a model which would minimize and mitigate the risks to an acceptable value is thus of imperative importance. This study thus has been successful in incorporating a certain aspect associated with SCM which did not form a part of the literature review studies. Like for example, the global recession of 2009 affected the growing industries in Dubai severely (Fellows, 2011).But incorporating this model helps to account for such unforeseen circumstances and helps to minimize the losses. So, this model is a much needed one which will provide a great support and fall back mechanism for the construction industry.
Case 3: SCM in the United Arab Emirates Construction Industry
As opined by Albaloushi and Skitmore (2008), primary supply chain involves material delivery that is incorporated into the final products of construction, support chain including provision of materials and equipments for facilitating construction and the supply chain related to human resources that includes labour supply. Construction SCM is also known to be the coordination that takes place in the decision making of inter organisations as well as the integration of the primary business processes of construction.
A number of industries have used management and collaboration of supply chain in order to obtain competitive benefit. The adoption of SCM as compared to other industries has been slower in the construction industry as an effective management strategy. The opinion of the contractors has been taken into account since they play a significant role in the supply chain of construction. This exercise is considered to be timely in terms of the energy and interest that has been devoted for the debate on newer forms of procurement. SCM is aimed towards the improvement of trust as well as collaboration between the partners of supply chain which results in the improvement of visibility of inventory and improved velocity of inventory. In terms of mainstream management, ideas of construction management pertaining to supply chain have undergone evolution with influences that have corresponding influence from the theories related to production, strategic procurement and distribution.
The extent of the awareness in the industry pertaining to the integration of supply chain and the related methods are yet to be established specially in countries like the United Arab Emirates. The factors that contribute towards the success of SCM include adhering to the procedures of the organisation while dealing with SCM, approaches of customer needs, technical background of supply chain, distributors, support received from the higher management, proper understanding of the environment of SCM and support extended towards the objectives of the system of production. More awareness of the significance of these factors lead to the success in implementing of SCM later on. The Supply chain is not only related to single construction business but it is a multiple business and institution relationship where the entire UAE construction business is affected as they are interlinked to each other. The main features of CSC are the converging supply chain where all the materials are brought to the site from different locations and the final product is assembled on site. Other than this a temporary supply chain of a specified make order chain can also be formulated on specific and rare occasions. Depending on the stated characteristics few features of SCM in UAE can be deduced depending upon the priority given to the supply chain or on site construction.
Firstly the management should be well aware of the supply chain a smooth flow of labour and on site activities should take place. Secondly there should be a well coordinated relationship between the suppliers and constructors which would directly affect in reducing the cost and time. The business objective all the all the ongoing construction projects in UAE are not the same and so the supply chain has been difficult to manage. The UAE construction business has about 16,000 contractors and 340,000 workers employed making it the single largest business sector in UAE. The current trend in the construction business in UAE is partnership between a foreign and a local construction company. Though both the parties agree on the importance of SCM in the success of their particular project the way they perceive the role of SCM is different and so because of this conflicting interest of both the parties the role of SCM in UAE is unlike from the other developed countries.
This case study highlights the salient points that have been discussed in the literature review section of the research like the State of SCM practices in UAE together with a particular focus in the construction industry. In order to understand the current state of affairs of the practices of construction industry this case study plays a pivotal role describing the total number of personnel and primary stakeholders whose livelihood is intricately linked with this industry. The practices of SCM although have been long neglected by the practitioners of this industry have started to infiltrate the industry especially since UAE has been the house of some extremely high profile and risky projects which demands the best and all methods that can be applied to speed the process up, ensure flow of materials and yet stay within the budgetary constraints evaluated at the beginning of the study amidst rising costs all over.
Case 4: A hierarchical framework of barriers to green SCM in the construction sector
As suggested by Balasubramanian (2012), a noteworthy strategy for taking up the challenge of reduction of carbon emission would be Green SCM (GSCM) and the subsequent enhanced sustainability due to the potential of improvement of organisational environmental performance. There have been attempts for measuring the practices related to GSCM such as implementation, advantages, performance and so on.
The highlights of the hierarchical framework of barriers to green SCM in the construction sector include the extensive identification of the barriers that are existent among the aspects of economy, environment, technology, society and culture for the adoption of an effective system of GSCM in the construction sector of the United Arab Emirates. Secondly, a hierarchical modelling that is scientific of the barriers in order to understand their significance in the process of decision making. Thirdly, the extent of potential of the adopted framework with regard to other countries of GCC that include Qatar and Oman who share similar Gross Domestic Product, e – readiness index and human development index.
There exist certain limitations which are mainly because of the inherent subjectivity of the approach of ISM. The opinion put forth by the experts in the realm may be considered to be biased without effective reflection of the setting in the real world. There also is a dearth of numerical validation of the results thus obtained. The structural equation model which is a quantitative approach may be applied to evaluate the validity of the ISM model that has been developed with numerical measurement of the association strength of the barriers. Balasubramaniam through his research has identified the factors that are eternal to the establishment which include lack of professionals who are skilled and sustainable, lack of developers and green suppliers, inadequacy of government support, inadequacy of awareness of the public as well as demand and uncertainty prevalent in the market. These form the crucial barriers in the GSCM adoption in the construction sector of the United Arab Emirates.
The internal barriers are reliant on the external ones. Policies are required by the government to attract right resources. A quantitative based approach such as the Structural Equation Modelling (SEM) can be handy to test the validity of ISM models. The measurement of association between the internal and exterior barrier can also be made with this approach. Future prospects involve amalgamation the ISM and SEM models to form a country wide integrated framework. Lack of public awareness and appropriate planning by the UAE government are some of the major problems in implementing the GSCM model successfully. The external barriers should be overcome by the management itself to clear the path for the public to embrace this model. The government should device methods and polices to attract skilled professionals and the general public as a whole. The people should be given the choice to make sustainable choices and for that the government has to take proper steps for the planning and execution of the GSCM policies. The GSCM policies are really important for the construction sector as it reduces carbon emission which results in the betterment of the environmental result of the construction company. The lacks of green initiative among the stakeholders of the construction companies are a direct result of the failure of the government to construct and formulate a proper framework for the smooth running and implementation of the GSCM policies.
Environmental sustainability has been a point of discussion since the 1980’s and today it is one of the most important considerations in the world over. Using construction materials such that they can be reused recycled or iteratively used in some way or the other has been the goal of enginners, architects and project managers all over. Many countries have specific site waste management plans that has to be submitted prior to the inception of the project, after which the project gets a go ahead .So green initiatives have to be taken considering the long time future of the environment of the country. So implementation of GSCM is a possible solution to the problems posed by environmental issues. The idea is to close all possible angles when it comes to the environmental issue from foods, to cars, to carry bags and even construction materials and supply.
Case 5: SCM in Construction: A literature Survey
As explained by Tiwari et al., (2014), supply chain is applied in the construction sector for the purpose of better coordination and costing. A number of models related to decision making have been formulated with regard to specific areas of the supply chain in construction that include risk management and trade off between times – cost. The flow of information, material and fund is significant in the construction project supply chain hence it is required to explore the areas of information flow as well as material flow. The feasibility in terms of SCM application has also been duly worked upon particularly in geographical application in countries like United Arab Emirates, United Kingdom, New Zealand, Indonesia and so on. It has, however, been found that there is not too much evidence regarding a complete solution for the application of construction based SCM. The models that had been developed extend focus on areas that are specific which do not offer a solution that is comprehensive.
The advantages of SCM in the realm of construction and the related barriers in terms of its implementation have been looked into. The advantages include the fact that the enterprise is considered to be a single unit. It is said that SCM has the visibility and permits due development of a consistent plan pertaining to demand and supply from customers to suppliers. Thus for somebody involved in planning, will be able to devise a total plan of any movement via the chain in terms of specific products. This may occur between the different functional groups or between a number of independent companies in the channel of distribution. This is turn provides services that are considered to be better with inventory reduction, paperwork reduction, consolidation of distribution centres and transportation cost reduction.
The barriers include inadequate guidance in alliance creation with the partners of supply chain, failure to formulate alliance monitoring measures, inability of broadening the vision of supply chain beyond product procurement or distribution for encompassing bigger processes of the business, inability of integrating internal procedures of the company, inadequate trust inside as well as outside the company, resistance on the organisational level to the given concept, inadequate system of integrated information and firm linking electronic commerce and inadequate set up on the organisational level that may be considered suitable. The SCM provides the scope for constant improvement, better coordination at each level and a sense of coherent bonding in the whole process of supply chain. The various aspects of SCM includes the reduction in the onsite costing which can be done by ensuring a smooth flow of labour and work between the labours and contractors. The trade off between time and cost is another important factor. The orderly management of the supply chain will ensure that the onsite working flow is fast which would eventually reduce the duration of the project resulting in cost saving. In case of the UK aerospace industry the SCM is well established unlike construction based companies where exists a chaos between the supply chain and the production sector. One of the main reasons to incorporate SCM is to maintain and establish a well oiled integrated system in the supply chain.
A sense of bonding and well tuned understanding is required between the SCM and the onsite contractors for the smooth running of a project. Various numerical models of SCM have also been formulated but the optimality of the methods is debatable and it varies for each company or institution. Another important aspect is the smooth flow of material which is directly related to SCM is a deciding factor in a project's success.
But on a whole based on the literary survey it can be concluded that the documentation and extensive research that is required in SCM is still not enough and there is further scope of improvement because many of the sectors are still untouched and there are many unchartered territories to be explored.
Chapter 5 – Conclusion and Recommendation
While conducting the above review, the studies that were not published or those that were not published in the English language as first language were not included as part of the study. There is a possibility that this may have an effect on the review result outcomes since a significant study may have to be excluded due to the reason given above. The restrictions from the academic point of view may pose to be limitations for the reviewer in the selection 0of studies without any external aid. There were also scopes of selection based bias as the selection made by the reviewer would have the influence of his subjective view. The process of recommendation selection of study and procedure of extracting data to be with minimised errors need to be done by at least two individuals in order to minimise selection bias which had not been adhered to. The selected studies were pertaining to the United Arab Emirates construction sector, hence availability of data was much less as compared to other nations such as the United Kingdom. Thus the study has been restricted to a limited information source as details pertaining to other countries were considered to be invalid.
The following recommendations were made by the reviewer after extensive consideration of the entire study undertaken:
For researchers and academics in the field of construction and supply chain management
There is a serious requirement to educate people regarding what exactly is SCM and its appropriate application in the construction industry of the United Arab Emirates. Such educational initiatives will help in the exact application of the concept and the required procedures of SCM. It is believed by the reviewer that if SCM is not appropriately applied in any sector including construction sector, the entire processes get hindered and might take the wrong direction or get delayed. More in depth research would be beneficial to know about the pros and cons of the application of SCM in the construction industry with emphasis on the market in the United Arab Emirates. Adequate scope and funds need to be allocated for such research for further studies that would take place on the similar topic.
SCM has a number of benefits which are befitting for a number of industries, which among such advantages would be appropriate for the construction industry need to be judged and adequately evaluated. The data available on this aspect pertaining to the United Arab Emirates is limited. Hence more exploration and studies in this realm is required.
For practitioners /researchers in field/construction industry/.
For practitioners and project managers
Experts need to be involved in the application of SCM to ensure that the construction sector of the United Arab Emirates receives adequate benefit from such application. People who are involved in the different processes that are encompassed in SCM should have adequate knowledge about its function. The parties involved in such management should work in collaboration to each other so that their input in the techniques and procedure add to the benefit drawn from the application of supply chain.
Even if the process of SCM is adhered to, there are a number of factors that may act as an obstacle in its effective application. Those need to be done away with to enhance the output of the construction industry. Constant out of the box thinking benefits to alter the situation without involving too much drawbacks.
SCM is a process that has been developed upon over the years. It is essential to be always updated on the latest application and effectively apply it to the construction industry in order to achieve the best possible results. Every new concept, idea or technique initially faces resistance as people are wary of change and take time to accept and apply it. With supply chain involving such huge number of parties from contractors to designers to clients to suppliers, the evolution of the concept may take some time to sink it. This does not necessarily mean that the industry will give up on its application. Once the benefits and application advantages are viewed and acknowledged by the parties, they too would want it to be appropriately used as it benefits the entire working of the sector. Though the industry processes are time pressed, this much time has to be spared for the acceptance of an effective system of supply chain which would be beneficial for the organisations and the industry on the whole in the long run.
5.3 Result Conclusion
The undertaken study was successful in completing all the aims that were taken into consideration by providing the review result and making effective recommendation that would provide more light to the topic and benefit the entire study in the future. The primary effects of SCM in the construction industry of the United Arab Emirates were successfully detected. The recommendations made pertaining to the current study extends focus clearly on the areas that require immediate attention and adequate action to tackle any issues that may arise. The implementation of the recommendations made will definitely add to the studies of the future. Education is a primary element in the study undertaken and with building awareness the study may be improved upon. It can thus be effectively concluded that though the construction industry of the United Arab Emirates has enhanced with leaps and bounds, the support facility of an efficient system of SCM is yet to be termed adequate in the nation. The industry is growing notably and with an efficient SCM method being incorporated, the sector would be highly facilitated, which has not been the case so far.
5.4 Plans for Dissemination
A research related dissemination is such a step that is carefully sought and thought while seeking surety regarding the research related findings and their appropriate provision to such individuals who need to be aware of the results for future application and practice. It is the wish of the reviewer to share his experiences and view points and also the findings of his study in order to build more awareness regarding the topic and aid future research work.
The outcomes obtained from this particular study will be shared so that more information on the topic is made available. The work will also be made available on the internet to be used as study material by people seeking knowledge in the effect of SCM in the construction industry of the United Arab Emirates. A copy of the research would also be made available in the institute library for helping students obtain knowledge in the area. Sharing the research as a publication and social networking sites would also be a thought that would be taken into consideration.
5.5 Reflection of Learning
Conducting research and writing a dissertation based on the information obtained might seem like a simple task, but in reality it can be quite challenging. A huge amount of brain storming and out of the box thinking is required along with linking of information. At the very initial stage of my course, I had already determined to do adequate research while doing my dissertation as this would reflect on my curriculum vitae for the rest of my life. Research work of this stature is not something that is done every day and it required a huge lot of hard work and immense dedication, not to mention time, energy and sleep deprivation. While doing this study, my knowledge regarding research methodologies got a boost. The toughest part of the entire dissertation according to me was to discuss and criticize review studies that had already been established. There were a number of occasions where I thought I am going nowhere where a little pep talk from my peers and a slight moral boost from my supervisor did miracles and got me back on track.
I tried to maintain a superior quality of the research to the best of my ability. I personally am glad that while doing the literature review of the studies that are existent, I was able to bring forth the view points of different authors meaningfully with regard to the selected topic. A major setback for me was to not find too many studies on the selected topic in the regular search engines. Though there were adequate studies on more popular countries that had global priority, United Arab Emirates known for its infrastructural supremacy was one nation on which too much information was not available. Time crunch is something every student faces all through their life. Though there was a pre set plan to do adequate research, how time flew by and how I had to work on my dissertation along with the ongoing course is something I know. There were frustrating moments when the search engine was as blank as me but the sense of achievement that one relevant study being displayed on screen is something that is beyond description. The dissertation surely made be better in using search engines with different permutation and combination of terms. The completion of the study gave me a sense of achievement and I hope I live up to the expectation of the people who had faith in my ability. Also, I would be very happy if the study conducted by me has enough relevance not only in terms of grades I get, but to provide to future researchers adequate information on the topic.
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