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Supply Chain Management in the Construction Industry A Literature Review
Lana Lovreni Butkovi1, Alica Grilec Kauri2, Josip Mikuli3
1University of Zagreb, Faculty of Civil Engineering, Zagreb, Croatia
2University of Zagreb, Faculty of Textile Technology, Zagreb, Croatia
3University of Zagreb, Faculty of Economics and Business,Zagreb, Croatia
llovrencic@grad.hr
alica.grilec@tth.hr
jmikulic@efzg.hr

Abstract
The importance of supply chain management (SCM) has been discussed extensively in the
scientific literature, especially in the context of improving companies performance. Since the
construction industry is a key social and economic activity of every country, the application
of SCM strategies is considered helpful in achieving higher competitiveness of construction
firms and construction sector as a whole. Construction is a worldwide activity with many
special characteristics and it includes projects of dramatically different types, sizes and
complexities. Although the existing literature suggests that the generic supply chains should
be simple and linear, the reality in the construction sector is quite different a myriad of
construction supply chains and markets need to be integrated by any construction firm when
it delivers a solution to an end customer/client. Thus the aim of this paper, in order to
provide guidance for future research related to supply chains in construction, is to review
existing research and synthesize main approaches and findings. In particular, this review
seeks to screen existing studies (published in period 2010-2015 using ProQuest database)
with regard to their a) level of analysis, b) research focus, c) type of study/paper, d) the
sample used, e) analyzed relationships, and f) the different types of construction subjects
which are covered and linked into supply chains.

Keywords: Construction company performanc, Construction industry, Supply Chain

Management

Track: Management

Word Count: 2.574

1. Introduction
There is no doubt that construction sector always has a strong impact on the entire economy
of every country, and that it is a worldwide activity with many special characteristics in
comparison with other economic activities. In order to improve performance and productivity
in construction sector, recent studies have highlighted the importance of adoption effective
supply chain management (SCM) within construction companies.

SCM is a concept that started in the manufacturing industry. It is seen as a demanding

innovation that is built on previous changes such as Total Quality Management (TQM) and
Just-in-time (JIT) (Saad et al, 2002). According to Christopher (1992) the supply chain is the
network of organizations that are involved, through upstream and downstream linkages, in
the different processes and activities that produce value in the form of products and services
in the hands of the ultimate customer. Similarly, a supply chain has been conceptualized as
a system whose constituent parts include materials supplies, production facilities,

798
distribution services and customers linked via the feed forward flow of materials and the
feedback flow of information (Towill, 1996). But since the construction sector includes
projects of dramatically different types, sizes and complexities and there is also a high degree
of subcontracting within the industry, the definition of construction supply chain is a bit more
complex.

First of all, it is necessary to define and understand relationships between clients, consultants,
contractors and subcontractors. Saad et al. (2002) investigated types of these relationships in
terms of the degree of collaboration and integration in the period between 1960 and 2000 that
is shown in Figure 1.

Figure 1: Type of relationships in the construction industry (Saad et al., 2002)

In Figure 1 is shown that the traditional single-stage approach to procurement still dominated
the approach of construction clients. Alternative procurement approaches, like two-stage
competitive tendering, Design and Built, Management Contracting and Construction
Management represent some differences in relationships and roles between partners.

The relationships discussed above are actually the term known in construction sector as
partnering which was the basis of development of SCM. Egan (1998: p. 12) defines
partnering as follows:
Partnering involves two or more organizations working together to improve performance
through agreeing mutual objectives, deriving a way of resolving any disputes and committing
themselves to continuous improvement, measuring progress and sharing the gains.
SCM in construction is more developed form of partnering and today there is obvious
progress towards the adoption of the principles of SCM within construction sector. In recent
years, a small but increasing number of construction organizations began to adopt SCM
strategies in recent years to improve their performance, but Khalfan et al. (2001) stated that
there is a growing awareness of the need for changes within the construction industry, in
particular with regard to its current business processes.

799
The aim of this paper, in order to provide guidance for future research related to supply
chains in construction, is to review existing research and synthesize main approaches and
findings. In particular, this review seeks to screen existing studies (published in period 2010-
2015 using ProQuest database) with regard to their a) level of analysis, b) research focus, c)
type of study/paper, d) the sample used, e) analyzed relationships, and f) the different types of
construction subjects which are covered and linked into supply chains.

The paper is organised in four sections. In Section 2 the construction supply chain landscape
are briefly described and some definitions of supply chain management in construction
industry are examined. Section 3 identifies the different bodies of literature in which
construction supply chain studies have emerged so far, while Section 4 presents the results of
literature review according to the abovementioned criteria and gives some conclusions we
can draw from obtained results.

2. The construction supply chain landscape

As we mentioned above, the construction industry has many special characteristics. It is often
argued that the construction industry is unique in the way that it establishes projects to deliver
one-off products (Cox et al, 2006), so a definition of construction supply chain differs from
the origins. According to Muya et al. (1999), there are three types of construction supply
chain:
1) the primary supply chain which delivers the materials that are incorporated into the
final construction product,
2) the support chain which provides equipment, expertise and materials that facilitate
construction, and
3) the human resource supply chain which involves the supply of labour.

The supply chain concept is often closely related with the production process within industry.
Figure 2. presents a schematic view of the process that is made up of the operational activities
of production within construction sector.

Figure 2: Process chain of operational activities in construction (Edum-Fotwe et al., 1999)

The process shown in the Figure 2. is often explained as a supply chain and can be cyclical
whereby several repetitions of the process are undertaken as facilities are modernised or
replaced; or can terminate as is the case with many one-off private developments (Edum-
Fotwe et al., 1999).

800
Cox and Ireland (2001) suggest a typical construction supply chain (Figure 3).

Figure 3: The myriad of construction supply chains (Cox et al., 2006)

In the construction industry it is the client who takes the initiative to start a construction
project, and this leads to the frequent conceptualization of the construction supply chain as a
process explicitly starting and ending with the end user as shows Figure 3. The stage end
customer includes all customers of construction projects. These clients typically source their
construction requirements from highly competitive construction supply markets so the
construction project provides the required functionality to support their business.
Furthermore, construction or civil engineering firm includes all civil engineering and
construction firms that deliver projects to the end customer. These firms play the 'integrating'
role for all the constituent construction supply chains and typically operate within a highly
competitive marektplace. Professional services firms includes all professional services firms
that provide engineering, design, planning etc.

It is undeniable that the major characteristic of the construction supply chain is that each
client represents a unique customer with unique requirements. And the construction supply
chain have to adjust to that in order to became more effective and more efficient. The lack of
a universal definition of construction supply chain management is in part due to the way the
concept of supply chain has been developed. Such, the concept of construction supply chain
has been studied form different perspectives within different relevant bodies of the literature,
as will be described in the next section.

3. Bodies of literature associated with construction supply chain

Trying to clarify methodology and assisting in creating an agenda for future research, we
present a content overview of the existing literature on construction supply chains. We have
set out an indicative delineation in Table 1, identifying the research concerns within each of
the six areas that we have identified in the existing literature to relate to the field of
construction supply chain.

801
Table 1: Principal component bodies of construction supply chain literature
Supply Chain Management
An examination of a modular supply chain
The role of supply chain management in
construction
Construction supply chain collaboration and
management
Success factors in implementation of strategic
partnerships
ICT systems in construction supply chain
management
Supply chain management and risks in the
construction industry
Safety Decision Points in the Construction
Supply Chain
McKinsey 7S Model for Supply Chain
Management of Local SMEs Construction
Business
Demand uncertainty in construction supply
chains
Sustainability
Developing sustainable supply chains
Barriers to Green Supply Chain Management in
the Construction Sector
Construction supply chain behavior
Multi-team communications in construction
design under supply chain partnering
Construction supply chain relationships
Implementing supply chain partnering in the
construction industry
Protecting workers through supply chains
Safety Climate Instrument (mechanism to
measure safety attitudes) for the Construction
Supply Chain
Source: authors
Project Management
Improving construction supply chain
collaboration and performance
Interdependence in supply chains and
projects in construction
Design and delivery solutions
Principles for the design and operation of
engineer-to-order supply chains
Knowledge Management
Supply chain capital in construction
industry
Organizational learning
Generative Mechanisms of the Adoption
of Logistics Innovation
Special scope of construction
Tunneling construction project's supply
chain
Construction supply chain in the public
procurement
Construction supply chain in the
industrialized construction projects
Supply chain integration in the
construction and shipbuilding industries
Hydropower Development Construction
Supply Chain
Off-site precast concrete production as a
case study for construction supply chain

In this review, we didnt only focus on applying the content analysis to the literature, but we
were also concerned with screening and describing the analytical details of existing studies in
order to locate possible future research. The matrix shown in Table 2 has been obtained by
combining these two dimensions and it will be used to summarize the location of publications
in terms of the research subject and with regard to the elements of exchange that they
consider.

802
Table 2: Construction supply chain content matrix
Research
Author Research subject Sample Relationship
method

Eriksson (2010) Improving Empirical The three Several aspects

construction surveys facilitate the
supply chain (responded to by achievement of
collaboration 26, 29 and 32 more than one
and performance project core element
participants), the
three workshops
(attended by 15-
20 participants),
12 interviews
Bankvall et al Interdependence Case study The plasterboard -
(2010) in supply chains supply chain
and projects in
construction
Xie et al (2010) How Empirical One case study, Partnering can
construction two rounds of eliminate many
design under questionnaire communication
supply chain survey (26 barriers and has
partnering can answers) a positive
be improved impact on social
through collaboration in
communication the construction
design process.
Meng (2010) Research review Conceptual - -
on construction
supply chain
relationships
Lnngren et al The Case study Strategic Centralised
(2010) establishment alliance by ten communication,
and partners efficient IT
implementation support and trust
of an aggregated among the
strategic alliance partners are
and its success shown to be
factors major factors
contributing to
the success of
the alliance.
Liu and Zheng Hydropower Simulation Three supply -
(2010) development chains
construction
supply chain
Doran and The degree to Case study Five modular -
Giannakis which supply construction
(2011) chain practices supply chain
are aligned with

803
Table 2: Construction supply chain content matrix
modular
construction
Ebrahimy et al Identifying Case study One tunnel -
(2011) variables project
impacting the
productivity of
tunneling
construction
projects
McAdam et al Establishing Action research One public -
(2011) public project (school
construction estate)
supply chain
Saunders et al The key safety Case study Large -
(2011) decision points wastewater
in the overflow tank
construction
supply chain
Malik and Understanding Conceptual - -
Masqsood the concept of
(2012) supply chain
capital
Deraman et al ICT systems in Conceptual - -
(2012) construction
SCM
Aloini et al Investigating the Conceptual 140 research -
(2012) risk factors articles
affecting the
implementation
of SCM
principles
Balasubramanian Evaluating the Empirical 32 barriers to Identified
(2012) barriers to the the adoption of external and
adoption of GSCM were internal factors
green supply classified by 11 that are critical
chain participants in 3 barriers
management workshops
Al-bazi and Developing an Case study Off-site precast -
Dawood (2012) innovative crew concrete
allocation production
system
Tenant and Exploring the Empirical Interviews with -
Fernie (2013) theory and 7 construction
current practice companies
of organizational
learning in UK
construction
supply chains
London and Developing a Case study Two case -

804
Table 2: Construction supply chain content matrix
Singh (2013) decision studies (adopters
framework to of BIM)
support multi-
disciplinary
information and
knowledge
management
model
Vidalakis et al The impact of Simulation 2 material Lead times are
(2013) demand distribution particularly
uncertainty on companies sensitive to
supply chain fluctuations
performance under conditions
of low demand
and higher
inventory costs
result in a
negative
exponential
relationship
between
increasing
demand and cost
efficiency
Taggart et al Improving Action research 6 different -
(2014) processes supply chain
adopted by a participants
small/medium (architect,
enterprise services
(SME) designers,
contractor for contracts
the control of director, site
defects in its manager,
supply chain subcontractors
and material
suppliers)
Cus-Babic et al The integration Case study Industrialized -
(2014) of information construction
flows in relation project
to material
management
throughout the
construction
industry supply-
chain
Naipinit et al The McKinsey Empirical Local SME Strategy was
(2014) 7S model to construction scored highly
study the shops
successful

805
Table 2: Construction supply chain content matrix
business strategy
of supply chain
management
Venselaar et al Implementation Action research Dutch housing -
(2015) of SCP as association
understanding
managerial and
intra-
organizational
dynamics
Pero et al (2015) The impact of Case study Five companies The higher the
product product
modularity on modularity, the
Supply Chain lower the SC
(SC) integration integration.
Dadhich et al Developing Case study The plasterboard -
(2015) sustainable supply chain
supply chains
Gosling et al Establishing Empirical 2 suppliers and -
(2015) principles for two large
effective supply contractors
chains for the
ETO sector
Tanskanen et al Generative Case study 55 interviews -
(2015) Mechanisms of
the Adoption of
Logistics
Innovation
James et al Identifying the Case study Two case -
(2015) factors studies on one
supporting the contractor
effective
management of
health and safety
Source: authors

As it can be seen from the matrix, 44% of the analyzed papers present case studies, 23% are
empirical, 15% are theoretical, 11% are action researches and 7% are simulations. An
overview of the studies regard to the project subjects or construction company they cover is
presented in Table 3.

806
Table 3: Construction project subjects in construction supply chain studies
Project
subject

Material distributors
Modularity constr.

Strategic alliances
Tunneling/bridge

Shopping centers

Housing sector
Public projects

Water projects
Lean projects

Contractors
projects

projects

ETO
BIM
Authors
Eriksson (2010) X
Doran and
Giannakis X
(2011)
Bankvall et al
X
(2010)
Tenant and
X
Fernie (2013)
Yasser et al
X
(2011)
Xie et al (2010) X
Arantes et al
X
(2015)
Taggart et al
X
(2014)
McAdam et al
X
(2011)
Venselaar et al
X
(2015)
Pan et al (2010) X
Lnngren et al
X
(2010)
Cus-Babic et al
X
(2014)
London et al
X
(2013
Saunders et al
X
(2011)
Vidalakis et al
X
(2013)
Dim and
Ezeabasili X
(2015)
Dadhich et al
X
(2015)
Gosling et al
X
(2015)

807
Table 3: Construction project subjects in construction supply chain studies
Al-bazi and
X
Dawood (2012)
Source: authors
Summarized results with regard to the construction project subjects covered by existing
construction supply chain studies show that mostly of analyzed papers focus their research on
contractors companies and also on material distributors. According to construction projects,
we can see that an equal number of studies research housing project, tunneling/bridge
projects or public projects.

4. Conclusion
Because SCM implementation in the construction industry has been scattered and partial so
far, the intention of this review paper was to give an overview of the context and focus of
previous supply chain studies that are set within a construction context, and to provide a
reference guide for further research. The authors intend to update and extend this literature
review, and hence any provision of information related to construction supply chains is
welcome and highly appreciated.
One of the most significant findings from our literature analysis has been the relative lack of
theoretical work in this field when compared to empirical based studies. Further research
could aim to compare the fit of supply chain management strategies with existing
construction management strategies. In particular, due to the fragility of many construction
systems, future studies may shift particular focus the role of supply chain management
strategies in achieving construction sustainability at the project level and also expand the
focus to supply chain management strategies used in construction systems.

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