MANAGING INFORMATION FLOW IN CONSTRUCTION SUPPLY CHAINS

1.0 INTRODUCTION

Now days Malaysia and other countries in the world entered a new era of the Information Age. Where by Management Information System (MIS) plays an important role in a construction environment whether it is during the preconstruction period or during the project implementation. Such information is vital not just to the procurer but to all the suppliers and parties involved in the project.

Procurement within the construction context applies to a combination of goods and services defined to meet specific requirements. The basis of procurement depends on the specific needs and objectives of the project. In a procurement project the parties involved have decisive roles based on the information available or communicated to them.

Besides that, information systems are an integral part of organization for some companies there would be no business without an information system. It needs to be captured and communicated efficiently between relevant parties during a construction project. Better means of managing the information flow results in enhanced productivity of projects. However, inefficiency in handling information does not depend solely on the industry process or the technologies adopted. Several other factors are identified within the framework of this paper.

2.0 DISCUSSION

2.1 Construction supply chain

The construction supply chains are characterized by the involvement of many companies from a wide variety of trades. A construction project involves a diverse group of participants including contractors, architects, engineers, labourers, and developers. A project of medium to large scale typically involves hundreds of different companies supplying materials, components, and a wide range of construction services. The multi-participant and multi-domain characteristic is partly caused by the high fragmentation of the industry.

The temporary project-based nature of construction projects also hinders integration of construction supply chains. Even though the processes can be similar for construction projects of a specific kind, most construction projects create new products or prototypes and consist of temporary supply chains that organizations need to be reconfigured for each project. A flexible system may facilitate adapting to new configurations and changes in supply chains. Based on the characteristics of construction supply chains, literature review, and feedbacks from practitioners in the industry, the following sections summarize the desirable requirements of a collaborative platform to enhance communication among members and integration of services in a construction supply chain.

2.2 Supply chain management

The definition of supply chain Supply chain management (SCM) is the management of the flow of goods, flow of cash, and flow of information internally and externally of a company or a group of companies that share the same value chain. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption; cash or credit in purchasing or selling of products or services; as well as the information that conducts those activities, such as orders, demand forecast, or even picking lists. Interconnected or interlinked networks, channels and node businesses are involved in the provision of products and services required by end customers in a supply chain. Supply chain management has been defined as the "design, planning, execution, control, and monitoring of supply chain activities.

SCM draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach. Each industry has its own product characteristics and builds networks on its own standards. Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value.

In the construction process, By working as directed by the vision of supply chain management, the direction of the development for individuals as well as companies can be changed. A process is defined as a repetitively used network of orderly linked activities using information and resources for transforming inputs to outputs, extending from the point of identification to that of the satisfaction of the customers needs (Ljungberg, 1998). A specific type of process is what is termed the construction processes. In this paper the term refers to the processes that are associated with construction projects. It is typical for a construction company to carry out production in projects.

The Construction procurement is a term Construction Procurement or Procurement Process is used in this paper to describe the process required to supply equipment, materials and other resources required to carry out a construction project. Construction procurement is a key activity within the supply chain associated with the provision of construction works and forms an integral part of supply chain management functions. The construction industry has developed many different contractual arrangements and procurement routes for carrying out construction works. They include both traditional practices and new initiatives. 2.3Role of information in the supply chain

The role of information in the supply chain management in construction deals with the management of materials, information, and financial flows in a network consisting of general contractors, subcontractors, suppliers, and distributors. The co-ordination and integration of these flows within and across companies are critical in effective supply chain management. The traditional approach to project management in construction has been based on activities to monitor each subcontractors activities against the schedule (Howell, 1999). The organization of a construction project usually consists of temporarily designed teams from different companies to produce a unique product. In addition, divergent goals and objectives of project participants deter from information sharing. As the structure of the supply chain becomes intricate, it is also unlikely that a single person would be able to deal with the entire information and material flow.

In the literature, several techniques are proposed for implementing supply chain management. In this context, information sharing is a fundamental approach that underlies both communication and collaboration. Existing tools in the manufacturing industry are often intended to provide information sharing to help supply chain managers. The construction industry has project based temporary supply chains: that is, its supply chains keep changing from project to project in most cases and participants cannot afford to spend much time in configuring a system.

Although many engineers, construction managers and contractors do not consciously recognize a supply chain, they all interact with it and make supply chain management decisions on a daily basis. However, real-time availability is not an easy task: information is not easily accessible; it takes too long to have; and no single person can handle all the information in a supply chain because one has to deal with thousands of products, numerous requirements on production, and many types of interactions.

2.4Contracting phases

The construction procurement is divided into two phases within a project environment such as pre-contracting and post-contracting phase. These are the main phases of the contracting process. The information contained in the precontracting phase is the early development of a project where negotiations and one or more bidding processes take place. Since each construction project has unique requirements, the supply chain identified or selected tends to vary from project to project.

The post contracting phase includes the activities and flows in the supply chain that take place based on the contractual agreements between the procurer and the supplying partners. During the precontracting phase, sharing of information is the main activity that takes place while negotiating for a contract and identifying requirements. In the post contracting phase, the flow of materials and services is added along with the managing information among supply chain partners. Supply chain integration, which depends on the easy flow of project information with the partner suppliers, is obviously significant during the post contracting phase.

2.5The information flow model

The purpose of the model is to understand the information flow that takes place throughout the construction procurement supply chain both during the pre- contracting and post-contracting phases. An abstract view of information flow was earlier analysed in the manufacturing and process industry (Titus, 2001). This model is developed here to accommodate the project-based approach of the construction environment and further explain the flow of information among supply chain partners.

The procurer identifies different actors that form the supply chain: the architecture firms, main contractors, specialized subcontractors, and engineering firms. The construction supply chain with its multitier customer and suppliers has less of a linear pattern compared to what is known from other industries. The production methodology adopted in a manufacturing setting cannot be immediately transferred to a construction project. This project-centred approach enables increasing collaboration and communication as seen in the model (Figure 1). The two arrows represent the bidirectional information flow: the requirement information that a partner receives, and information that the partner releases.

The requirement from the procurer initiates the procurement. This mostly takes place with the tender request from the procurer or could even be in response to a spontaneous offer from a supplier. The information flow is considered bidirectional at the level of each partner firm though it needs to communicate further upstream to suppliers in order to cause the fulfilment flow. The procurement requirement is the intended purpose of the procurer that needs to be converted to information and communicated.

Figure 1: Project model depicting information flow in construction supply chain

2.6Time, cost and quality

The three most common primary objectives in project management are lowest cost, highest quality and shortest time. Very often the gain in one of these objectives needs a compromise in the other. Simplifying, the literature indicates that client core objectives can be summarized as: highest realistic quality, lowest realistic cost, minimum realistic time into service, high prestige for the building (within what is affordable) and minimum conflict during the process. However, aside from core wants, there is a huge variety of noncore client requirements that a construction project has to assimilate.

2.6.1Time

Effective planning and programming the design and construction is fundamental to the timely completion of the project. The project plan and programme will be established using a hierarchical system of programmes within a project planning framework. Progress through the stages of design, procurement, construction and commissioning will be monitored on a regular basis and any action required to overcome delays will be noted and implemented as early as possible for these actions to be effective.

2.6.2CostEffective cost control can only be obtained when the whole of the project team has the correct attitude to cost control. Rider Levett Bucknalls cost management strategy places emphasis on ensuring that close liaison and free exchange of cost information between the project team is maintained at all times.

2.6.3Quality

Quality control will be implemented within an overall Quality Management framework. Appropriate procedures and controls will be established to ensure compliance with specifications and to confirm that standard and quality of workmanship and materials are attained.

2.7Managing information

Nobody would deny that proper management of information brings in value. The value is obtained when information enables people and systems to efficiently perform actions and make decisions. Managing information is particularly valuable in the procurement projects in that it provides timely information in decision making among the member firms within the supply chain. Those decisions may be good or bad, brilliant or inept, but the decisions are largely driven by the information as presented.Human SystemHuman HumanSystem System

Figure 2: Three types of interaction

Figure 2 shows three types of such interactions between deciders are identified: Human to Human, System to System, Human to System, and system to system. Managing information is not just information processing in pure system terms but also includes decision making by various actors involved in enhancing the information flow. Such decision makers can either be systems or people, based on the type of information and type of decision. According to the project model described above, the requirement and fulfilment flow is based on the decision making efficiency associated with each individual partner or firm. Based on the decision made, the subcontractor causes the fulfilment flow as information is sent to the required parties.

Each participating firm in the project supply chain has a decision making role in managing the information flow within the network of the construction project. The deciders in the decision making process sense the environment they are in (here environment is the instance when a partner firm needs to make decision based on the information received or possessed). The decision making process generally is modelled or understood as a feedback loop. Several models have been proposed for describing the decision making process. Based on this model it is understood that proper information flow involves both sharing of information between partner firms and managing information by proper decision making within each partner firm in the supply chain.

The flow of information in supply chain management depends on the trade-offs each partner firm is willing to make in terms of information sharing with the other partner firms in the project. The cost-effective communication of high quality and timely information increases the value of project partner as a communicator of information within the project. The inter-relatedness of the value of information to efficiency in information flow is presented in Figure 3. The nature of information received, the decision made and the information communicated are inter-related within the context of each partner firm. The value of information can be analysed according to the three underlying factors that cover the objectives of the procurer: quality, time and cost. In Figure 3 shows the managing of information and the overall efficiency is a result of information handling capabilities within each project partner .It is also a fundamental fact that each partner within a single project can be part of several other projects and supply chains. The environment of supply chains also depends on the nature of the project and the firm.

Value of InformationProject Partner as aQualityRecipient

TimeDecider Efficiency in Information flow

CostCommunicator(Of information)

Figure 3: Efficiency in information flow from a project partners perspective

3.0CONCLUSION

The case study presents a model for better understanding the information flow in complex construction projects. Though the construction process in many ways is dissimilar to what is typical of production in the manufacturing industry, several conclusions can be drawn from both the theoretical viewpoint of supply chain management and the managing of information.

Supply Chain Management System of a construction project use to help manage relationship with their partners, identifies the partners involved and their respective roles in handling the flow of information. The procurer initiates the project and the requirements are broken down and communicated between the participating partners. On an abstract level, each instance of information triggers bidirectional flows to and from each partner, flows that are identified as a requirement and a fulfilment flow, respectively. Once the information flow is considered, the factors of time, cost and quality need to be analysed with the partner firm deciders capacity to handle information to cause the requirement and fulfilment flow.

The quality of information received, the timeliness of the manner it is received and the cost-effectiveness in obtaining the information determine the efficiency of a project partner. This framework can be used as a tool to examine information flow efficiencies and implement better supply chain strategies, developing the appropriate metrics. It has implications for users and developers of construction procurement related information systems and supports managers in better decision-making while adopting new technologies for procurement process.

In addition, it helps identify the information gathering and retrieval among various partners in the procurement process and thus design better procurement systems. This framework leads to an impetus to further explore the areas of information management and to define a next step in construction supply chain management, the continuing struggle to adapt the principle of a totally integrated supply chain in other industries to the construction industry.

4.0REFERENCES

1. Silas Titus Jan Brchner, (2005), "Managing information flow in construction supply chains", Construction Innovation, Vol. 5 Iss 2 pp. 71 82

2. Kenneth C.Laudon, Jane P.Laudon, (2014), Supply Chain Management System, Management Information System, 13rd Edition, page 85-86

3. http://www.academia.edu/6207486/Construction_Supply_Chains_A_proposal_to_develop_a_new_conceptual_model

4. http://en.wikipedia.org/wiki/Supply_chain_management

5. https://buyandsell.gc.ca/for-government/buying-for-the-government-of-canada/the-procurement-rules-and-process/phases-of-the-procurement-process

6. http://www.academia.edu/7824884/SUPPLY_CHAIN_MANAGEMENT_IN_CONSTRUCTION_DIAGNOSIS_AND_APPLICATION_ISSUES

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