Logistics Building Blocks

The construction industry is realising how efficient logistics can help to reduce costs without compromising on quality.

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By  Robeel Haq Published  May 7, 2006

|~|construction2.jpg|~||~|Whilst the construction boom continues at full pace in the Middle East, the costs associated with building projects are constantly rising. Construction companies are therefore faced with the challenge of reducing their costs without compromising on quality. It’s a tricky situation, but the industry has started to realise how efficient logistics and supply chain management could provide them with the ideal solution. “The rising costs associated with the construction industry has placed increasing pressure on companies. The concept of logistics is really being embraced because it results in lower costs, helps to improve efficiencies and allows these companies to gain a competitive advantage,” says Tekkali Satya, distribution centre manger, Global Shipping & Logistics. Manufacturers and distributors specialising in the construction industry deliver items such as electrical products, cables, heaters, interior decoration and waterproofing material to building sites throughout the day. The actual delivery times must be carefully organised taking into account road restrictions placed on heavy commercial vehicles throughout the Middle East. “Organising inbound deliveries meticulously avoids the build-up of lorries waiting for unloading at construction sites, causing unnecessary delays,” says Satya. Once the order is delivered to the building site, the logistics manager is assigned responsibility to certify the stock has arrived in the correct quantity and each item meets quality standards. Construction companies must maintain optimal inventory levels due to space constraints within the building site, plus the additional hazards associated with overloading products onsite. “Stock management is a very important factor in construction logistics,” says Satya. “The process involves co-ordinating with worldwide manufacturers and managing the flow on inbound construction materials. Such items are usually very valuable, which means stock visibility is essential.” Construction companies normally obtain effective stock visibility by implementing technology such as enterprise resource planning (ERP) and warehouse management systems (WMS). Whilst most industries started migrating from paper-based operations around five years ago and began using computer technology to track and control stock, a large section of the construction industry in the Middle East initially continued without proper systems in place. This created logistical nightmares because information on the supply chain became difficult to obtain. However, the situation has recently changed with construction companies in the region implementing such technology in large numbers. “Computer technology such as warehouse management systems, ERP systems, barcoding and RF helps to simplify the management of construction logistics,” says Satya. “Regardless of whether a construction company handles logistics inhouse or outsources to a third party, the benefits of implementing this technology include better order forecasting, reduced inventory levels and greater transparency of stock.” The technology is also used to record the movement of stock to the construction company’s storage facility, which is normally an outdoor area within the building site. “Outdoor storage is sufficient for most construction material,” says Satya. “There are some items that require special storage conditions, for example temperature control, although these are normally ordered just-in-time to avoid potential damage. If fuel and gas cylinders are stored in the site, a separate area with special safety equipment is required.” Because the valuable construction equipment is stored outdoors, the chance of theft or damage is higher. Therefore, building site security is very important. The use of CCTV and security personnel, supported by detailed access procedures, is normally adequate. “The financial impact of having stock stolen or damaged is detrimental. Most companies in the Middle East have already adopted detailed security procedures to protect themselves,” says Satya. Health and safety is another important consideration on construction sites because the potential dangers are higher compared to normal warehouses. Although health and safety considerations vary between different building sites, ensuring everyone at the site is wearing a helmet and safety shoes to protect themselves against accidents is universal. In addition, labour should be provided with sustained safety training before being allowed to work on the site. As such, most construction material is utilised within the building site. However there are still occasions when stock is moved out of the site, which normally occurs when the construction company has several different projects within close proximity and needs to transport material between different sites. “Moving stock between different sites is common when construction companies need out-of-stock items urgently,” says Satya. “In fact, the construction companies have more control when transporting items themselves, because instead of relying on the manufacturer’s fleet of lorries, the companies are using their own vehicles.” It has become quite common for construction companies to install vehicle-tracking devices in their fleets to keep track of deliveries between sites. In fact, the technology can also monitor the movement of labour between the building site and staff accommodation. “Labour transport is a critical aspect of construction logistics, especially because of traffic congestion in places like Dubai,” says Satya. “A construction company may place employees in accommodation around the city and keeping track of their arrivals to the site could prove very beneficial.” Whilst logistics concepts such as vehicle tracking are being regularly incorporated within the construction industry, the opportunity for further improvements still exist. Purchasing the correct technology, training logistics professions within the industry, and outsourcing work are some options available to companies wanting to improve their supply chain. “Construction companies are already starting to reap the benefits of utilising good logistics models,” concludes Satya. “In simple terms, those construction businesses failing to take these issues seriously risk being overtaken by their competitors.” ||**||

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