SCM competencies in construction: issues and challenges in New Zealand

Purpose – The purpose of this paper is to understand the nature and extent of current practice of construction supply chain management (CSCM) in the New Zealand (NZ) construction industry; consequently, to examine the challenges and issues that the industry is confronted in implementing an efficient CSCM. The construction industry, which contributes around 5 per cent to gross domestic product, is a vitally important industry in NZ. With over 50,000 businesses, the construction industry is the third largest industry by business count in NZ’s economy (Statistics New Zealand, 2009). Although it is widely accepted that productivity can be improved by adoption of effective supply chain management (SCM), no studies have investigated this at the tactical level in the NZ context. Design/methodology/approach – A case study approach is used for probing SCM practice on a NZ$75-million commercial project located in Auckland Central Business District. The supply chain network of the principal ground works and superstructure construction stages was studied. Findings – The key findings of the case study suggest that the flow of materials remains the main focus of CSCM practice. It was found that essential skills training for CSCM was extremely limited and largely ill-defined in terms of its nature and content. Finally, it was identified that as the NZ construction industry moves towards a significantly more collaborative framework, the efficacy of CSCM operations is expected to substantially improve. However, this last point did not negate the requirement to expand and improve skills training in CSCM. Originality/value – The results of the case study present that our best industry proponents are inadequate in their knowledge of CSCM as a result of education and training. This is a key issue that needs to be addressed through education at all levels. Similarly, they have virtually nil capability with logistics and the efficiency of transportation as a result of standard contractual costing procedures. Until the SCM/logistics knowledge gap is recognised and addressed, the improvements in logistics and, therefore, SCM will not occur in the NZ construction industry. That said, the findings related to partnering and collaborative thinking in NZ are encouraging. NZ has these elements largely in place already and a willingness to engage, particularly in alliances, in the future. It remains to be seen whether there will be sufficient energy expended in NZ by the leading players to create effective partnering and alliancing through improving SCM and logistics competencies.