FOCUS: Secrets to supply chain efficiency in the GCC
Supply chain management (SCM) in the construction industry is a crucial element as the need to move materials securely and with fewer errors is of utmost importance for ongoing projects.
Danube is a major supplier of building materials in the region and, having also begun launching its own projects, has found out that supplying materials to its own projects ensures that it can maintain quality and control the availability and timely supply of materials.
Rizwan Sajan, founder and chairman of Danube Group, says: “Our SCM system is based on a four-month inventory cycle as 95% of the products are imported.”
Nevertheless, Danube’s chief points out that carrying excess inventory may lead to price drops which, in turn, can result in the devaluation of that inventory.
“However, procurement for the entire group is centralised in Dubai in order to maximise price benefit,” Sajan continues. “Moreover, we use enterprise resource planning (ERP) to monitor stock and sales as there are no forecasting models or tools available. This supply chain model has been effective for more than two decades.”
Many developers are now relying on software tools to assist in efficent management and minimise loss.
Recently, Greek firm, ACE-Hellas, a provider of integrated services in structural design, engineering, and sustainability software, introduced ACE OCP, a commercial optimisation computing platform that aims to deliver cost reduction in the architecture, engineering, and construction (AEC) market.
ACE- Hellas claims that the tool represents the future of value engineering, going beyond what has been possible with traditional optimisation techniques. Its algorithms are designed to automatically optimise any structure, thereby reducing construction and material costs by at least 10%. This is consistent with the required performance, reliability, quality, and safety protocols of regional construction firms, according to the company.
Another software company, Oracle, has developed cloud-based management software to assist with SCM. Swami Natarajan, software as a service (SaaS) sales development and strategy leader – Eastern Central Europe, Middle East, and Africa (ECEMEA) for Oracle, says: “The cloud SCM solution establishes the digital ecosystem architecture by which supply chains can begin analysing, translating, and responding to demand opportunities across the end-to-end business that they often miss [at present].
“This end-to-end digital ecosystem is a new enabling capability that provides scale and agility across the supply chain, as more industry 4.0 practices take hold in the enterprise, and among internal and external partners and customers.”
Pointing to drawbacks of systems commonly used within today’s construction sector, Natarajan adds: “Compared to many other industrial settings, lean thinking has not yet been widely adopted in the project-based construction industry as a means for improving supply chain performance.”
Although electronic systems are gaining ground within the field of SCM, Hill International says that construction firms can still benefit significantly by enlisting the services of a reliable consultant.
Lindsay Hawkins, director at Hill International, explains: “If the competitive tendering process to select a consultant is balanced then you should be getting the best in the market, which means the best and most recent experience; for example in logistics, network planning, or inventory management.
“Plus, with the rate of technological change in the supply chain industry, providers are incentivised to bring the latest thinking to construction projects in order to differentiate themselves from their competitors.
“While most asset owners are looking to boost efficiency within their portfolios, SMC in construction may not be one of their core business capabilities. As such, they may neither be the best at SMC optimisation, nor the most cost effective.”
Hawkins also says that challenges involved in maintaining adherance to performance regimes over the course of a project can make a consultant’s job tough.
“Consultants may not [always] be able to guarantee correct management [throughout] the supply chain,” he concedes. “[However,] if each of the consulting firms is delivering their scope (the best ones will also be continuously improving and applying lean production and planning), and the owner is delivering the programme successfully, then the supply chain should be managed effectively,” he concludes.