Worksite Logistics in House Construction : HOW STRATEGIC CHOICES AFFECT THE TOTAL COST OF THE MATERIAL SUPPLY PROCESS

Abstract: Material supply is much more than the cost of materials. It is a chain of activities that require resources, which over time accumulate costs such as salaries and rents. The accumulated cost of the linked activities is the total cost of a process of material supply. To find the total cost, a holistic perspective is required. This study has collected empirical data at Skanska, a Swedish construction company, where supporting units work towards construction projects. One of them is a logistics unit that provides logistics services focusing on material supply in projects of house construction. The activities of the system in which the logistics services operate lead to costs that are not visibly attached to the process, but rather to the resources of it. The whole is the material supply process and the components of its total cost must thus be understood. The logistics services provided by the logistics unit to the projects incorporate the total cost perspective, however, this is not always considered by all in production. Thus a tool to prove the holistic view of the effect of different strategies is necessary. The aim of this study has been to create a tool for evaluating the total cost of material supply, with the purpose to create a common platform for strategic decisions, on which both parties can agree on the total cost of different strategies. Through interviews at Skanska, and visits to construction sites, a material supply process for residential house construction has been identified. This was developed into a process map that represents the material supply process at the worksite in projects that are not using logistics services. The process map includes activities, but also options for strategic decisions and delays due to random happenings. This makes the process flexible for each unique project. Also the cost generating parameters have been identified for input into the process. The difficulty has been to find a general process due to the unique nature of construction projects. The process is an estimated model of reality. With the general material supply process as a basis, the impact of implementing each logistics service in the process was explored. A process map of material supply at the worksite was developed with each of them individually; Consolidated Deliveries, Carry-in Services, and Delivery Calendar. These process maps show the change in activities and links between them, as well as the related cost generating parameters. To a large extent, these parameters are the same, but will be different in value due to the underlying strategies of the logistics services.The focus of Consolidated Deliveries is to reduce the number of deliveries and to deliver Just-intime for production by consolidating materials at a terminal before it reaches the worksite. This removes buffer stock and reduces material waste. The Carry-in Services focus on outsourcing thematerial handling activities performed by the workforce and increases the focus on core activities by the workforce. The Delivery Calendar focus on increasing transparency of resource allocation, which leads to greater possibilities to optimize the use of resources, and also a smoother flow of activities with less waiting time. The result of this study is a logical tool that can be used for evaluation of the total cost of materialsupply strategies. The suggestion is to use the process maps and identified parameters to develop a simulation model. By finding the values of the identified parameters, and running the simulation program, the difference in total cost between the material supply strategies can be identified.