Supply chains in construction
The supply chain is the interconnected hierarchy of supply contracts necessary to procure a built asset. Managing the supply chain involves understanding the breakdown and traceability of products and services, organisations, logistics, people, activities, information and resources that transform raw materials into a finished product that is fit for its purpose.
Unlike the automotive industry, the construction industry has the particular difficulty that every building is different, a unique prototype, developed by a team of consultants, contractors and other suppliers that may never have worked together before and may never work together again.
To add to the complexity, different procurement systems place elements of supply chain management with varying disciplines and organisations.
On a 'traditional' building project, design consultants are first tier suppliers, working for the client, and the contractor has a supply chain of sub-contractors and specialist suppliers. On PFI or design and build projects, however, there may be just one first tier supplier (sometimes the contractor) and design consultants will work for them as part of their supply chain.
On large or complex projects, responsibility and performance may cascade down the supply chain to a plethora of suppliers sometimes unknown to management at the top of the chain. For more information see: Suppliers.
One of the problems in the construction industry is that the first and second tier of the supply chain typically sign up to fairly onerous agreements, but as the chain develops, so the contractual liabilities decrease until suppliers at the end of the chain are often not locked in at all.
The key to supply chain management is providing a strategy that aligns with the project programme. This starts at the design stage, scoping the work into packages. Early evaluation based on feedback from the supply chain can produce enormous cost benefits and value. Capacity and production capability in a market controlled by supply and demand are particularly significant if programme bottlenecks are to be avoided.
In recent years larger companies offering continuity in construction have taken an increasing interest in establishing relationships beyond direct, first tier suppliers. Framework contracts and partnering agreements have pioneered this approach, encouraging the involvement of selected suppliers at relatively early stages of projects while offering continuity of work. This has led to greater collaboration between lead designers and product designers to the advantage of all parties.
'Integrated supply team' describes the integration of the complete supply chain involved in the delivery of a project. This may include the main contractor, designers, sub-contractors, suppliers, facilities managers, and so on. The integrated supply team is particularly relevant on public projects that may follow private finance initiative (PFI), prime contracting or design and build procurement routes. Under these routes, the entire supply team may be appointed after the project brief has been prepared, often under just one contract rather than separate contracts with each individual company.
Supply chain integration (SCI): 'involves everyone in the supply chain working cooperatively and collaboratively, so that the collective effort effectively delivers the client’s requirements and avoids unnecessary work. SCI is about adding value to design and construction processes, improving time, cost, quality, health and safety and other outcomes.' Ref BIM Overlay to the RIBA Outline Plan of Work, published by the RIBA in 2012.
NB In June 2019, the Construction Leadership Council (CLC) published Future Skills Report, criticising extended supply chains and calling for more direct employment of labour. Mark Reynolds, chair of the CLC skills workstream said: “This important report clearly sets out the challenge the industry and our clients face and the actions that must be taken now to avoid significant skills shortages in the future. When we have seen projects with higher levels of direct employment the results are often better, the workforce more engaged and ultimately the client and end users are happier with the final product.”
[edit] Related articles on Designing Buildings
- 2021 Building Engineering Business Survey.
- Broken chain.
- BSI construction product identification system.
- CLC urges inclusion of fluctuations provisions in contracts.
- Collaborative practices.
- Collateral warranties.
- Contractor.
- Contractor vs supplier.
- Cyber resilience.
- Down payment chain.
- Fair payment practices.
- Fragmentation of the UK construction industry.
- Framework agreement.
- Green supply chain management.
- Integrated supply team.
- Named supplier.
- Onerous contract.
- Partnering.
- Reflections on 2021.
- Subcontractor vs supplier.
- Supply.
- Supply chain integration.
- Supplier.
- Supplier selection.
- Supply chain management.
- Vertical integration.
- What is causing the rise in steel prices?
Featured articles and news
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.
UK Infrastructure: A 10 Year Strategy. In brief with reactions
With the National Infrastructure and Service Transformation Authority (NISTA).
Ebenezer Howard: inventor of the garden city. Book review.
The Grenfell Tower fire, eight years on
A time to pause and reflect as Dubai tower block fire reported just before anniversary.
Airtightness Topic Guide BSRIA TG 27/2025
Explaining the basics of airtightness, what it is, why it's important, when it's required and how it's carried out.
Construction contract awards hit lowest point of 2025
Plummeting for second consecutive month, intensifying concerns for housing and infrastructure goals.
Understanding Mental Health in the Built Environment 2025
Examining the state of mental health in construction, shedding light on levels of stress, anxiety and depression.
The benefits of engaging with insulation manufacturers
When considering ground floor constructions.
Lighting Industry endorses Blueprint for Electrification
The Lighting Industry Association fully supports the ECA Blueprint as a timely, urgent call to action.
BSRIA Sentinel Clerk of Works Training Case Study
Strengthening expertise to enhance service delivery with integrated cutting-edge industry knowledge.
Impact report from the Supply Chain Sustainability School
Free sustainability skills, training and support delivered to thousands of UK companies to help cut carbon.
The Building Safety Forum at the Installershow 2025
With speakers confirmed for 24 June as part of Building Safety Week.
The UK’s largest air pollution campaign.
Future Homes Standard, now includes solar, but what else?
Will the new standard, due to in the Autumn, go far enough in terms of performance ?
BSRIA Briefing: Cleaner Air, Better tomorrow
A look back at issues relating to inside and outside air quality, discussed during the BSRIA briefing in 2023.
Restoring Abbotsford's hothouse
Bringing the writer Walter Scott's garden to life.
Reflections on the spending review with CIAT.