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Last edited 06 Nov 2020
Supply in construction
‘Supply’ is the flow of resources used to satisfy a demand, such as materials, labour, information, skills, and so on. It can also refer to competencies or combinations of resources. In very general terms, commodity suppliers tend to be more price focused, whilst strategic suppliers are more quality/delivery focused.
As an economic concept, supply can relate to the amount that is available at a specific price, or the amount that is available across a range of prices. Goods and services all have their own supply and demand patterns based on the principle that if the market demands something and consumers are willing to pay more for it, producers will add to the available supply. As the supply increases, the price falls provided there is the same level of demand until (in theory at least) an equilibrium point is reached at which the supply equals the demand and there is neither any wasted supply or shortages.
In the construction industry, the term ‘supplier’ refers to organisations contracted as part of the delivery of a built asset. Traditionally, suppliers were considered to be organisations contracted to provide physical supplies such as goods, materials, plant, and so on; however, use of the term is now much broader and PAS 1192-2 defines a supplier as any ‘…provider of services or goods either directly to the employer or to another supplier in a supply chain’.
The term 'supply chain' refers to 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.
Supply chain management requires a holistic perspective and a view of organisations as parts of a process. It requires the ability to look beyond organisational boundaries, and a recognition of interdependencies.
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