By William Wappler
In 1989, one of the most innovative and complicated construction projects I know was built in Jukkasjarvi, Sweden. It’s the Ice Hotel. It’s a working hotel that only books rooms from December to April. It’s built using 2-ton bricks of ice harvested from the Torne River along with what the builders call snice, a combination of snow and ice. It’s not a building that can exist in many parts of the world due to the complicated ice and snice supply chain and particular weather requirements. This may be an extreme example to discuss supply chain issues in the construction industry, but it perfectly illustrates something unique about construction. No two projects are the same depending on the location, building requirements, and execution of the construction. And, the bigger the project is, say a single-family home versus an airport, the larger and more complicated the supply chain.
The need to harvest ice, mill lumber, or quarry rock, points to another issue with construction supply chains. Though it’s 2021, construction supply chains are still manual with orders and requests handled on paper and through phone and human transactions. This presents other problems when one considers the specialized construction equipment, materials, and skilled labor. It’s all costly and if materials and equipment are lost, stolen, damaged, or simply fail to arrive on site when expected, timelines, budgets, and reputations can be damaged.
DIGITAL SUPPLY CHAIN
A 2020 survey by Marcum LLP’s national Construction Services group reports a positive outlook by respondents about the current and future state of the construction industry, despite the COVID-19 pandemic. Factors influencing this optimism were the ability to secure financing for new projects and finding new sources for building materials, that means new supply chains. Additionally, while job backlogs remain strong, respondents say they see the need for more diversified supply chains. The news for 2021 looks to be a good year for the construction industry, too.
Construction professionals are more interested than ever in adopting technology to meet the needs of the construction industry just as other industries have such as biotech, aerospace, manufacturing, and agribusiness.
We can expect to see the use of technology in the risk mitigation programs that contractors are deploying. We are already seeing the use of several technologies growing in the sector such as GPS, Bluetooth, and RFID technology to identify and locate large and expensive items that are prone to theft and general loss, such as equipment, materials not installed but are staged on-site, and construction machinery.
Managing the supply chain for a major building project involves understanding the breakdown and traceability of materials, logistics, people, activities, resources, and information that allows the project to go smoothly and within budget. The ability to see what’s happening in real time in the supply chain is the difference between on time and on budget delivery and resource scheduling, and a project foundation languishing for months.
This process 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 bottlenecks are to be avoided.
The increasing complexity of modern construction projects, both in an administrative and architectural sense, means that projects can quickly become difficult to coordinate, and potentially lead to mistrust and disputes if the involved parties disagree about basic project facts. Better documentation and new systems that promote trust and transparency of data can provide major benefits for construction industry companies of all kinds. Blockchain is one of the most exciting answers to this problem. It provides added security and applications as well as a means to prevent tampering and provide authenticity for valuable building materials.
Blockchain is a digital ledger technology best known for its use in the cryptocurrency Bitcoin. A blockchain is a decentralized, distributed digital ledger of records called blocks that is used to record transactions across many computers so that any involved block cannot be altered retroactively, without the alteration of all subsequent blocks. This allows the team members of a specific project to verify and audit transactions independently and relatively inexpensively.
With blockchain in the construction industry, it’s possible to establish trust across multiple, unrelated third parties by inviting disparate groups to collaborate on documents. Products can be tracked and verified for quality and authenticity if necessary. Other elements such as equipment rentals can be included, too. Because of the many partners in a major construction project, the use of blockchain to manage, in real time, all the moving parts is not only essential but cost-effective.
The role of data in today’s supply chain should be viewed from the aspect of improvement and change, and the degree at which each can occur. The value of data can be measured in two distinct ways: the quality or integrity of the data and its ability to create transformative impact. By developing a single community framework to build into a cloud-based solution, supply chain data can be accessed with a cell phone, alerts, or notifications to follow the tags. Tags can be followed out, and more importantly back, in the case of a recall.
As we move forward, I see a greater use of technology being deployed in storage yards going beyond location into following maintenance service dwell time, time off site, over-the-road location, and on-site time of use and movement.
Technology is allowing supply chains to become resilient and agile. A community using a common framework would solve many of the fractured data issues. The pandemic has highlighted the importance of supplier relationship management. Accurate, data-driven supply chains move beyond transactional relationships, focusing on innovation and collaboration. And that’s a “snice” future.
About The Author
William Wappler is the founder and CEO of Surgere, a leading company revolutionizing and expanding visibility into the physical supply chain with engineered and patented supply chain software, IoT-based sensors, and certified asset identity hardware. For more, visit www.surgere.com.
Modern Contractor Solutions, May 2021
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