Logistics Centers to Support Project- Based Production in the Construction Industry

With the advancement of information technology and increased market competition, construction companies are driven to employ supply chain management strategies to seek competitive advantage. Managing logistics is one component at the core of such strategies. An effective logistics system ensures delivery of the right products and services to the right customers at the right time while minimizing costs and rewarding all participants based on value added to the supply chain. As a component of a logistics system, logistics centres can serve the construction industry by offering services such as: storage, transport, distribution, assembly, kitting, consolidation, sorting, breaking bulk, cross-docking, and e-commerce. This paper focuses on the role logistics centres may play and the impact they may have on construction supply chains. Construction companies may configure their logistics centres in different ways to match their global and local supply chain strategy, while addressing challenges posed by variation in demand and supply for material, equipment, and services. A hypothesis is that logistics centres are underused in this industry, yet may offer considerable advantage. The ultimate aim of the research that is reported on here is developing a logistics system to support project-based production needs. The authors present a simulation model of a logistic centre that supports multiple site stores on different construction projects facing variations in supply lead times. The objective of the simulation is to find an approach to reduce material management costs while avoiding resource shortages, and enhancing both reliability and responsiveness of the supply chain.