questionnaire

1

SURVEY OF SUPPLY CHAIN MANAGEMENT AS PERCEIVED BY THE US CONSTRUCTION INDUSTRY

By

ASLIHAN KARATA

A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE

UNIVERSITY OF FLORIDA

2009

2

2009 Aslhan Karata

3

To my family

4

ACKNOWLEDGMENTS

I would like to thank people who helped me complete the work contained in this thesis.

The help of my supervisor Dr. Ralph Ellis was of great value. I would like to thank Dr. Raymond

Issa for his technical advice, encouragement and insightful comments throughout my work. I

thank Dr. Zohar Herbsman for serving as my thesis committee member and helpful advices.

I would like to express my special thanks to my parents Dr. Necmiye Karata and Dr.

kr Karata, my sister Berfin Karata and my beloved aunt Dr. Gnseli Grr. Their

understanding and faith in me and my capabilities, their love, encouragement, and eternal

support have motivated me all the time. Their support was the biggest motivation for the

completion of my degree. Also, I would like to thank my dear friends, Diner Konur and Sezgin

Ayabakan, without them it would be hard for me to accomplish this work.

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TABLE OF CONTENTS page

ACKNOWLEDGMENTS.................................................................................................................... 4

LIST OF TABLES................................................................................................................................ 7

LIST OF FIGURES .............................................................................................................................. 8

ABSTRACT .......................................................................................................................................... 9

CHAPTER

1 INTRODUCTION....................................................................................................................... 10

2 LITERATURE REVIEW ........................................................................................................... 12

Supply Chain Management ........................................................................................................ 12 Supply Chain Management in the Construction Industry......................................................... 13

3 METHODOLOGY ...................................................................................................................... 19

Introduction ................................................................................................................................. 19 Questionnaire Design .................................................................................................................. 19 Sample Design ............................................................................................................................. 22

4 ANALYSIS OF RESULTS ........................................................................................................ 23

Introduction ................................................................................................................................. 23 Analysis of Responses ................................................................................................................ 24

Functions Affecting the Contractors Efficiency of Supply Chain in Relation to Suppliers ........................................................................................................................... 24

Factors Affecting Contractors Organization when Considering Developing Supply Chain Collaboration ......................................................................................................... 25

Factors which are Necessary for Contractors when Developing a Successful Supply Chain Relationship with a Supplier ................................................................................ 29

Factors Affecting the Development of a Successful Supply Chain Relationship between Contractors and Clients..................................................................................... 31

Factors which are Necessary when a Contractor Communicates with its Clients/Suppliers .............................................................................................................. 33

Factors which are Barriers to Supply Chain Integration for Contractors ......................... 34

5 CONCLUSION ........................................................................................................................... 42

6 RECOMMENDATIONS ............................................................................................................ 45

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APPENDIX

A SURVEY FORM......................................................................................................................... 46

Informed Consent Form .............................................................................................................. 46 Questionnaire Form..................................................................................................................... 47

B CRONBACHS ALPHA TEST RESULTS .............................................................................. 51

Factors Affecting Contractors Organization when Considering Developing SC Collaboration ........................................................................................................................... 51

Factors Necessary for Contractors when Developing Successful SC Relationship with a Supplier .................................................................................................................................... 54

Factors Affecting the Development of a Successful Supply Chain Relationship between Contractors and Clients ........................................................................................................... 57

Factors which are Barriers to Supply Chain Integration for Contractors ................................ 60

C ANOVA RESULTS .................................................................................................................... 63

Functions Affecting the Contractors Efficiency of Supply Chain in Relation to Suppliers................................................................................................................................... 63

Factors for Developing SC Collaboration ................................................................................. 64 Companies value partnership with their suppliers/clients ........................................................ 67 Factors which are Necessary for Contractors when Developing a Successful Supply

Chain Relationship with a Supplier ........................................................................................ 67 Factors Affecting the Development of a Successful Supply Chain Relationship between

Contractors and Clients ........................................................................................................... 71 Factors which are Necessary when a Contractor Communicates with its

Clients/Suppliers...................................................................................................................... 75 Relationship between contractor and the majority of their suppliers/clients........................... 76 Factors which are Barriers to Supply Chain Integration for Contractors ................................ 77

LIST OF REFERENCES ................................................................................................................... 80

BIOGRAPHICAL SKETCH ............................................................................................................. 83

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LIST OF TABLES

Table page 3-1 Distribution of company groups ............................................................................................ 22

4-1 Functions affecting the efficiency of SC in relation to the suppliers .................................. 25

4-2 Relationship between the contractors and the majority of suppliers/clients ...................... 26

4-3 Factors developing supply chain collaboration with clients and suppliers......................... 27

4-4 Companies in terms of their revenue with regards to value of partnership with clients and suppliers ........................................................................................................................... 29

4-5 Developing SC relationship with a supplier ......................................................................... 30

4-6 Developing a SC relationship with client ............................................................................. 32

4-7 Factor effecting the communication with suppliers and clients .......................................... 34

4-8 Barriers to supply chain integration for contractors............................................................. 35

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LIST OF FIGURES

Figure page 2-1 Sample of SC organization .................................................................................................... 17

2-2 Manufacturing companys SC (Spekman et al, 1998) ......................................................... 17

2-3 Supply chain data acquisition process in construction (adapted from Spekman et al. (1998) An empirical investigation into supply chain management: a perspective on partnerships) ......................................................................................................................... 18

4-1 Functions affecting the efficiency of SC in relation to the suppliers .................................. 36

4-2 Factors developing a supply chain collaboration with clients and suppliers...................... 36

4-3 Relationship between the contractors and the majority of suppliers/clients ...................... 37

4-4 Partnership agreements with suppliers and clients............................................................... 37

4-5 Average duration for partnership agreements with clients and suppliers ........................... 37

4-6 Results indicate how the contractors value partnership with clients and suppliers ........... 37

4-7 Developing a SC relationship with a supplier ...................................................................... 38

4-8 Developing a SC relationship with client ............................................................................. 39

4-9 Factors affecting the communication with the suppliers and clients .................................. 40

4-10 Barriers to supply chain integration for contractor .............................................................. 41

B-1 Matrix plot of factors affecting contractors organization when considering developing a SC collaboration............................................................................................... 53

B-2 Matrix plot of factors which are necessary for contractors when developing a successful SC relationship with a supplier ........................................................................... 56

B-3 Matrix plot of factors affecting the development of a successful SC relationship between contractors and client .............................................................................................. 59

B-4 Matrix plot of factors which are barriers to supply chain integration for contractor ......... 62

9

Abstract of Thesis Presented to the Graduate School of the University of Florida in Partial Fulfillment of the

Requirements for the Degree of Master of Science

SURVEY OF SUPPLY CHAIN MANAGEMENT AS PERCEIVED BY THE US CONSTRUCTION INDUSTRY

By

Aslhan Karata

May 2009

Chair: Ralph Ellis Major: Civil Engineering

Supply chain management (SCM) has become a fundamental element in the construction

industry to improve the efficiency and productivity in recent decades. The construction sector

players including contractors, suppliers and clients have major roles in establishing and

developing SCM and collaboration. In this study, the relationship between contractors, their

suppliers and clients has been investigated to reveal the degree of importance of SCM from the

point of view of contractors. The individual opinions of the contractors have also been analyzed

to obtain personal data on the subject. This study details the results of a questionnaire survey of

supply chain management applied to US construction industry contractors randomly selected

among US construction industry contractors. From the results obtained, some solutions can be

proposed for the effective use of SCM for optimum construction performance as well as

emphasizing some crucial points avoiding optimum efficiency and productivity in the

construction business.

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CHAPTER 1 INTRODUCTION

This study presents the understanding and analyzing of Supply Chain Management (SCM)

in the US construction industry regarding the relationship between major contractor companies

and their suppliers and clients with a view to come up with certain implications for optimum

construction performance. It is conventional wisdom to accept that the construction sector is

composed of a large number of players with numerous project supply chains and various markets

(OBrien et al., 2002). Contractor companies, their suppliers and clients are major players of this

sector. In this study, partnering relationships among these players are investigated, since a

companys partners in the supply chain may well determine the companys success (Chopra and

Meindel, 2007).

The questionnaire form was designed to display the degree of knowledge of contractor

companies about SCM. The partnership agreements between the parties were inspected to see

whether they are really aware of importance of such mutual relationships or they are ignored by

contractors. As stated by Saada et al. (2002) partnering in construction revolved around three key

principles: agreeing mutual objectives; making decisions openly and resolving problems in a way

that was jointly agreed at the beginning of the project; and aiming to achieve measurable

improvements in performance through incentives. There are some vital factors to meet these key

principles on the part of the contractors, suppliers and clients.

Firstly, contractors should analyze their partners demand logically during the project

which is essential for a successful collaboration between a contractor and its partners leading to a

well-established and developed SCM. In order to achieve the high levels of collaboration

required to synchronize the supply chain, companies must balance the needs of customers with

those of suppliers and partners (Martella, 2000).

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Communication among the concerned parties is very important to improve collaboration.

As pointed out by Elliman and Orange (2000), one of the major problems of the construction

industry is its fragmented and adversarial nature which is a key factor contributing to poor

communication between all parties working on a construction project.

The quality of communication and sharing information among the contractor companies,

their suppliers and clients, determine the degree of achievement of the key principles. In addition

to balancing the needs of customers and suppliers, businesses must maintain equilibrium

between open communication and responsible information exchange (Martella, 2000).

Supply chain management is currently in its developing stage for construction industry.

Since the innovations on supply chain management in construction are still in the embryonic

stage, many barriers still need to be overcome (Cox and Townsend, 1998). The obstacles

preventing the optimum efficiency and productivity in the construction business were sought and

some implications were derived for the US construction industry to optimize the construction

performance.

This thesis is organized as follows. Chapter 2 presents SCM with a brief description and

SCM in construction industry with an explanation of the importance of roles of contractors,

suppliers and clients from the view of SCM philosophy. Chapter 3 provides the methodology of

the research. The strategy used when designing a questionnaire form in terms of understanding

and the attitudes of main contractors concerning the perception of SCM in US construction

industry with special emphasis on their relationship to their suppliers and clients, was explained.

Chapter 4 presents the survey results which were analyzed by using ANOVA, Cronbachs Alpha

Test and graphical bar tools. Chapter 5 includes the conclusion part of this study. Chapter 6

consists of some recommendations to further this research in the future.

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CHAPTER 2 LITERATURE REVIEW

Supply Chain Management

The whole chain from producing a raw material to selling the product to the firm i.e. a

retail merchant is ascribed as a supply chain. Several companies take part in an organization for

creating a product and transmitting it to the end user. Chopra and Meindl (2007) described the

supply chain as consisting of the parties who are involved in satisfying the customer demands.

The members of supply chain are not limited to the manufacturers and suppliers. Warehouses,

retailers, transporters and customers are all players of supply chain. The sample of La Londe and

Masters (1994) defined the supply chain more clearly as one firm producing a raw material and

selling it to the second firm which then uses raw material and turns it to a component. The third

firm buys this component from the second firm and assembles the component into a product sold

to the fourth firm which might be a wholesale distributor. This firm distributes the product to the

retail merchants who finally sell this product to the end users (customers). The set of firms which

pass these materials forward can be referred to as a supply chain. The schematic expression of

this chain is shown in Figure 2-1.

Mentzer et al. (2001) listed several activities which should be established by firms to

behave consistently with the SCM philosophy. In this research, the focused activities are;

integrated behavior, mutually sharing information, cooperation and partners building and

maintaining long-term relationships. Integrated behavior and cooperation with clients and

suppliers are highly recommended to meet mutual expectations in the long-term (Mentzer et al.,

2001). Partners building and maintaining long-term relationships are required for increasing the

effectiveness of SCM (Mentzer et al., 2001). Lee (2004) suggested that collaborative

relationships should be developed with suppliers and customers so that companies work together

13

to design or redesign processes, components and products as well as preparing backup plans.

Thomas and Griffin (1996) explained that Supply Chain Management (SCM) is the

management of material and information flow both in and between facilities, such as vendors,

manufacturing and assembly plants and distribution centers. An illustration of supply chain is

indicated in Figure 2-2.

It is very important to take into consideration the responsiveness of the supply chain while

designing the supply chain which is basically enabled by sustained information flow (Chopra and

Meindl, 2007). In addition, information flow has a direct impact on the scheduling, inventory

control and delivery plans which are fundamental elements for the coordination of members in a

supply chain (Lee et al., 1997). The supply chain strategy of many companies depends on getting

quicker response rate at consumer flow, since it has tremendous effect to optimize the companys

performance. So, a supply chain management strategy should be developed to attain the ultimate

goals of the company; providing a competitive advantage. In this paper, the existence of effective

collaboration within and beyond the boundaries of a company which is essential to convert

competitive advantage into profitability was sought.

Supply Chain Management in the Construction Industry

Major steps are taken to improve the efficiency and productivity of construction industry

for the last decades. Although performance of construction industry with regards to the budget,

quality of service, quality of materials and time of delivery are as well-developed as the other

industries, it is believed that there is still room for the improvements of supply chain

management tools for the Construction Industry.

SCM plays a major role to improve the efficiency and productivity of companies. The

actors of construction industry (contractors, suppliers and customers) should interact and

compromise to enable the essential adjustments (Dubois and Gadde, 2000). Since, contractors,

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suppliers and customers are very significant elements for the implementation of SCM,

collaboration between those sector players is very essential. Total management of the supply

chain enhances the competitive edge of all players therein (Berry et al., 1994). Contractors

have a key role to establish and develop the supply chain management. Their role includes the

activities and tasks leading to preparation of the production on site involving construction clients

and design team (Akintoye et al., 2000). Sustainable cash flow and data flow among both the

upstream and downstream of chain are provided by contractors (Figure 2-3).

The relationship between a customer and a contractor and the relationship between a

supplier and a contractor develop long term financial performance which increases profitability

and competitiveness (Dubois and Gadde, 2000). Partnership with suppliers and customers are

several advantages such as long-term association, encouraging mutual planning and problem

solving efforts (Maloni and Benton, 1997). Matthews et al. (2000) mentioned that adoption of

partnering into the construction industries of the USA can also reduce the common construction

industry problems such as lacking trust, respect and honesty between professionals. On the other

hand, if the one partner can not meet the mutual expectations partnership agreement will become

a disaster. Additionally, loss of partnership control and neglecting potential short comings

because of high expectations from the partnership can destroy mutual collaboration between the

players.

There are some features of the construction industry differing from the other industries

which might prevent the proper application of SCM in construction industry. Vrijhoef and

Ridder (2007) pointed out that the difference of SCM in construction industry from the other

industries occurs at the end-customer stage, since clients are involved in the chain both at the

start and at the end for construction projects. This nature of construction industry evolves

15

significant problems such as lack of communication, lack of knowledge sharing infrastructure,

which are obstacles the improvement of SCM in construction. Latham (1994) reported that the

fragmented and adversarial nature of the construction industry have directly negative effects

on communication between all parties on a construction project. Chinowsky et al. (2007)

indicated that knowledge sharing infrastructure is one of the primary barriers preventing the

successful implementation of organizations. If an infrastructure can not be established for

sharing the information, exchanging knowledge will only be restricted among individuals. The

quality of communication and sharing information among the contractor companies, their

suppliers and clients, determine the degree of achievement of the key principles. Vrijhoef et al.

(2003) pointed out that insufficient management of supply chain triggers natural problems of

construction industry; a large quantity of waste and problems. The old-fashioned management of

supply chain leads to waste problem because of independent control of each stage of the chain.

Only focusing on the optimization of local aims instead of concerning the whole chain (Chopra

and Meindl, 2007) and poor communication between the players on a project cause the lack of

coordination between the parties (Latham, 1994). This unimproved coordination causes

unreliable environment, consisting of negative symptoms as not only waste and rework but also

low efficiency level, high unpredictability, low profits (Vrijhoef and Ridder, 2007) which might

thwart the developing and sustaining of SCM coordination in construction industry. Partnering is

one of the solutions to prevent those circumstances. With this in mind, contractors partnership

agreements with their clients and suppliers were investigated in this study.

In this study, a questionnaire form was designed for contractor companies to display

managements understanding of the concept and its effectiveness for practical application in

construction industry (Mentzer et al., 2001). The relationship between contractors, their suppliers

16

and clients was examined for emphasizing the necessity of SCM application from the point of

view of contractors. The approaches of contractors, who were assumed as the most vital players

of the enabling the flow of organization in construction industry, to the SCM concept was

investigated, since there is a relationship between improving SCM strategy on construction

projects and understanding the inherent behavior of firms in markets and the structural

characteristics of those markets (OBrien et al., 2002). Moreover, since the nature of construction

industry prevents the proper implementation of supply chain, barriers existing during enhancing

the industry were asked to figure out the common problems of the constructors.

17

I. Firm

Produce raw mat

Sell/distribute raw material II. Firm

Produce a component

Sell/distribute components III. Firm

Assemble com. into a

product

Sell/distribute the product

IV. Firm

Distribute the product

Sell/distribute the product to a retail merchant V. Firm

Distribute the product

Sell/distribute the product to customer

Figure 2-1. Sample of SC organization

Figure 2-2. Manufacturing companys SC (Spekman et al, 1998)

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Figure 2-3. Supply chain data acquisition process in construction (adapted from Spekman et al. (1998) An empirical investigation into supply chain management: a perspective on partnerships)

19

CHAPTER 3 METHODOLOGY

Introduction

This study investigated the understanding and the attitudes of main contractors concerning

the perception of Supply Chain Management in US construction industry with special emphasis

on their relationship to their suppliers and clients. Various studies, literature and research articles

on SCM and its application in construction industry were analyzed. A questionnaire form was

designed to identify and discuss the views and opinions of the contractors about the application

of SCM in construction sector, with the inspiration from previous studies on supply chain

collaboration and management in the UK construction industry (Akintoye et al., 2000) and

manufacturing and supply chain management in China (Pyke et al., 2000).

Questionnaire Design

Survey questionnaire is a measurement tool to find out the opinions of a specific group

about a certain subject. Since the needs for accurate and prompt flow of information has become

very critical, surveys are used to gather information from a sample of individuals (Scheuren

2008). Questionnaire provides a major source of knowledge. In this study, a three-page

questionnaire with an informed consent letter was sent to US contractors randomly selected

among the US contractors. Questionnaire forms were sent via e-mail, since researchers have

pointed out numerous benefits of e-mail over postal mail surveys, especially in terms of speed

and cost efficiency (Sheehan, 2006).

The questionnaire study was designed by the implications of two studies carried out by

Akintoye et al. (2000) A survey of supply chain collaboration and management in the UK

construction industry and Pyke et al. (2000) Manufacturing and supply chain management in

China. US contractors approach to the concept of supply chain management in construction

20

industry was sought to define. Relationship with their suppliers and clients were inspected to

identify the importance of supply chain strategy for these companies. This mutual relationship is

the fundamental element of SCM

The degree and quality of the relationship between the members of supply chain in

construction sector, including contractors, suppliers and clients, is one of the main factors to

determine the level of achievement of SCM. Thats why the questionnaire form was majorly

based on the relationship among these players to measure the success of supply chain strategy of

contractor firms. The questionnaire form was created based on the 5-point Likert scale; 5 refers

to very important or very strong or strongly agree or high extent and 1 refers to

unimportant or very weak or strongly disagree or low extent.

The insights for mapping supply chain structure have three primary attributes: members of

supply chain, structural dimensions, types of process links; indicating the structure of different

supply chains and the interconnection between a number of focal organizations supply chains

and the resultant networks of supply (Obrien et al., 2002). The questionnaire form is based on

the first attributes: members of supply chain; contractors, suppliers and clients.

The questionnaire survey was divided into four subgroups, each including different

numbers of questions. The first question was about the nature of companies participating in this

study. In Section A and Section B, contractors relationships with their suppliers and clients were

asked. Contractors were also asked about their collaboration with their suppliers/clients. Section

C sought the degree of importance of functions of suppliers and clients to the contractors supply

chain strategy to the achievement of their company goals and objectives. Section D contains nine

questions to explore supply chain strategy of contractor companies. Supply chain strategy

21

contains substrategies including production planning, inventory, lead time, purchasing and

transportation. These all elements must be consistent with supply chains level of responsiveness.

Firstly, contractors were asked about the extent to which inventory, transportation, lead

time, purchasing and production planning affect their efficiency of supply chain in relation to

their supplies. Secondly, they were asked to state the importance of such factors as improved

customer service, overall supply chain reduction, increased profitability etc. when considering

developing supply chain collaboration. In the third and the fourth questions, contractors were

asked to point out variables such as reliable delivery time, accurate order fulfillment, level of

complaints returns etc. to develop a successful supply chain relationship with suppliers and

clients. Questions five, six and seven involved questions about the degree of the importance of

communication between contractors, suppliers and clients, because communication plays a vital

role in establishing and developing collaboration. Question eight, contractors were asked the

degree of relationship to their clients and suppliers stating from very weak to very strong. Since

the innovations on supply chain management in construction are still in the embryonic stage,

many barriers still need to be overcome (Cox and Townsend, 1998). It is believed that supply chain

management is still in developing process for construction industry. This question sought the

obstacles to prevent the improvement of supply chain collaboration in construction industry. Last

part, question 10, was left for comments from contractor companies about supply chain

management in construction.

In conclusion, the questionnaire form was designed for contractor companies to display

managements understanding of the concept and its effectiveness for practical application in

construction industry (Mentzer et al., 2001).

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Sample Design

This study details the results of a questionnaire survey of supply chain management

applied to US construction industry contractors randomly selected among US construction

industry contractors by value of project. The questionnaire forms sent to the contractors via e-

mail using online survey software program. Each e-mail text included consent form explaining

the reason of my survey study. If the receiver accepted to participate in this survey, start survey

link was followed (Appendix-A). Overall, 23 responds were received after a one-month deadline

period for response. Data were sorted and ranked according to the mean values to be dealt with.

In order to check the null hypothesis to see whether there were any differences among the views

of the contractor groups classified in terms of companies total revenue in the year 2007,

ANOVA method was used (Appendix-B). Group numbers, total revenue of companies, number

of companies in each group and their distribution percentage within the group were depicted in

Table 3-1.

Table 3-1. Distribution of company groups Group Total Revenue, in 2007 ($ M) Frequency Percentage

Group 1 Less than 100 5 21.74% Group 2 100-500 12 52.17%

Group 3 More than 500 6 26.09%

Total 23 100% Each set of questions was analyzed with its contribution to clarify the contractors opinions

about SCM concept. Cronbachs Alpha approach was applied to check the reliability of a set of

questions where necessary. The Cronbachs Alpha test indicated that 5-point Likert scale test

analyzing the factors was reliable (Appendix-C).

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CHAPTER 4 ANALYSIS OF RESULTS

Introduction

Survey results were analyzed using Minitab statistical package and Analysis of variance

(ANOVA) method. Data were sorted and ranked according to the mean values to be dealt with.

In order to check the null hypothesis to see whether there were any differences among the views

of the contractor groups classified in terms of companies total revenue in the year 2007,

ANOVA method was used. Group numbers, total revenue of companies, number of companies in

each group and their distribution percentage within the group were depicted in Table 3-1.

Answers for each question were analyzed with respect to the null hypothesis to see whether

all company groups have the same mean value. Null hypothesis was tested as Ho and alternative

hypothesis was tested as Ha:

Ho = There is no significant evidence of a difference in the mean of responses among the three groups with respect to their approach to supply chain management concept (1=2= 3)

Ha = At least one of the three types of companies differs from the others with respect to knowledge about supply chain management concept Test statistic:

F = MST/ MSE MST= Mean Square for Treatments MSE= Mean Square for Error Rejection region:

F > F (crit.) (k-1, n-k) F critical = Probability of rejecting the null hypothesis k = sample size n = number of groups k -1 and n - k were defined as degree of freedom (df) P-value = Probability value (if P < 0.05, there is a high difference of views within groups in

relation to that factor)

24

Each set of questions was analyzed with its contribution to clarify the contractors opinions

about SCM concept. Cronbachs Alpha approach was applied to check the reliability of a set of

questions designed to test 5-point Likert scale. Since summated scales are an assembly of

interrelated items designed to measure underlying constructs, it is very important to know

whether the same set of items would elicit the same responses if the same questions are recast

and re-administered to the same respondents (Reynaldo and Santos, 1999). Considering 0.7 as

an acceptable reliability coefficient for Cronbachs Alpha approach, the higher the score, the

more reliable the generated scale will be. It should also be noted that when small sample sizes

exist, the normality condition and the equal variance condition become more critical. This

situation might present a problem because there were not enough observations from the

individual group of companies to test validly whether the normality or equal variance condition

was satisfied.

Our study aimed to present the understanding and analyzing of SCM in the US

construction industry regarding the relationship between major contractor companies and their

suppliers and clients with a view to come up with certain implications for optimum construction

performance. Detailed analyses and explanation of each set of questions are shown in the section

Analysis of Responses.

Analysis of Responses

Functions Affecting the Contractors Efficiency of Supply Chain in Relation to Suppliers

Inventory, Transportation, Lead Time, Purchasing Planning and Production

Planning are major functions affecting the efficiency of supply chain relation. In this part,

contractors were asked to scale the functions which were expected to influence their relationship

with their suppliers. Figure-2 indicates the results of this question.

25

Since scheduling is one of the most significant factors for construction projects, 73.9 % of

contractors put Lead Time function on Important-Very Important scale. The results of

Purchasing (65.2%), Production Planning (47.8 %) and Inventory (34.8%) functions were as

expected. However, Transportation (39.1%) function was disregarded by the contractors.

According to ANOVA results (Table 4-1), there was an inverse proportion between total revenue

of companies and effect of transportation function in relation to suppliers (even if the differences

between variances are not significantly different). Higher-income causes less concern about

transportation. Even if this result was reasonable with regards to the ratio of transportation cost

on the companies budget, increasing fuel-oil prices recently should be taken into consideration,

since it triggers transportation cost dramatically which increases the total cost of project. This

function is expected to have a major role for the construction industry in the near future. There is

no rejected null hypothesis for this case, since all F values are smaller than Fcrit.=3.49.

Table 4-1. Functions affecting the efficiency of SC in relation to the suppliers Average Total Revenue ($ Millions) F P-value

Total Less than

100 100-500

More than 500

Inventory 2.98 3.20 3.25 2.50 1.17 0.33 Transportation 3.31 3.60 3.50 2.83 1.68 0.21 Lead Time 3.95 3.60 4.42 3.83 2.63 0.10 Purchasing 3.82 3.80 4.00 3.67 0.39 0.68 Production Planning 3.71 3.80 3.33 4.00 1.15 0.34

Factors Affecting Contractors Organization when Considering Developing Supply Chain

Collaboration

Contractors should analyze their partners demand logically during the project which is

essential for a successful collaboration between a contractor and its partners leading to a well-

established and developed SCM organization. Improved customer service, overall supply chain

reduction, increased profitability, reducing bureaucracy/paper, increased market competitiveness

26

cost reductions within the organization, benefits to client, benefits to supplier and improved

quality assurance were listed as the most significant factors for an organization when considering

developing a supply chain collaboration. The Cronbachs Alpha test indicates that 5-point Likert

scale test analyzing the factors was reliable (Cronbach's Alpha = 0.8 > 0.7).

Among these factors, the results of responses to Improved quality assurance (78.3 %),

Benefits to the client (81.8 %), Improved customer service (87.0 %), Increased

profitability (69.6 %), Cost reductions within the organization (69.6 %), Reducing

bureaucracy/paper (43.5 %) and Increased market competitiveness (73.9 %) were as

expected. On the other hand, the responses to Benefits to supplier (34.8 %) and Overall

supply chain reduction (39.1 %) were lower than expected. Figure-3 indicates the distribution of

responses.

There was a major difference between responses to benefits to clients and benefits to

supplier. In addition to this, the result of a question revealing the relationship between the

contractor firms and the majority of their suppliers/clients is indicated in Figure 4-3.

Figure 4-3 highlighted that all contractors relationship with their clients are strong/very

strong (100 %). On the other hand, 65.2 % of them had strong relationship with their suppliers.

Also there were no significant differences among the group members (Group 1, Group 2 and

Group 3) (Table 4-2). There is no rejected null hypothesis for this case, since all F values are

smaller than Fcrit. = 3.49.

Table 4-2. Relationship between the contractors and the majority of suppliers/clients

Average Total Revenue ($ Millions) F P-value

Total Less than 100 100-500 More than 500

Suppliers 3.73 3.60 3.75 3.83 0.18 0.83

Clients 4.31 4.00 4.42 4.50 1.25 0.31

27

Most contractors almost neglected the contribution of suppliers to the SCM organization,

although they were aware of the clients importance for supply chain collaboration. Since,

contractors, suppliers and customers are very significant elements for the implementation of

SCM tools, collaboration among them is very essential. There should be a centralized supply

chain among those players. Only trying to optimize the local aims causes lack of coordination

and hurts the efficiency of supply chain (Chopra & Meindl 2007). Total management of the

supply chain enhances the competitive edge of all players therein (Berry et at, 1994).

Companies must balance the needs of customers with those of suppliers and partners to achieve

the high levels of collaboration required to synchronize the supply chain.

Table 4-3. Factors developing supply chain collaboration with clients and suppliers Average Total Revenue ($ Millions) F P-value

Total Less than

100 100-500

More than 500

Improved customer service 4.19 4.40 4.17 4.00 0.49 0.62 Overall supply chain reduction 3.92 4.00 3.75 4.00 0.08 0.93 Increased profitability 3.88 3.80 4.00 3.83 0.70 0.51 Reducing bureaucracy/paper 4.23 4.20 4.33 4.17 0.01 0.99 Increased market competitiveness 3.41 3.40 3.50 3.33 0.29 0.75 Cost reductions within your organization 3.93 4.20 3.92 3.67 0.12 0.88 Benefits to the client 3.36 3.40 3.33 3.33 0.09 0.91 Benefits to your supplier 3.27 2.80 3.33 3.67 1.23 0.31 Improved quality assurance 4.06 4.00 4.17 4.00 0.14 0.87 Benefits to your supplier 3.27 2.80 3.33 3.67 1.23 0.31 Improved quality assurance 4.06 4.00 4.17 4.00 0.14 0.87

Keeping in mind the significant differences between the responses to benefits to clients

and benefits to suppliers, the value of partnership with client and suppliers were inspected. The

existence of partnership agreement of contractors with clients and suppliers were sought to

clarify if they were intended to establish standards for consistent environment (Figure 4-4).

28

Even if there was no significant difference between percentage rates of existing partnership

agreements with clients and suppliers, the duration of these agreements had to be investigated

(Figure 4-5).

In Figure 4-5, it can be seen that there was a great difference between the average duration

of partnership agreements with suppliers (12.6 year) and clients (29.6 year). The controversial

situation between the existence of partnership agreement and its average duration can be

explained that the contractors have started to be aware of the importance of suppliers for their

companies in the last decade. Furthermore, when contractors were asked how they value their

partnership with suppliers and clients, 76.2 % of contractors responded that their partnership

with clients were on the important-very important scale and 60.9 % of them value partnering

with suppliers important-very important (Figure 4-6).

On the contrary to low response rate to benefits to supplier factors, high response rate to

partnering with suppliers pointed out that contractors are intended to make mutual agreements

with the suppliers. It was observed that Group 1 had higher averages (4.2 on the Likert scale) to

value of partnership with suppliers (Table 4-4). This result could be analyzed that this type of

companies are ready for mutual collaboration with suppliers to increase their budget. However,

when it comes to the Group 2 and Group 3, averages of between benefits to supplier and value

of partnership were no differences. With the comparison of Table 4-3 and Table 4-4, these

should be highlighted; Benefits to supplier: Group 3 (3.6), Group 2 (3.4); Value of partnership

with supplier: Group 3 (3.6), Group 2 (3.3)).

29

Table 4-4. Companies in terms of their revenue with regards to value of partnership with clients and suppliers


Total Less than 100 100-500 More than 500

Suppliers 3.76 4.20 3.42 3.67 0.75 0.49 Clients 4.13 3.80 4.08 4.50 0.55 0.58

At the warm-up phase of companies, partnering with supplier helps to increase the profit.

When the company grows, the importance of supplier is disregarded. The advantages of

partnership with suppliers and customers are always taken into consideration, since it has

tremendous effect on long-term association, encouraging mutual planning and problem solving

efforts (Maloni and Benton, 1997). The adoption of partnering into the construction industries of

the USA can also reduce the common construction industry problems such as lacking trust,

respect and honesty between professionals (Matthews et al., 2000).

Factors which are Necessary for Contractors when Developing a Successful Supply Chain Relationship with a Supplier

To improve coordination among players, contractors relationships with suppliers are very

necessary. Mutual relationship with supplier leads to reliable environment, with higher efficiency

level and higher profits. At this part, contractors were asked to scale the given factors when

developing a successful supply chain relationship with a supplier. Factors were listed as; reliable

delivery time, accurate order fulfillment, level of complaints/returns, delivery at specified

time, flexibility, fast order cycle time, handling of complaints, added value, quality of

materials, quality of service, trust and simplifying the whole construction process. The

results are shown at Figure 4-7. The Cronbachs Alpha test indicates that 5-point Likert scale test

analyzing the factors was reliable (Cronbach's Alpha = 0.9 > 0.7).

Since scheduling process is one of the most important elements for the construction

projects, reliable delivery time and delivery at specified time were asked to reveal

30

effectiveness of those factors for contractors when developing a supply chain relation with

suppliers. Even if the responses to figure out the importance of reliable delivery date (95.7 %)

were as expected, the degree of importance of delivery at specified time factor has changed

according to the size of companies. ANOVA results were helped to make these comparisons

(Table 4-5).

Table 4-5. Developing SC relationship with a supplier Average Total Revenue ($ Millions) F P-value

Total Less than 100 100-500

More than 500

Reliable delivery date 4.55 4.40 4.58 4.67 0.27 0.77 Accurate order fulfillment 4.37 4.20 4.25 4.67 0.99 0.39 Level of complaints/ returns 3.83 3.40 3.75 4.33 3.72 0.04 Delivery at specified time 4.27 3.80 4.17 4.83 3.37 0.05 Flexibility 3.81 4.00 3.58 3.83 0.88 0.43 Fast order cycle time 3.91 3.80 3.92 4.00 0.09 0.91 Handling of complaints 3.89 4.00 3.50 4.17 1.76 0.20 Added value 3.89 3.60 3.75 4.33 1.69 0.21 Quality of materials 4.32 4.20 4.25 4.50 0.30 0.74 Quality of service 4.28 4.00 4.33 4.50 0.86 0.44 Trust 4.32 4.20 4.58 4.17 0.74 0.49 Simplifying the whole construction process 4.19 4.00 4.25 4.33 0.28 0.76

There was a controversial relationship between the size of the company and their

sensitiveness to delivery at specified time. The range of averages was between 3.8 and 4.8,

increased dramatically from Group 1 to Group 3. Larger companies were more concerned

delivery at specified time than smaller ones, since liquidated damages provisions in

construction contracts are not very restricted for companies with lower income. Higher budget

increases the responsibilities should be taken during the project, so companies belong to Group 3

should be more precise for the project completion time.

Companies had high interest to Trust factor (86.4 %) as expected. Wong and Cheung

(2004) pinpointed that successful partnering depends on trust, an element that is difficult to be

31

implied on the construction industry, because of its fragmented and contentious structure. This

nature inhibits the engagement of construction partners. So, it is necessary to understand

importance of trust for successful partnering.

Responses to Level of complaints/returns factor had significant differences within the

group of companies which were classified as their annual revenue (F=3.72 > F crit.=3.49, Ho is

rejected). The averages of responses of Group 1, Group 2 and Group 3 were individually, 3.4, 3.7

and 4.3. It was a good indication that the responsibilities of bigger companies encouraged them

to align their organizations with respect to the complaints.

The results from rest of factors listed for developing a successful relationship with a

supplier had no significant differences within the group of companies. There is no rejected null

hypothesis except for Level of complaints/returns for this case, since F values are smaller than

Fcrit.=3.49.

Factors Affecting the Development of a Successful Supply Chain Relationship between Contractors and Clients

It was analyzed that contractors were aware of importance of clients for developing a

successful supply chain relationship. This question was asked to reveal the degree of importance

of which factors were more important for them. Factors were listed as reliability of supply, top

management support, trust, mutual interest, integrated information systems, more frequent

meetings, joint business planning, simplifying the whole business construction process,

manpower development, closer links between demand/supply, free flow of information, creating

standardization of processes and simplifying the bidding process. The Cronbachs Alpha test

indicates that 5-point Likert scale test analyzing the factors was reliable (Cronbach's Alpha = 0.9

> 0.7). The results of factors are shown at Figure 4-8.

32

Table 4-6. Developing a SC relationship with client Average Total Revenue ($ Millions) F P-value

Total Less than

100 100-500

More than 500

Reliability of supply 4.00 4.00 3.67 4.33 1.83 0.19 Top management support 3.94 3.40 4.08 4.33 1.65 0.22 Trust 4.13 3.80 4.25 4.33 0.74 0.49 Mutual interest 3.80 3.40 3.83 4.17 1.17 0.33 Manpower development 3.44 3.40 3.42 3.50 0.02 0.98 Closer links between demand/ supply 3.61 3.40 3.58 3.83 0.41 0.67 Free flow of information 3.98 3.60 3.83 4.50 2.09 0.15 Integrated information systems (e.g. EDI) 3.44 3.40 3.08 3.83 2.07 0.15 More frequent meetings 2.68 2.80 2.42 2.83 0.56 0.58 Joint business planning 3.14 3.00 2.75 3.67 2.48 0.11 Simplifying the whole construction process 3.14 3.00 2.75 3.66 0.24 0.79 Creating standardization of processes 3.57 3.20 3.67 3.83 0.72 0.50 Simplifying the bidding process 3.63 3.40 3.67 3.83 0.41 0.67

The quality of communication and sharing information among the contractor companies,

their suppliers and clients, determine the degree of achievement of the key principles. So, it was

sought that where more frequent meetings were essential to develop a supply chain collaboration

with clients. Responses to more frequent meetings were lower than predicted (13.6 %). Lacking

of communication between the partners inhibits the improvement of supply chain collaboration.

Contractors might interpret more frequent meeting factor as face-to-face meetings which

causes time consuming. New developments on technology provide many advantages for

communication. Instead of old-fashioned information management which relies on time

consuming - manual processes, multiple handoffs, and error-prone data reentry, implementation

of recent technological improvements i.e. XML, E-commerce on the construction industry enable

convenient environment for free flow of information (68.2%). Additionally, especially

companies in Group 3 which have more complicated supply chain organization value free flow

33

information more than the others to avoid cross-company processes (Table 4-6). Information

flow has a direct impact on the scheduling, inventory control and delivery plans which are

fundamental elements for the coordination of members in a supply chain (Lee et al., 1997).

Integrated information systems (36.4 %) had lower response rate than expected.

Implementation of information technology (IT) to the company reduces the levels of supply

chain and simplifying the processes. All players should be consisted in the echelon to increase

the overall effectiveness. Without integration of information systems, the same information is

entered repeatedly into different systems, the same forms are filled out and passed around

multiple times, the same checks and certifications are done over and over. This cumbersome

structure causes jumping of activities and data between companies, inconsistencies, errors, and

misunderstandings routinely arise, leading to even more wasted work. Even if implementation of

IT is a troublesome and expensive strategy which might discourage companies, its long-term

benefits to the companies are very important.

Besides of those factors explained and discussed in detail, the response rates to the others

were as predicted and there were no significant differences within the group of companies. There

is no rejected null hypothesis for this case, since all F values are smaller than Fcrit.=3.49.

Factors which are Necessary when a Contractor Communicates with its Clients/Suppliers

It was pointed out that improved communication with clients and suppliers are very

essential. So, the next question is; at which consulting stages contractors are concerned

communicating with their suppliers and clients; being consulted in deciding which new products

to develop or being consulted in deciding the production schedule. It was also sought that

whether there was any difference between communication preferences with clients and supplier

at these stages. The percentage rates of responses were as predicted. Contractors prefer being

consulted by suppliers (69.6 %) than clients (65.2 %) when deciding the production schedule. On

34

the other hand, contractors prefer being consulted by clients (87.0 %) than suppliers (82.6 %) in

deciding which new products to develop (Figure 4-9). There were unexpected ANOVA results

i.e. averages of results which might be caused by low number of participants (Table 4-7), since

there was an irregular distribution among the mean values of company groups. But, there is no

rejected null hypothesis for this case, since all F values are smaller than Fcrit.=3.49.

Table 4-7. Factor effecting the communication with suppliers and clients Average Total Revenue ($ Millions) F P-value

Clients Total Less than

100 100-500 More than

500 Being consulted in deciding the production schedule 4.27 3.80 4.50 4.50 1.44 0.26 Being consulted in deciding which new products to develop 3.97 4.00 3.58 4.33 0.30 3.49


Supplier Total Less than

100 100-500 More than

500 Being consulted in deciding the production schedule 4.09 3.60 4.33 4.33 1.59 0.23 Being consulted in deciding which new products to develop 3.78 3.60 3.58 4.17 1.15 0.34 Factors which are Barriers to Supply Chain Integration for Contractors

Since the nature of construction industry thwarts the proper implementation of supply

chain and inhibits developing of SCM organization in construction industry, barriers existing

during enhancing the industry were asked to figure out the common problems of the

constructors. Determination of common problems might provide taking precautions on the whole

sector, because only focusing on local aims instead of concerning the whole chain causes the

lack of coordination between the parties (Latham, 1994). Factors which might be potential

barriers were listed as; late and incorrect payments, bidding process, retention, unrealistic

35

program times, traditional contracts do not endanger good working relationships, estimators are

too demanding on small organizations, companies do not understand other business within

supply chain, some partnering relationships are executed for the wrong reasons (Figure 4-10).

Cronbach's Alpha proofs that 5-point Likert scale of factors are reliable (0.8 > 0.7).

The biggest barrier preventing the developing of SCM integration was bidding process

(65.2 %). Late and incorrect payment (60.9 %), traditional contracts (52.2 %), unrealistic

program times (52.2 %) followed the biggest barrier. Misunderstanding of SC concept (17.4

%), executing of some partnering relationships for the wrong reasons (17.4 %), excessive

demanding of estimators on small organizations (26.1 %) and retention (34.8 %) factors did

not exceed the mean value (3.00). Hence, those factors were not considered as the vital ones.

ANOVA test showed significant difference at bidding process factor (F=3.59 > Fcrit.=3.49)

(Table 4-8). It was observed that Group 1 and Group 3 were concerned bidding process as barrier

more than Group 2. But this might be biased, because of irregular distribution of companies for

each group. There is no rejected null hypothesis except for bidding process in this case, since

all F values are smaller than Fcrit.=3.49.

Table 4-8. Barriers to supply chain integration for contractors Average Total Revenue ($ Millions) F P-value

Total Less

than 100 100-500

More than 500

Late and incorrect payments 3.63 3.80 3.58 3.50 0.11 0.89 Bidding process 3.87 4.20 3.25 4.17 3.59 0.05 Retention 3.12 3.20 3.00 3.17 0.08 0.93 Unrealistic program times 3.62 4.20 3.33 3.33 1.44 0.26 Traditional contracts don engender good working relationships 3.43 3.20 3.25 3.83 0.50 0.61 Estimators are too demanding on small organizations 2.69 2.40 3.00 2.67 0.52 0.60 Companies do not understand other business within supply chain 2.96 2.80 3.08 3.00 0.24 0.79 Some partnering relationships are executed for the wrong reasons 2.95 2.60 3.08 3.17 0.81 0.46

36

34.80%

39.10%

47.80%

65.20%

73.90%

Inventory

Transportation

Production Planning

Pruchasing

Lead Time

Figure 4-1. Functions affecting the efficiency of SC in relation to the suppliers

34.8%

39.1%

43.5%

69.6%

69.6%

73.9%

78.3%

81.8%

87.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Benefits to your supplier

Overall supply chain reduction

Reducing bureaucracy/paper

Increased profitability

Cost reductions within your organization

Increased market competitiveness

Improved quality assurance

Benefits to the client

Improved customer service

Figure 4-2. Factors developing a supply chain collaboration with clients and suppliers

37

65.2%

100.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Suppliers

Clients

Figure 4-3. Relationship between the contractors and the majority of suppliers/clients

43.5%

52.2%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Supplier

Client

Figure 4-4. Partnership agreements with suppliers and clients

12.6 yr

29.6 yr

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Supplier Client

Figure 4-5. Average duration for partnership agreements with clients and suppliers

60.9%

76.2%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

suppliers

clients

Figure 4-6. Results indicate how the contractors value partnership with clients and suppliers

38

56.5%

65.2%

65.2%

69.6%

69.6%

82.6%

82.6%

86.4%

87.0%

91.3%

91.3%

95.7%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Handling of complaints

Flexibility

Added value

Level of complaints/ returns

Fast order cycle time

Delivery at specified time

Simplifying the whole construction process

Trust

Quality of materials

Accurate order fulfilment

Quality of service

Reliable delivery date

Figure 4-7. Developing a SC relationship with a supplier

39

13.6%

31.8%

36.4%

50.0%

50.0%

54.5%

54.5%

59.1%

68.2%

68.2%

72.7%

72.7%

81.8%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

More frequent meetings

Joint business planning

Integrated information systems (e.g. EDI)

Manpower development

Simplifying the bidding process

Closer links between demand/ supply

Creating standardisation of processes


Mutual interest

Free flow of information

Reliability of supply

Top management support

Trust

Figure 4-8. Developing a SC relationship with client

40

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Being consulted in deciding the production schedule

Being consulted in deciding which new products to develop

Being consulted in deciding the production schedule Being consulted in deciding which new products to develop

Clients 87.0% 65.2%

Suppliers 82.6% 69.6%

Figure 4-9. Factors affecting the communication with the suppliers and clients

41 17.4%

17.4%

26.1%

34.8%

52.2%

52.2%

60.9%

65.2%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Companies do not understand other business within supply chain

Some partnering relationships are executed for the wrong reasons

Estimators are too demanding on small organizations

Retention

Unrealistic program times

Traditional contracts do not engender good working relationships

Late and incorrect payments

Bidding process

Figure 4-10. Barriers to supply chain integration for contractor

42

CHAPTER 5 CONCLUSION

SCM has a key role to improve the efficiency and productivity of companies. Companies

involve in an organization for creating a product and transmitting it to the end user. Even if

major steps are taken to improve the efficiency and productivity of construction industry for the

last decades and alignments on performance of construction industry in terms of the budget,

quality of service, quality of materials and time of delivery, there is still room for the

improvements of supply chain management tools for the construction industry.

Among the activities for companies to adapt to the SCM philosophy, integrated behavior,

mutually sharing information, cooperation, partners building and maintaining long-term

relationships were based on for this research (Mentzer et al. 2001). Well-established partnership

between the players can meet implementation of these activities properly. Partnering in

construction revolved around three key principles: agreeing mutual objectives; making decisions

openly and resolving problems in a way that is jointly agreed at the beginning of the project; and

aiming to achieve measurable improvements in performance through incentives (Saada et al.

2002). Hence, contractors binding role at the upstream and downstream of the chain has been

based on in this research to analyze the current situation of SCM in construction industry.

It was revealed that contractors strategy majorly depends on the clients. They almost

disregard the contribution of suppliers to SCM organization, whereas they were cognizant of the

clients importance for supply chain collaboration. However, comparing the average duration of

partnership agreement with suppliers and clients indicated that the contractors have started to

realize the importance of suppliers for proper application of SC. Mutual relationship also with

supplier leads to reliable environment, with higher efficiency level and higher profits and also

provides several advantages such as long-term association, encouraging mutual planning and

43

problem solving efforts (Maloni and Benton, 1997). It should be regarded that companies must

balance the needs of customers with those of suppliers and partners to achieve the high levels of

collaboration required to synchronize the supply chain.

Comparing three different types of contractors which were classified as Group 1, Group 2

and Group 3 (Table 3-1), there are some differences between their approaches to the factors

enabling successful environment for supply chain. It was observed that higher budget of a

company increases the responsibilities should be taken during the project. So, these companies

have become more sensitive on the specified time completion of the project, this may result

because of liquated damages provision in construction contracts. Additionally, especially

companies in Group 3 which have more complicated supply chain organization value free flow

information more than the others to avoid cross-company processes (Table 4-6). Information

flow has a direct impact on the scheduling, inventory control and delivery plans which are

fundamental elements for the coordination of members in a supply chain. Each player of

construction industry should concern adapting to their individual strategy to the whole supply

chain organization instead of optimizing their own aims which brings to the lack of coordination

between the players.

Since the nature of construction industry (its fragmented and adversarial structure)

prevents the suitable implementation of supply chain and inhibits developing of SCM

organization in construction industry, barriers existing during enhancing the industry were asked

to figure out the common problems of the constructors. Bidding process , Late and incorrect

payment , traditional contracts , unrealistic program times were ranked as the biggest

barriers. These are all caused by traditional management method which causes cumbersome

structure and stimulate the unreliable environment for the construction industry. Determination

44

of common problems might provide taking precautions on the whole sector and diminish the

obstacles for implementation of optimal supply chain performance.

45

CHAPTER 6 RECOMMENDATIONS

This study consists of a survey of supply chain management as perceived by the US

construction industry with a special emphasis on the relationship between contractors, suppliers

and clients. Even if contractors pivotal role is depended on for this study, it can be extended by

involving more sector players, i.e. owners, building product manufacturers in the future research.

The analysis in this thesis is based on the 23 responses from the US contractors. More data

may help to get more accurate results and give more precise information about this subject. That

amount of responses might cause some biased results, and this situation will be prevented by

obtaining more data from the companies. More contractors should be motivated to participate in

the survey study.

In conclusion, participation of different kinds of construction sectors players and also

conducting the survey on more companies will be helpful to enrich the data result and get more

specific and proper information about the SCM in construction industry.

46

APPENDIX A SURVEY FORM

Informed Consent Form

Supply Chain Management in the Construction Industry Dear Participant, I am a graduate student in the Civil and Coastal Engineering Department at the University of Florida. As part of my course work I am conducting a survey, the purpose of which is to identify and discuss the views of US contractors on supply chain collaboration and management. I am asking you to participate in the survey because of your close connection with these issues, as a participant in the construction industry. Participants will be asked to fill out a survey lasting no longer than 20 minutes. You will not have to answer any question(s) you do not wish to answer. Your survey will be conducted in your workplace, after you have read this informed consent. Only I will have access to the survey that you fill out. The statistical data collected from your survey and others will be documented in my thesis. Although, your identity (if you choose to reveal it) will be kept confidential to the extent provided by the law and your identity will not be revealed in the final manuscript. There are no anticipated risks, compensation or other direct benefits to you as a participant in this survey. If you have any questions about this research protocol, please contact me at (352) 346 6021 or my faculty supervisor, Dr. Ralph D. Ellis, at (352) 392-9537. Questions or concerns about your rights as a research participant may be directed to the UFIRB office, University of Florida, Box 112250, Gainesville, FL 32611; Ph: (352) 392 0433. By filling out the provided survey, you give me the permission to report your responses anonymously in the final manuscript to be submitted to my faculty supervisor as part of my course work. Sincerely, Aslihan Karatas I have read the procedure described above. I voluntarily agree to participate in the research study and I have received a copy of this description. Please you use the following link: I agree, Start Survey

47

Questionnaire Form

Supply Chain Management in the Construction Industry

This survey has been designed to find out the views of main contractors on supply chain management. Please take a few minutes from your busy schedule and participate in the survey. Upon completion, please send an e-mail it to us at: [email protected]

1. What was your companys revenue in the year 2007, in US dollars? (PLEASE CHECK ONLY ONE) $1 to $49.9 Million $300 to $499.9 Million $50 to $99.9 Million $500 Million to $1 Billion $100 to $299.9 Million $1 Billion +

Section A 1. Do you have any partnership agreements with any of your suppliers? (yes / no )

If yes, how long has it been in existence? _________

2. Do these partnerships include any contractual agreements? ( yes / no )

3. How do you value partnership with your suppliers? (Please circle your choice)

Unimportant____ Less Important_____ Normal____ Important____ Very important_____

Section B.

1. Do you have any partnership agreements with any of your clients? ( yes / no ) If yes, how long has it been in existence? _________

2. Are these partnerships contractual agreements? ( yes / no )

3. How do you value partnership with your clients? (Please circle your choice)

Unimportant____ Less Important_____ Normal____ Important____ Very important_____

Section C. (please mark your choice) How important is supply chain management concepts with clients and suppliers to the achievement of your company goals and objectives? Unimportant____ Less importance____ Normal____ Important____ Very Important_____

Section D. (please circle chosen response) 1. To what extent do you consider that the following functions affect your efficiency of supply chain organization?

Low Extent High Extent

1 2 3 4 5

Inventory

Transportation

Lead Time

Purchasing

Production Planning

48

2. How important are the following factors to your organization when considering developing a supply chain collaboration?

Unimportant Very important

1 2 3 4 5

Improved customer service

Overall supply chain reduction

Increased profitability

Reducing bureaucracy/ paperwork

Increased market competitiveness

Cost reductions within your organisation

Benefits to the client

Benefits to your supplier

Improved quality assurance

3. How important are the following factors when developing a successful supply chain relationship with a supplier?

Unimportant Very important

1 2 3 4 5

Reliable delivery date

Accurate order fulfilment

Level of complaints/ returns

Delivery at specified time

Flexibility

Fast order cycle time

Handling of complaints

Added value

Quality of materials

Quality of service

Trust

Simplifying the whole construction process 4. To what extent do the following factors affect the development of a successful supply chain relationship between your organization and clients?


1 2 3 4 5

Reliability of supply

Top management support

Trust

Mutual interest

Manpower development

Closer links between demand/ supply

49

Question 4. Continued

Free flow of information

Integrated information systems (e.g. EDI)

More frequent meetings

Joint business planning


Creating standardisation of processes

Simplifying the bidding process

5. How much do you agree with the following factors when sharing information with your clients or suppliers?

Strongly Disagree Strongly Agree

1 2 3 4 5

Competitive advantage is sought by sharing information with our suppliers or customers

Competitive advantage is sought by production planning or inventory decisions for your suppliers or clients

Competitive advantage is sought by performing some of your suppliers or customers work for them

Proportion of overall production process subcontracted to outside firms

6. How important are the following factors when you communicate with your clients?


1 2 3 4 5



7. How much do you agree with the following factors when communicating with your suppliers?


1 2 3 4 5



50

8. How is the relationship between your firm and the majority of your (Please circle your choice)

Very Weak Weak Normal Strong Very strong

Suppliers?

Clients?

9. To what extent do you believe the following factors are a barrier to supply chain integration for contractors?


1 2 3 4 5

Late and incorrect payments

Bidding process

Retention

Unrealistic program times

Traditional contracts do not engender good working relationships

Estimators are too demanding on small organizations

Companies do not understand other business within supply chain

Some partnering relationships are executed for the wrong reasons

10. Please add any personal comments on the subject of supply chain management within the construction industry and how it

can be improved in the future.

________________________________________________________________________________________________________

______________________________________________________________________________________________________

________________________________________________________________________________________________________

______________________________________________________________________________________________________

51

APPENDIX B

CRONBACHS ALPHA TEST RESULTS

Factors Affecting Contractors Organization when Considering Developing SC Collaboration

Item Analysis of C1, C2, C3, C4, C5, C6, C7, C8, C9 Where C1: Improved customer service C2: Overall supply chain reduction C3: Increased profitability C4: Reducing bureaucracy/paper C5: Increased market competitiveness C6: Cost reductions within your organization C7: Benefits to the client C8: Benefits to your supplier C9: Improved quality assurance Raw Data (5-point Likert Scale) C1 C2 C3 C4 C5 C6 C7 C8 C9 3 3 3 3 3 3 3 3 3 4 2 3 2 4 4 4 2 3 5 4 3 3 4 3 5 4 4 4 4 4 4 4 5 5 3 4 4 3 4 4 4 4 4 4 4 5 4 4 2 2 2 5 3 4 4 3 3 3 4 4 4 3 4 3 3 3 3 3 3 3 3 3 5 4 4 3 4 5 5 4 5 4 2 4 4 4 4 5 5 5 4 3 5 2 5 3 3 3 3 5 5 5 4 5 4 5 2 4 5 5 5 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 4 3 3 3 3 3 3 3 3 4 3 4 4 4 4 4 3 4 5 3 5 2 5 5 5 3 5 4 3 4 3 3 3 4 2 4 4 3 3 3 4 4 5 4 5 4 4 4 4 3 5 5 2 5 3 4 4 3 4 4 3 3 4 4 3 4 4 4 4 4 3 4 4 3 4 5 4 4 4 4 4

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Correlation Matrix C1 C2 C3 C4 C5 C6 C7 C8 C2 0.519 C3 0.510 0.505 C4 0.048 0.336 0.259 C5 0.325 0.164 0.552 0.207 C6 0.276 0.309 0.426 0.466 0.548 C7 0.773 0.425 0.346 0.248 0.206 0.498 C8 0.285 0.172 0.175 0.420 0.254 0.267 0.313 C9 0.539 0.377 0.438 0.372 0.267 0.671 0.802 0.495 Cell Contents: Pearson correlation Item and Total Statistics Total Variable Count Mean StDev C1 23 4.174 0.650 C2 23 3.435 0.843 C3 23 3.913 0.733 C4 23 3.348 0.885 C5 23 3.870 0.757 C6 23 3.913 0.848 C7 23 4.261 0.810 C8 23 3.304 0.926 C9 23 4.087 0.733 Total 23 34.304 4.800 Cronbach's Alpha = 0.8419

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4.5

3.5

2.5

5

4

3

4.5

3.5

2.5

4.5

3.5

2.5

4.5

3.5

2.5

5

4

3

4.5

3.5

2.5

543

5

4

3

4.53.52.5 543 4.53.52.5 4.53.52.5 4.53.52.5 543 4.53.52.5

C2

C3

C4

C5

C6

C7

C8

C1

C9

C2 C3 C4 C5 C6 C7 C8

Matrix Plot of C1, C2, C3, C4, C5, C6, C7, C8, C9

Figure B-1. Matrix plot of factors affecting contractors organization when considering developing a SC collaboration

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Factors Necessary for Contractors when Developing Successful SC Relationship with a

Supplier

Item Analysis of C1, C2, C3, C4, C5, C6, C7, C8, C9, C10, C11, C12 Where C1 : Reliable delivery date C2 : Accurate order fulfillment C3 : Level of complaints/ returns C4 : Delivery at specified time C5 : Flexibility C6 : Fast order cycle time C7 : Handling of complaints C8 : Added value C9 : Quality of materials C10: Quality of service C11: Trust C12: Simplifying the whole construction process Raw Data (5-point Likert Scale) C1 C2 C3 C4 C5 C6 C7 C8 C9 C10 C11 C12 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 5 4 4 3 3 4 4 3 4 5 5 4 5 4 4 4 5 4 4 4 4 5 4 4 5 4 4 4 5 5 5 5 4 4 4 4 4 4 3 4 4 4 4 4 4 5 4 4 4 3 3 3 4 4 4 4 3 5 5 4 5 3 3 3 3 5 5 5 5 5 5 5 5 4 4 5 4 5 5 5 4 5

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