Standardizing Logistics at the Corporate Level Towards Lean Logistics in Construction

Jan A. Elfving1, Glenn Ballard2 & Ulla Talvitie3

1Senior Vice President, R&D and Supply Chain Management Skanska Oy, Head of Logistics in Nordic Procurement Unit. Paciuksenkatu 25, 00101 Helsinki, Finland, Phone +358 40 738 6100, jan.elfving@skanska.fi
2Professor, Civil and Env. Engineering. Department, and Director of the Project Production Systems Laboratory (p2sl.berkeley.edu), 215-B McLaughlin Hall, Univ. of California, Berkeley, CA 94720-1712, USA, Phone +1 415/710-5531, FAX 510/643-8919, ballard@ce.berkeley.edu
3Logistics Manager, Skanska Oy. Paciuksenkatu 25, 00101 Helsinki, Finland, Phone +358 20 719 2438, ulla.talvitie@skanska.fi

Abstract

The hypothesis of this paper is that one of the reasons why logistics is poorly managed in the Finnish construction industry is that we try to tailor it too much on a project level and to standardize too little on a corporate level. Depending on various studies the logistics cost is between 10-30% of construction cost. There are many reports, which claim that there is significant amount of waste such as excess inventory, movement of material, and damage related to logistics. In addition, there are many success stories how logistics has been improved on a project. However, even though the opportunities are huge and good practices have been identified, the majority of construction projects in Finland manage logistics poorly. The question is why? The paper is based on empirical studies from the last five years from a single company. Around 180 projects, some more and some less actively, have been involved. With the help of three cases we present three logistics solutions and how their implementation has progressed. The first case is a customized solution for one project, where engineered-to-order supply chains are made transparent with the help of Building Information Modeling and RFID tags in order to increase delivery reliability. The second case is a ―corporate‖ level solution for managing small make-to-stock items with the help of Vendor Managed Inventory. The third case is a ―corporate‖ level solution to manage make-to-order and large make-to-stock items with the help of a terminal (logistics center) in order to increase site productivity. All three cases were successful pilot projects, but only the last two have we been able to be more widely implemented in the company. The paper discusses why and comes to the conclusion that there are at least two main obstacles that have earlier prevented or slowed down a wider implementation of good practices. One is poor production reliability and the other one is that we have been trying to customize our logistics solution too much on a project level instead of standardizing processes on a corporate level. There is plenty of literature that supports the poor production reliability argument but much less understanding of the latter argument.

Keywords

Logistics, Production management, Processes, Lean

Files

Reference

Elfving, J.A. , Ballard, G. & Talvitie, U. 2010, 'Standardizing Logistics at the Corporate Level Towards Lean Logistics in Construction' In:, Walsh, K. & Alves, T., 18th Annual Conference of the International Group for Lean Construction. Haifa, Israel, 14-16 Jul 2010. pp 222-231

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