Supply Chain Management - Essay Example

h the finalization of eligibility criteria for enlisting the potential members. Thirdly, an information sheet about the rationale behind the formation of a supply chain needs to be submitted to the management for better understanding of the strategy in proper perspective.  It is in this backdrop, the proposal for building up a supply chain management system and selection of members for partnering discusses the strategy in detail. Procurement strategy Clients in the field of construction are more demanding and the contractors have to keep up to the schedule considering the cost overruns and penalties involved in case of delays.

Value for money, timely delivery and quality plays an important role in formulating procurement policies. Therefore, while short-listing the suppliers as members of the supply chain management for partnering, their track record for integrity, timely delivery and dependability is given more weight for consideration. The flexibility of the suppliers, in the face of change in requirements by the customers, needs to be given importance as the contractor cannot keep the goods in their inventory. It is important to ensure that the procurement schedule is finalized after making assessment of the current operations of the projects, the clients’ current priorities, documentation formalities and weaknesses noticed in the current schedule of operations.

Matching the procurement program with the progress of the project demands care, tact and good business relationship on the part of the contractor with the client as well as the suppliers, because the projects are mostly one-off designs with complex interaction among various partners. Bower (2003) states, “It has been widely reported that extreme fragmentation is a particular trait of the construction industry…observed in the diversity of professions and trades in construction.” (p.10) In view of the uncertainties involved due to non-repetitive and non-standard nature of the projects, diverting the materials procured for one site to another site could be planned at the time of taking procurement decisions.

Benefits of teamwork and partnering Outsourcing: Benefits of team work and partnering accrues through outsourcing. Conceptually, “Cost of using something in a particular venture is the benefit foregone (or opportunity lost) by not using it in its best alternative use”. (Lipsey 1995, p. 259) If the company decides to use its capital effectively based on the opportunity cost by means of sub-contract or outsourcing, it increases its profitability and scale of operation. Selection of the right members for partnering depends upon several criteria such as financial strength, infrastructural facilities, storage facilities, reputation for timely delivery and dependability in view of the continuing business relationship envisaged in the process.

Sub-contracting is also preferred in view of its cost advantage to the contractor. Ulku, Toktay & Yucesan (2007) “The supply chain may benefit from the separation of risk ownership and production capability. One of the primary drivers of