ABSTRACT
Introduction The aim of this chapter is to provide an understanding o f the importance of the construction industry in the UK and understand how a closer working relationship between primary supply chain members can provide cost savings together with other benefits for both client and contractor organizations alike. Although Supply Chain Management has grown in use and importance in other industries, notably those o f retail and automotive, it is a relatively new concept for the construction industry, despite its many years of experience in sub-contracting specialist services. Whilst the relationship between the main contractor and the client organization is the principal focus of a partnering arrangement, it is also recognized that as a consequence of successful supplier relationships at this level, the role and importance of the full supply chain will also increase. In line with the theme of this book, the chapter also reports on the risks associated with a supply chain approach to construction by examining the internal and external factors acting upon the industry.The construction industry has, like other parts of the UK business economy, witnessed previous major developments aimed to improve profitability and performance. Typically such initiatives have included sales and marketing in the 1980s followed by human resources and organizational design in the early 1990s brought about through downsizing, delaying and re-engineering. Since the mid 1990s, mainly as a direct result of the publication o f the Latham Report (1994), the construction industry has seen an increasing interest in better Supply Chain Management and in particular, in the subject o f ‘Partnering’. It is widely stated that the principle of partnering first emerged in the construction industry some twenty years ago, predominantly in the United States of America where it was said to have been championed by the US Army Corps o f Engineers. Since then it has gained momentum in New Zealand, Australia and the United Kingdom. In respect to the UK, the Latham Report ‘Constructing the Team’ (1994) has undoubtedly acted as a catalyst for a move towards adopting Supply Chain Management in the
construction industry and in the use of ‘partnering’ between the client and the main contractor.There is an almost uniform view that the aim of partnering is to eliminate or at least reduce adversarial relationships and replace them with a long-term relationship based on mutual trust and benefit, not just in the form of more harmonious working but also in reducing traditional project risks. The concept of partnering is based on the premise that important but complementary opportunities exist between two companies but also there are powerful barriers which obscure these opportunities and often preclude their realization. However, if the right people are brought together with an effective organization process, the risks to partnering can be managed, barriers removed and the positive opportunities can be identified, prioritized and pursued.The chapter presents an overview of the UK construction industry, the use of Supply Chain Management in the industry and then examines the risks associated with collaborative partnering relationships in the industry before ending with a number of conclusions.
