Localising the supply chain

Abstract

The UK committed in 2008 to reduce its greenhouse gas emission by 80% by 2050. The construction industry is a key contributor to the greenhouse emissions and future legislative adjustments for the built environment are well underway. The industry will face many challenges and it is expected that its profile will be very different by 2050. The scenario that there will be pressure for the supply of labour, materials and components to be much more localised due to increased energy costs is very likely. In turn, supply chains, which currently are becoming increasingly long as the demands of projects become increasingly complex, will inevitably have to face the localisation challenge. The long supply chains provide the increasingly high levels of technical input relating to design, manufacture, installation and servicing in the context of an industry anxious to maintain flexibility in the face of uncertain levels of workload and investment. These tall contractual hierarchies contain a massive amount of expertise but the contractual hierarchy constrains the effective management of knowledge and innovation through excessively long network paths, containing multiple, perversely incentivised, network bridges and gate keepers. Contractual relationships, knowledge management and information exchange networks define the localised supply chains and important work needs to be done to examine the potential for these networks to be established and be maintained. Social network analysis can be employed to map existing supply chains and to provide predictive models for local supply chains in 2050. The paper discusses how to best examine what the capabilities of the local supply chains today are and what their capabilities would be if they were specifically enhanced to meet 2050 challenges. These capabilities inform supply chain management targets which mainly focus on continuous improvements of the supply chain increasing value and stimulating knowledge sharing and innovation. Sustainability targets are yet to be fully incorporated in the value equation, which is what the 2050 challenge requires; therefore particular attention is paid to it. It is suggested that exploring the location of intellectual capital in construction supply chains, demonstrating how the use of BIMs and vertical integration of the supply chain might be exploited to provide interfaces between local supply chain actors and end-users, examining the logistics and embedded energy, comparing the today’s logistical demands with a 2050 localised supply chain scenario, is a starting point in developing the concept of the localised supply chain as a successful approach to the sustainability problem.