STRATEGY RESEARCH FOR THE SUPPLY CHAIN MANAGEMENT BASED ON VALUE CHAIN ANALYSIS IN CONSTRUCTION ENTERPRISES

Transcription

1 STRATEGY RESEARCH FOR THE SUPPLY CHAIN MANAGEMENT BASED ON VALUE CHAIN ANALYSIS IN CONSTRUCTION ENTERPRISES 1 BAI XIAO-PING, 2 XU CHUN-MEI 1 Aoc. Prof, School of Management, Xi an Univerity of architecture technology, Xi an, , China 2 Mater candidate, School of Management, Xi an Univerity of architecture technology, Xi an, , China 1 xxppbai@126.com, @qq.com ABSTRACT With the development of economic globalization and the information network ytem, in order to deal with more and more fierce market competition ituation, upply chain management (SCM) which i looked a a kind of main operation mode, ha been adopted by manufacturing enterprie, Contruction indutry ha already become pillar ector in the national economy. The particularity of it product and the complexity of it production proce have challenged the operation mode of building contruction enterprie in which the high cot and low benefit phenomenon often exit. Thi paper preent the detailed method and procedure applying upply chain management to the contruction enterprie from value chain analyi ide, alo analyze ome trategie that hould be elected when the upply chain management baed on value chain analyi i applied in building contruction enterprie, and give detailed cae tudy. The preented detailed method and point can offer the meaningful reference for olving ome problem exited in building contruction enterprie, uch a the dicontinuance of buine, low level productivity, the big loe, inufficient reource utilization rate. Keyword: Supply chain management; Value engineering; Contruction indutry ; Value chain; Strategy; Purchaing 1. INTRODUCTION With the fat development of the economy of our country, the contruction ha already become the pillar indutry of the national economy. It ha made a contribution to the tabilization and properity of a national economy and play more and more important poition in the economic contitution. According to the national bureau of tatitic, in 2011, the output value of the contruction ector wa billion Yuan, up 22.6 percent year-onyear; the building indutry houing contruction area wa billion quare meter, and up 22.6 percent year-on-year. At the end of 2011, the added value of the contruction ector of China wa trillion 3.2 Yuan. Compared in comparable price, it ha increaed 10.0%, a proportion of 6.8 percent of the total GDP. But compared to the manufacturing and the IT indutry, thi added value i relatively backward in it peed development, technological progre and the management mode. A ocioeconomic enter the digital, networked, information age, the advanced management method and idea of the manufacturing indutry being applied in the contruction indutry are not only poible, but alo neceary. In the indutrial economy era, the management theory and practice have been through the proce from the product a the center to the market a the center, the management focu i on the internal upply chain management of enterprie. But ince the 1990, the third indutry ha rapid development; information indutry i fat becoming a pillar of the modern economy. The knowledge economy ha hown the profitability, manufacturing and ervice ector have been gradually moved toward the integration, enterprie management i alo converted to take the cutomer a the center. The management of the upply chain make each organization link executive different procee between the flow, and upply chain interaction with other organization. The purpoe of upply chain i to make the whole upply chain achieve the maximum value. 15

2 2. DETAILED ANALYZING SOME RELATED REFERENCES Until now, there have been many reference tudying the upply chain management. The reference [1] examine the driver of utainability and related key feature baed on extant literature and a cae tudy [1]. The reference [2] invetigate the extent of implementation of utainable upply chain management practice [2]. The reference [3] deignate green upply chain management (GSCM) trategie to effectively direct buine function and activitie in the electronic indutry [3]. The reference [4] invetigate method for managing the irregular and uncertain demand involved in upply chain planning [4]. The reference [5] applie the eminal Ba model to analyze green upply chain management practice diffuion [5]. The reference [6] review the extant literature on empirical reearch in upply chain management (SCM) [6]. The reference [7] develop a correponding framework for value-baed performance and rik optimization in upply chain [7]. The reference [8] tudie logitic financial management of upply chain ytem from the value creation perpective [8], and etc [9-12]. By detailed analyzing thee reference, we find that the pecial tudie aiming to trategy reearch of the upply chain management baed on value chain analyi in China contruction enterprie are carce. The contruction indutry ha already become pillar ector in the Chinee economy. The particularity of it product and the complexity of it production proce have challenged the operation mode of building contruction enterprie in which the high cot and low benefit phenomenon often exit. Thi paper conider thi particularity and preent the detailed method and procedure applying upply chain management to the contruction enterprie from value chain analyi ide, alo analyze ome trategie that hould be elected when the upply chain management baed on value chain analyi i applied in building contruction enterprie 3. ANALYZING THE SUPPLY CHAIN MANAGEMENT MODE OF CONSTRUCTION INDUSTRY Supply chain management embodie advanced ytem management thought, it emphaize integrating all participant involved in the production proce from the view of the whole upply chain, o a to achieve win-win effect and improve the core competitive power of enterprie on the upply chain. The building upply chain ha internal and external upply chain: internal upply chain i limited in a ingle building enterprie interior, emphaize the coordination among internal market, finance, planning, engineering and purchaing department in building enterprie; While the external upply chain i beyond a ingle building enterprie' range, it conited of he owner, deign intitute, uperviion company conulting intitution, the contractor and the ubcontractor, material, equipment and component upplier, Bank, government department, inurance companie, and other enterprie and organization. That i, treat the general contractor a the core enterprie, by controlling information, good, fund, connect the material upplier, engineering ubcontractor, owner into a whole function network tructure model from raw material purchaing to contruction, tranferring to the client to ue, hown a Figure 1. upplier of material Labor ubcontra ctor Equipment leaing buine Information flow Capital flow Engineering ubcontractor General contract or Figure 1 The Model Of Contruction Supply Chain Owner Like manufacturing, the contruction indutry alo belong to the order form production, but the contruction upply chain have it different characteritic, uch a dipoable and pecificity of the upply chain, the uncertain link, the complex tructure of upply chain, which make u fully conidering the indutry characteritic and production characteritic to carry on the management of the contruction upply chain. In thi paper, contruction upply chain management i thought a a collaborative integrated management mode by treating engineering project a the carrier, baed on project information haring, to achieve the 16

3 optimal project completing and win-win effect of participant, hown a Figure 2 Party B Party B Party C Party A Information haring Supply chain management ytem Party D Party A Information haring Party C Party D Figure 2 The Model Of Contruction Supply Chain Management Thi management mode emphaize integrated management of core upply chain enterprie (general contractor), but alo tree on the integrated management of each party in external enterprie, applying information haring and trategic partner relationhip to improve efficiency of enterprie and fat repone change in the market, i a kind of new thought in building management. The overea experience how that taking the upply chain management in contruction enterprie would make the total cot of the proce can be reduced by 10% ~ 15% average, proceing opinion period horten, owner atifaction i alo greatly improved. 4. THE VALUE CHAIN ANALYSIS OF BUILDING AN ENTERPRISE SUPPLY CHAIN Contruction enterprie are different from general manufacturing enterprie; it main buine proce can be ummarized a: according to the requirement of the client to form contract market, the contruction enterprie contracting project, project contruction and project delivery and ervice - from contracting market for contracting, repeat the proce, hown a Figure 3. Auxiliary activitie Baic activitie Enterprie infratructure Human reource management Technological Development Purchaing Undertaking Internal logitic Project contruction Profit delivery and ervice Profit Figure 3 The General Form Of The Building Enterprie Value Chain The baic value chain activitie of contruction enterprie include project contracting, internal logitic, project contruction and project delivery and ervice for. Among them, the project contracting include all the activitie in the project. Internal logitic mainly refer to the torage and tranport for raw material, character of the production proce in building enterprie lead it poor tability of reerve material. In order to complete the internal logitic, material torage and tranportation i achieved with the "purchaing" in auxiliary activitie at the ame time. Project contruction i the one-time activity proce to perform contruction contract, integrate contruction reource (labor, contruction machinery, turnover material and the ubcontractor, etc.) To form contruction ability, and ue it in building material, finally complete the tak of contract. Project delivery and ervice refer to the project contract delivery and providing the needed ervice after being handed over the contract. The auxiliary activitie of building enterprie value chain include purchaing, technology development, human reource management and enterprie infratructure. 5. STRATEGY RESEARCH FOR IMPLEMENTING SUPPLY CHAIN MANAGEMENT 5.1 Analyzing the value upply chain in contruction enterprie The value analyi of the upply chain of contruction enterprie i applying the value analyi method to upply chain management of the contruction enterprie, through the upply chain management make the enterprie reduce cot, horten the contruction period, improve the work efficiency and management level, improve enterprie' popularity, enhance enterprie core competitivene in the market on the original bai of management. The creation value of upply chain i mainly reflected in the enterprie' financial value, cutomer value and ocial value. The core principle of creating value of upply chain i reducing the cot of enterprie internal exited on upply chain by the cooperation between the enterprie and functional department, a increaing the financial value of the enterprie, while at the ame time improving cutomer ervice level, realizing cutomer value, o that making the overall value to be promoted. 5.2 Strategy Reearch For Implementing Supply Chain Management In the upply chain management of building enterprie, becaue of it ome characteritic 17

4 including long buine activitie time, place fixing, big rik, more uncertainty factor, product being too ingle etc, o the production of each building product need to reconider time, cot, efficiency, peronnel and the ervice object, but the upply chain being ued to upport each building product are different. By detailed analyzing, the trategie of upply chain management baed on value chain analyi in contruction enterprie include: (1) Cultivating core competence and carrying out buine outourcing The core competitivene i an integrate knowledge and kill in organization internally, it i an ability formed in the buine proce of the enterprie and it i not eay to aped by rival, can bring an exce profit. The node enterprie which belong to the building upply chain mut have a unique core competitivene in a upply chain management environment, therefore they hould make ue of own characteritic to engage in a buine or a certain field. The non-core buine mut be outourced to other profeional ubcontractor, o internal reource in enterprie can be focued on core buine. If building contractor have won numerou profeional trong contruction equipment and contruction team involved in pile foundation, gla curtain wall, teel tructure, etc., Which generally caue idle and lead to great wate; On the other hand, if ubcontracting buine to profeional ubcontractor will achieve better effect at a relatively low cot. But the contractor can put more energy on the total package management and achieve better economic benefit. (2) Achieving effective human reource management The practice ha proved that people may reit change, when the new concept i introduced and the new plan i implemented. So upply chain management mut carry on the effective human reource management, which mainly include tranformation leaderhip idea, training worker (epecially management taff). Many large contruction enterprie in china are merged from blind puruing "large and allincluive" or "mall and all-incluive" buine model in the planning economy ytem. Thi kind of that all thing don't ak for help of the old management thought make contruction enterprie become a cloed ytem, it will put a lot of reource into an auxiliary buine which they are not good at, a a reult it weaken the core competitivene of enterprie, and differ very far from the open modern enterprie mode. Contruction enterprie need to train worker epecially in management kill and knowledge apect, including reading and writing kill, computer and network technology, accounting and finance, contract management, cooperation ability and profeional knowledge and kill. At the ame time it need to change the concept of taff, to make the taff etablih cooperation and win-win concioune, and cooperation partner hould trut each other, trengthen exchange can make job improve contantly. (3) Making ue of cutomer relationhip management to trengthen cooperation partnerhip The CRM ytem i a new buine model baed on the buine philoophy of taking the cutomer a the center", in which "cutomer relationhip oneon-one theory" i the foundation for the market, cutomer information reource are integrated to realize reource haring, it can make quick repone to the individualized demand market and enhance the competitive ability in the market. (4) Etablihing an electronic buine platform The application of information technology i the key to promote information haring in the upply chain uch a EDI (electronic data interchange), E- mail (electronic mail), IE (network technology), CAD (computer aided deign), DATE Exchange (data Exchange), and other information exchange technology ha been widely ued in many indutrie and produce the huge influence. But the information level of building enterprie i relatively low. Accordingly, the application of information technology hould be paid pecial attention to implement upply chain management in the contruction enterprie. (5) Etablihing the upply chain ytem In order to realize the tranformation of upply chain management from the traditional to the modern, it i neceary to achieve optimized integration of ome link including the enterprie internal product upply, order purchae, production, tranportation, inventory, and ale and ervice. Building enterprie i the complex production enterprie, in which procurement, tranportation, inventory hould have a relatively perfect ytem becaue of long contruction time, complex team. The upply chain i involved in capital, enterprie reource planning (ERP), inventory management, plan haring, logitic, tranportation, procurement, and inventory adding, effective feedback repone and quality management. 18

5 In the actual operation of upply chain management, afety, law and regulation, conultation, initiative time limit, competition mechanim and other real problem are exited. In order to tandardize the upply chain management we mut aim at thee problem to adopt trict tandard of the upply chain agreement. In addition, we alo hould etablih a reaonable upply chain management performance meaurement of evaluation ytem and incentive mechanim. Thi paper detailed analyze ome cot control problem in the upply chain management Enterprie production plan and material ubmitted by the department of material plan about the purchaing value chain combined with the real cae. 6. DETAILED CASE STUDY 6.1Putting Forward The Problem Taking a real contruction enterprie a an example, the current purchaing buine proce i hown a Figure 4. Making material demand planning department to relevant after ummarizing formulated department Finding poible upplier according to the purchaing plan by each department Negotiation with variou upplier and take part in all kind of entertainment pay all expene. Multiple-upplier Signing a purchae contract or a ingle Supplier choice Purchaing invoice Controlling number and amount on contract invoice account of arrival good Account of arrival good Poteriori quality and amount Making ettlement by purchaer Payment after financial examine Figure 4 The Current Operation Flow Chart Of A Real Contruction Enterprie Production plan of enterprie Purchae requiition for material department Gather information Chooing upplier Summary material requirement Prepa -re purch a-ing plan Supplier Tal -k Sin gin g che ck Logitic ditribution Pla n pay u p e r v i i e v a l u a t i a d j u t Figure 5 The Proce Model In Building Enterprie Purchaing Management Baed On The Value Chain Thought 19

6 6.2 Strategic Analyi For The Supply Chain Purchaing Management Baed On The Value Chain The point of the value chain provide an analyi tool for our controlling purchae cot. It eence i to look each proce aociated with purchaing a a value change proce, which either i a poitive value or negative value. The actual purchae cot C hould equal: material cot Cv, plue the total tranportation cot Ct, plue buyer and upplier of variou dinner party cot between Cy, plue the inpection fee Cj, plue the total material cot of wear and tear Ch, plue the audit cot C, plue other management fee Cn (mainly i the contract monitoring cot), hown a: C = C + C + C + C + V t y j C + Ch + Cn (1) For purchaing activitie, purchaing value can be aid to be a kind of competition baed on time and quality, the tandard of cutomer atifaction i to buy lowet cot upply to meet it requirement in time. So, for aving the purchaing cot, we will try to reduce the purchaing cot of each link in the value chain, improve ome link, and even omit any unneceary link to ave cot. Thi paper put forward the proce model in building enterprie material purchaing management baed on the value chain thought, hown a Figure 5. The proce model of building enterprie purchaing management can be divided into three layer: the planning layer, the organization implement layer and monitoring layer. 6.3 Planning Layer In planning layer, each uing department ubmit material requiition according to the production plan, the material department check the actual inventory, ummarize material requirement, make purchae deciion and prepare purchaing plan, carrie on the centralized purchaing according to the collected material market information. In thi way, they can get good quantity dicount price by larger purchaing quantity to make full ue of the ize of the procurement efficiency, reduce purchaing cot and logitic cot, that i, reducing the actual value cot CV and carriage expene CT in the formula (1) After tandardization we can obtain preferential price of tandard good to the upplier, inventory can be alo relatively lower. So, the adminitrative paying will alo be reduced by unifying purchaing operation, and reduce the management cot Cn. 6.4 The Organization Implement Layer Implementing layer mainly include: election of upplier according to the purchaing plan, negotiating the upplier, igning the purchae contract, checking incoming material, and upplier' ettlement, etc. (1) The election of upplier Making ue of ABC claification rule of material to analyze required material in enterprie, we can ee: a few material occupy a large proportion in total procurement cot, and large quantity material don t occupy a large proportion in total procurement cot. So the purchaing material can be divided into key material and the non-key material, electing upplier will ue a different trategy according to thee two kind of material, o a to reduce the purchaing cot. (2) The ettlement, check payment with upplier The department often need to pend more time in dealing with thee agreement, thu caue the great wate of people, finance, time to lead high audit fee C. Thi paper put forward a new ettlement way, under the environment of electronic upply chain management in building enterprie, buyer will input purchaing contract to online databae, after upplier deliver good to the factory, the quality inpection tation taff check whether the good in the databae and procurement contract photograph are identical, if being conitent he will make an arrival account entry databae, and payment department can achieve payment when he ee it. Thi payment mode baed on the good arriving implifie the examination link greatly, the content that ettlement department need to verify are decreaed greatly, which only need to verify upplier, upply good, the quantity and the delivery time, o a to implify the material management work, realize accurate fat ettlement and ave mot C. 6.5 Monitoring Layer On the urface, the uperviion of contract and evaluation increae management fee Cn of contruction enterprie, that i, increae the purchaing cot. But from the point of view of the value chain, if the enterprie internal want to reduce thi cot, it mut have credible upplier, reducing contract execution uperviion, and greatly reducing the proceing cot of trading dipute Cy, at the ame time the contract uperviion alo reduce tet quality link of the quality inpection department for raw material to 20

7 ave the inpection fee Cj. If the enterprie want to have credible upplier, want to coordinate good relationhip with upplier and chooe long-term reliable upplier, thi i the advantage of upply chain management. 7. CONCLUSIONS Under the background of economic globalization, our country ha gradually kept contruction indutry open; the traditional purchaing and the organization management mode of contruction enterprie i no longer uitable for the current contruction development need. Conidering the broad dometic and international market, the fierce competition environment and the era of fat tranformation, the contruction indutry i faced with new opportunitie for development and new challenge. In order to gain the continuou development and more value return in the competition, the enterprie mut etablih and enhance their core competitivene. The building enterprie of our country ha own pecial indutry characteritic and hitorical background, it hould be baed on their own development tatu to contruct upply chain management according to the exiting reource in enterprie, to etablih and enhance the core competitivene. 8. ACKNOWLEDGMENT Thi work wa upported in part by NSFC ( ), Shanxi Province Education Department Reearch Project (12JK0803), Shanxi Province Key Dicipline Contruction Special Fund Subidized Project (E08001), Shanxi Province Higher Education Philoophical Social Science key Reearch Bae Contruction Special Fund Subidized Project (DA08046) and Shanxi Province Higher Education Philoophical Social Science Characteritic Dicipline Contruction Special Fund Subidized Project (E08003, E08005). REFRENCES: [1] Gopalakrihnan, Kavitha; Yuuf, Yahaya Y.; Sutainable upply chain management: A cae tudy of Britih Aeropace (BAe) Sytem, International Journal of Production Economic, v 140, n 1, 2012, pp , [2] Zailani, Suhaiza; Jeyaraman, K.; Vengadaan, G.; Premkumar, R. Sutainable upply chain management (SSCM) in Malayia: A urvey, International Journal of Production Economic, v 140, n 1, 2012, pp [3] Chen, Chiau-Ching; Shih, Hu-Shih; Shyur, Huan-Jyh; Wu, Kun-Shan, A buine trategy election of green upply chain management via an analytic network proce, Computer and Mathematic with Application, v 64, n 8, 2012, p p [4] Jung, Hoang ; Jeong, Suk-Jae, Managing demand uncertainty through fuzzy inference in upply chain planning, International Journal of Production Reearch, v 50, n 19, 2012, pp [5] Zhu, Qinghua; Tian, Yihui; Sarki, Joeph, Diffuion of elected green upply chain management practice: An aement of Chinee enterprie, Production Planning and Control, v 23, n 10-11,2012, pp [6] Soni, Gunjan; Kodali, Rambabu, A critical review of empirical reearch methodology in upply chain management, Journal of Manufacturing Technology Management, v 23, n 6, 2012, pp [7] Hahn, G.J.; Kuhn, H. Value-baed performance and rik management in upply chain: A robut optimization approach, International Journal of Production Economic, v 139, n 1, 2012, pp [8] Wang, Yang ; Hu, Wei, The topology analyi on value creation of logitic financial management in upply chain ytem, BMEI Proceeding 2011 International Conference on Buine Management and Electronic Information, v 5, 2011, pp [9] Zhou, Wei-Gang ; Feng, Qian-Qian, Value diruption information management in a upply chain with myopic cutomer, 2011 IEEE 18th International Conference on Indutrial Engineering and Engineering Management, IE and EM 2011, n PART 3, pp [10] Wang, Xiaojun; Li, Dong; Li, Lulu, Adding value of food traceability to the buine: A upply chain management approach, International Journal of Service Operation and Informatic, v 4, n 3, 2009, pp [11] Tomlin, Brian, On the value of mitigation and contingency trategie for managing upply chain diruption rik, Management Science, v 52, n 5, 2006, pp [12] Janen, Marijn, the architecture and buine value of a emi-cooperative, agent-baed upply chain management ytem, Electronic Commerce Reearch and Application, v 4, n 4, 2005, pp