Efficient purchasing in the construction industry

Many companies today are facing the demand of faster deliveries, lower total costs and a perfect quality from their customers, which is really a big challenge to their existing supply chain to improve the efficiency and effectiveness. Purchasing is seen as a great opportunity for savings since it takes quite a large pat in the turnover. The supplier side of a company is becoming of strategic importance (Dubois and Gadde 2000, and Gadde and Håkansson 2001). The supply chain in construction industry is characterized by the single product, instability, fragmentation, make-to-order (Vrijhoef and Koskela, 2000), and many suppliers and subcontractors. The current situation is the decentralization of purchasing in each construction project. The relationships with suppliers are arms-length and lack of collaboration. And the poor communication hampers the co-ordination among different projects. Production planning and purchasing are identified as key targets to apply supply chain management to construction industry (Akintoye et. al., 2000). This paper will first focus on the current state of purchasing in construction industry, e.g. how the construction companies are executing the purchasing function, and how do the relationships with their suppliers look like. Afterwards some possible improvement areas are presented regarding the current situation.