Exploring change in construction: supply chain management

The Authors

Scott Fernie, School of the Built Environment, Heriot-Watt University, Edinburgh, UK

Anthony Thorpe, Department of Civil and Building Engineering, Loughborough University, Loughborough, UK

Abstract

Purpose – The purpose of the paper is to explore the process of change within organisations in the construction sector related to the content of change called for by reformers such as Egan, Latham, Constructing Excellence and the “rethinking construction” movement. The concept of supply chain management is used within the research to facilitate this kind of exploration.

Design/methodology/approach – The broad framework adopted in the paper is contextual in nature and informed by structuration theory and new institutionalism. The approach followed is a case study method that looks for literal replication across a number of cases.

Findings – Supply chain management is found to be both synonymous with the concept of partnering and particularly problematic for organisations to implement within the construction sector due to specific contextual factors.

Research limitations/implications – All methodological positions have limitations. Like all research this piece of work is the product of choices that could have been different and achieved different outcomes.

Originality/value – The findings support a view that contextual approaches provide greater insight into the problematic nature of change in the construction sector and concerns regarding the development of a robust, relevant and sustainable agenda for change within the sector.

Article Type:

Case study

Keyword(s):

Supply chain management; Change management; Construction industry; United Kingdom.

Journal:

Engineering, Construction and Architectural Management

Volume:

Number:

Year:

2007

pp:

319-333

Copyright ©

Emerald Group Publishing Limited

ISSN:

0969-9988

Introduction

There are a number of substantial contributions within the supply chain management literature that make explicit and implicit reference to the importance of context in generating theory and understanding the practice of supply chain management (Mouritsen et al., 2003; Cox et al., 2002). Some also reject what is termed the tyranny of best practice that prescribes one best way to characterise buyer and seller relationships – collaborative working (Cox, 2001) or integration (Mouritsen et al., 2003). Such contextual thinking is also grounded within Porter's (1985) wider grasp of contextual sensitivity, rationalised as the five forces that shape organisational strategy. This point is neatly summed up by Mouritsen et al. (2003) with respect to supply chain management (SCM):

… ‘best practice’ in SCM should only be copied and implemented if the objective situational factors are exactly the same, which is very seldom the case. (Mouritsen et al., 2003)

Notably, Porter's (1985) five forces relate to institutional structures and contextual factors that cannot be presumed to be consistent across industries. In turning their attention to the construction sector, Cox and Ireland (2002) criticised the dominant thinking within the sector for lacking an understanding of similar contextual factors (Ireland, 2004). Some of this criticism was argued to be based on the sectors allegiance to notions of best practice and a failure to understand the dynamics of industry structure. Such contextual insensitivity to the unique structure of industries and the relationship between industry structures and managerial practice is also reinforced and outlined in Fernie et al. (2003) and Green et al. (2004).

Intriguingly, the idea that disintegration and arms-length contractual relations may be appropriate characteristics for managing supply chains in specific circumstances is posited as the basis of future research by Mouritsen et al. (2003). Such a position sharply contrasts with the dominant discourse of change (see Fernie et al., 2006) within the construction sector. The current discourse of change proposes the need for a journey away from adversarial attitudes towards enlightened co-operative relations and appears to demonize adversarial opportunistic behaviour (bad) over cooperative and collaborative behaviour. Such a journey is however considered to be problematic in that it is argued to lack an understanding of practitioner behaviour in context (Ramsay, 2004).

Drawing on Cox and Ireland (2002), Ireland (2004), Mouritsen et al. (2003) and Ramsay (2004), this paper is not concerned with developing and advocating the adoption of supply chain management tools and techniques. Such a position would be to assume that supply chain management per se is relevant and makes sense (resonates) to practitioners in construction organisations. Indeed, the “sense” of supply chain management, its diffusion and form, it is argued, would be shaped by contextually sensitive, knowledgeable and reflexive practitioners. From the perspective of this paper, the arguments of Cox and Ireland (2002), Mouritsen et al. (2003), Ramsay (2004) and Green et al. (2004; 2005) make a compelling case for exploring how knowledgeable and contextually sensitive practitioners make sense of supply chain management.

Part 1 of the paper introduces theoretical frameworks that emphasise contextual sensitivity. The second part of the paper highlights and broadly explores the discourse and theory of supply chain management. The third part of the paper briefly outlines the adopted research strategy and the fourth explores the findings and discussions arising from the research. The final part of the paper details a number of conclusions and recommendations.

Contextual sensitivity

There are many examples of contextual approaches underpinning studies of change in organisations (see for example Bloodgood and Morrow, 2003; Cooper et al., 1996; Staber and Sydow, 2002; Sturdy and Grey, 2003). This body of literature is highly critical of contemporary organisation change literature describing it as for example: ahistoric, acontextual and aprocessual (Pettigrew, 2001). The view of such researchers follows a pattern that posits organisations as social systems where practices or processes are constantly being transformed, discarded or reinforced through the actions of knowledgeable and reflexive practitioners (Fernie et al., 2006). What these frameworks all have in common is that they all draw on, to a greater or lesser extent, structuration theory.

Structuration theory argues that the duality of human agency and structure are inseparable (Berends et al., 2003). Thus, it challenges the dualism of structure and action. What is presented in the theory is a duality of structure that is highly sensitive to social structures being constituted by human agency but also, the very medium of this constitution (Giddens, 1993). Importantly, whilst it is argued that the analytic separation of structure and action is possible, the duality of structure argument concedes that they cannot be separated in practice (Pozzebon, 2004). It is this idea of a duality that has been picked up by some organisation study scholars and used to develop contextual research frameworks.

A significant contributor to the development of contextual frameworks has been Andrew Pettigrew's work (for example Massini et al., 2002; Pettigrew and Whipp, 1993; Pettigrew, 1985; Webb and Pettigrew, 1999; Pettigrew, 1990; 1992;, 1997). This body of work is very much related to Pettigrew's (2001) call for a greater degree of engagement with social scientists and users in developing more contextualist and dynamic views of knowing (see also a similar argument put forward by Bachmann, 2003). Other organisation studies scholars have significantly drawn on and developed Pettigrew's work (see Bloodgood and Morrow, 2003; Staber and Sydow, 2002; Sturdy and Grey, 2003). Pettigrew's contextualist approach involves the interconnection between three analytical domains related to change called context, content of change and the process of change.

The content of change refers to the areas of change (transformation) under examination such as aspects of managerial practice. Context is related to two separate domains that include outer and inner. The outer refers to the competitive environment of the firm – political, social and economic (see also Linstead, 1997). The inner refers to the structure, culture and political context of the firm through which change has to proceed. Process is understood to be the process of change that relates to action, interactions and reactions of organisational members as they interpret and in turn, shape context and legitimise change/transformation or continuity. Pettigrew's contextualist approach rejects dominant views of change that treat the process of change as a simplistic, rational, linear problem. Indeed change is considered to be messy, iterative and emergent where due to the unintended consequences of action, change is not entirely programmable or predictable. This messiness leads Pettigrew (1987) to the conclusion that:

Explanations of change have to be able to deal with continuity and change, actions and structures, endogenous and exogenous factors, as well as the role of chance and surprise. (Pettigrew, 1987)

The approach adopted for the research described in this paper is heavily informed by this framework. The content of change will therefore be informed by a review of supply chain management theory. The process of change and context will be analysed by exploring the interpretations and actions of practitioners. In doing so, a contextual understanding of supply chain management that engages with existing rules, resources and typifications derived from a cumulative history of action and interaction will emerge. This understanding will ultimately be instrumental in explaining whether supply chain management makes sense for industry practitioners embedded within the context of construction organisations. It will also be instrumental in highlighting and providing explanations for the legitimacy of current practice.

Discourse and theory of supply chain management

The perceived underperformance of the UK construction sector has been a central theme running through contemporary government sponsored reviews and reports (e.g. Latham, 1994; DETR, 1998; NAO, 2001; Rethinking Construction, 2002; Strategic Forum for Construction, 2002; NAO, 2005). Indeed, the perceived underperformance of the UK construction sector has been highlighted in Government sponsored reviews for decades (see Murray and Langford, 2003). In contemporary reports, this perception is in part related to an assumption of consistently higher performance in other sectors (notably the automobile sector) and pockets of higher project performance within the construction sector. The use of innovative managerial concepts is argued to make such sectors and particular projects in the construction sector higher performers (Fernie et al., 2006). One of these concepts is supply chain management which has been extensively advocated and promoted throughout the sector through many initiatives and networks. There is also a plethora of documents, reports and toolkits on and relating to supply chain management within the sector. Notably, in this period, the discourse mobilised by these organisations has largely been prescriptive of a need for supply chain management (including training) and less informative and descriptive of supply chain management in practice. Such discourse is also considerably light on reflection of supply chain management theory. Despite this, supply chain management is assumed by such organisations to be highly relevant to the sector and remains central to arguments for efficiency gains.

Research in construction

Through the auspices of the Engineering and Physical Sciences Research Council (EPSRC) and the Department of the Environment, Transport and the Regions (DETR) support for the discourse of supply chain management outlined above is reflected by the commissioning of research concerned with implementing supply chain management in the UK construction sector (see Evans and Towill, 1997; Holti et al., 2000; Fernie et al., 2000; Naim, 1997; Sarshar et al., 2000; Austin et al., 2001) for an outline of such research). McGeorge and Palmer (2002) have also added a new chapter dedicated to supply chain management in the second edition (first edition was published in 1997) of “Construction Management: new directions” reflecting its growing stature as a topical and relevant concept for the construction sector

These research projects however tend to be informed by an assumption and indeed objectives related to the need for the implementation of supply chain management. They are therefore less reflective on questions challenging its relevance as a managerial concept to the construction sector or indeed its best practice label. Dissenting voices such as Green et al. (2004; 2005) in the construction sector are a notable exception. Their work is rather more reflective on supply chain management and how it is interpreted by practitioners in the construction and aerospace sectors. The paper presented here follows a similar path to Green et al. (2005) but draws on a separate body of empirical evidence. The aim is not to present a comparative analysis but to remain within the confines of the construction sector in determining how contextually sensitive, knowledgeable and reflexive practitioners attempt to make sense of supply chain management.

Theory

As with most management concepts, supply chain management has many definitions rooted in the literature. Authors such as Croom et al. (2000) and Vrijhoef (1998) have explored and condensed many of these in their respective reviews on supply chain management. What becomes apparent from these explorations is recognition of the many disparate foci regarding the content and scope of supply chain management. For example, the optimisation or efficient use of information and material “flows” (Jones and Riley, 1985; Houlihan, 1987; Ellram, 1991; Tan et al., 1998), developing collaborative relationships, process integration (Tan et al., 1998; Morgan, 1999; Ayers, 2002) networks (Gadde and Håkansson, 2001), core competencies (Prahalad and Hamel, 1990) and, power (Cox and Ireland, 2002). Underlying all these definitions is however the assumption that developing and understanding relationships within and between organisations underpins an ability to: optimise “flows”; break down process discontinuities; develop networks; make decisions about managing competencies and; optimise the use of power. Relationships, and the distribution and use of power however do not develop in a context free environment. Indeed they reflect and reinforce situational factors. Despite the many disparate aspects to supply chain management, it is possible to broadly describe two distinct perspectives within the literature.

Supply chain management is frequently viewed from a perspective that seeks to strategically manage and strongly position a firm within particular markets (Ellram, 1991; Cox et al., 2002; Moncza et al., 2002; Cox, 2004). It is therefore primarily concerned with understanding markets and what is required to compete in these markets. Indeed, as Tan et al. (1999) observe:

Supply Chain Management provides a framework within which to implement a well-conceived market strategy. (Tan et al., 1999)

The strategic view is therefore concerned with strategically manoeuvring an organisation within a marketplace based on the relative importance, ownership and management of assets within this market. Strategy is therefore heavily rooted in understanding the marketplace (and its structure and contours) and refining and executing a strategy to exploit current and future opportunities to better position the organisation. This includes the use of relational forms of contract to achieve the strategy of bettering or maintaining positions in the market. It is also heavily linked to calls for procurement professionals to take a more strategic view of relationships with this objective in mind (Spekman et al., 2002, Moncza et al., 2002).

The operational view however is less concerned with market positioning and more concerned with efficiencies in operational activities within and across organisational boundaries. It does however draw upon the use of relationships and relational forms as requisite in achieving and facilitating the objective of efficiency gains in transactions costs, problem solving and, logistic and inventory management.

The strategic and operational supply chain management views however cannot be assumed to be separate since they share similar activities to achieve their arguably separate objectives. Disconnected from context, operational arguments for the adoption of supply chain management cannot be countered. Connected to context however, arguments for the adoption of supply chain management only make sense if they resonate with the concerns and interests of practitioners operating within organisations competing in that context. This point is rather fundamental in challenging the ideas of supply chain management or collaboration as best practice since organisations develop disparate strategies to compete in disparate contexts. Supply chain management cannot therefore be a sensible strategy for organisations regardless of sector. It cannot be a universal panacea. Undoubtedly, the structural characteristics of industry sectors reflect and reinforce how practitioners make sense of strategies and associated managerial practice (Green et al., 2004). The question in this paper is therefore concerned with exploring whether, and how, supply chain management is interpreted and acted upon by practitioners in the construction sector.

Research strategy

A case study research strategy was followed for this research that involved developing and testing two theoretical propositions, based upon a guiding theory. Literal replication within data collected from five case studies was sought during analysis. The research strategy drew heavily upon Yin (1994) in designing a multiple case study research design outlined in Figure 1.

Data from five separate case studies was collected to test propositions and to look for literal replication to support the findings of the research. The propositions directed and shaped the collection and analysis of data in each case study. These propositions were dominantly developed from an interpretation of supply chain management and contextual theories. Indeed, the propositions took the form of theoretical statement (s) that provide an explanation of the phenomena of interest (Leiringer, 2003). The first proposition was grounded in an understanding of contextual sensitivity and drew on Pettigrew (1997; 2001). In this sense, practitioners within organisations operating and competing in the construction sector are undeniably treated as knowledgeable and reflexive with respect to both content and context simultaneously.

P1. Practitioners interpret and draw upon specific aspects of context that shape and are shaped by how they make sense of the content of change.

This understanding of the dominant and influential aspects of context drawn upon by practitioners informed the basis of P2, which sets out to explain how practitioners make sense of supply chain management in context and how they use context to inform their interpretations of supply chain management. This proposition also draws on the dominant theoretical perspectives of supply chain management and whether practitioners make sense of supply chain management as a strategic or more operational concern. The proposition was also informed by an interest in whether practitioners make sense of supply chain management as a concept that has an internal and external focus. One of the last and perhaps most important key aspects of supply chain management that the proposition attempted to test were relationships and trust.

P2. Practitioners interpretations of context and content contribute to an explanation of how they make sense of supply chain management.

The underlying logic of multiple-case studies is similar to that of, but not the same, as multiple experiments (Yin, 1994). Experiments/case studies are undertaken separately and replication argued to be established if the results from each experiment or case favourably compare. The basis of such a comparison in case studies is based on the development and use of an explicit theoretical framework. The research therefore draws on Yin's (1994) analytic generalisation approach where the previously developed theoretical propositions are used as a template with which to compare the results of each case study. Similar results from individual cases are argued to reflect some form of replication.

Findings and discussion

Aspects of context

Informants drew upon continuity of workload/repeat work in making sense of what they interpret to be central to supply chain management – relationships. What is particularly interesting is that this aspect of context is interpreted to shape relationships at the interface with commodity suppliers, service supplier, repeat clients or non-repeat clients differently. Various levels of continuity of workload and repeat work exist at these interfaces. Even internal relationships with other organisations in a group of companies were considered to be shaped by workload continuity.

Three of the cases also provided literal replication that past experience with the concept of partnering on projects with main contractors (non-repeat clients) informed how they made sense of relationships. Indeed four of the cases provided literal replication that the content of supply chain management is interpreted to differ little from partnering. Every case provided literal replication that informants draw upon interpretations of legitimised structures within the organisation such as short or long term thinking and “project costs over external relationships” in making sense of what they interpret to be supply chain management – relationships.

There is literal replication that informants within organisations do draw upon specific aspects of context in bring meaning to and making sense of supply change management. Three specific aspects of context are clearly identifiable as: the level of workload continuity; organisational structures legitimising project based thinking in making decisions affecting relationships and; the past. Interpretations of these aspects of context by practitioners in the construction sector inform, in a way that would differ from practitioners in other sectors, how they make sense of supply chain management.

Notably, there are a number of aspects of theory that do not form any part of how informants interpret and make sense of supply chain management. In other words, informants' interpretation of the content of supply chain management does not draw upon systems thinking, competing supply chains, logistics, a strategic perspective, networks or integration. There is therefore a basis for claiming literal replication that practitioners within organisations do not draw upon these theoretical concepts in how they make sense of supply chain management. This is perhaps not surprising since there is also a strong basis for claiming literal replication that the case study organisations do not, nor intend to in the future, engage in training activities relating to supply chain management theory.

The heavy hand of the past

The absence of any form of education or training courses to promote the theoretical content of supply chain management is notable. Informants were able to discuss supply chain management, but do this largely by drawing on how external relationships can be improved. In this respect, relationships are understood to reflect an important aspect of supply chain management theory. However, the dyadic level at which informants understand and discuss these external relationships is inseparable from the content of partnering (see Bennett and Jayes, 1998). Indeed, informants' interpretations of supply chain management refer consistently to partnering. The inability to separate supply chain management from partnering reflects the concerns of Pearson (1999) and McBeth and Ferguson (1994) – that supply chain management is for those in the construction sector merely a reinvention of partnering. This is perhaps not surprising since both supply chain management and partnering are dominantly underpinned by the same simplistic argument – collaboration is good and arms-length contractual relationships are bad.

Past experience of partnering, in particular between the subcontracting organisations and main contractors was also shown to influence how informants made sense of supply chain management relationships. Past experience of adopting partnering with non repeat clients such as main contractors and service suppliers were reflected upon by informants. These experiences have been largely poor. Much of this failure of partnering to deliver expected efficiencies is related to aspects of context such as continuity of workload and the legitimacy of short-term thinking.

Demonstrating how practitioners draw upon aspects of context and the past in making sense of supply chain management confirms the limitations of research approaches that strip context from research inquiry (Nutt, 2000; Swan et al., 1999). Furthermore, it reinforces arguments surrounding the problems inherent in universalistic assumptions underpinning best practice (see Purcell, 1999; Marchington and Grugulis, 1998; Wood and de Menezes, 1998; Mouritsen et al., 2003). In particular, Cox and Ireland's (2002) assertion of poor thinking (on the part of those calling for change at least) in the construction sector is also supported by this research.

Relationships

Aspirations to collaborate under the label of supply chain management differ little from failed attempts to adopt and sustain collaborative relationships under the label of partnering. Indeed, the case study organisations provide little confidence that project partnering is proving sustainable let alone evolving generations of partnering such as that described by Bennett and Jayes (1998). Thus, competing supply chains (Spekman et al., 2002; Vokurka et al., 2002) and optimisation of flows across a number of organisations through time over numerous projects, strategically and operationally aligned, remain an aspiration despite partnering or supply chain management. Indeed, these aspirations do not make sense to practitioners embedded within construction organisations.

Informants fully understand that collaboration without workload continuity does not make sense. Secondly, the collaboration is good and arms-length contractual relationships are bad argument makes little sense when connected to how practitioners understand cross organisational relationships. The legitimacy of the argument falls apart when related to how organisations structure themselves and set strategy in accordance with their interpretations of the market. The operational efficiency argument therefore falls apart if not similarly supported by an organisations strategy to develop collaborative relationships in the marketplace to support, maintain or manipulate their position in the market.

It was noted however that continuity is evident in the construction sector if the nature of what was being procured or sold was a commodity. The procurement of commodities by organisations was understood to be characterised by workload continuity. In these circumstances, there is evidence for dependent relationship. In such circumstances levels of trust are likely to be high since the organisations can be more confident that the other will not exploit their vulnerabilities (Korczynski, 2000). Informants understood this in providing explanations for how they made sense of relationships with commodity suppliers. Most had single or dual sourcing arrangements in place. These relationships were also frequently characterised by an understanding that the suppliers were “good for their problems”. These suppliers were dependent on the relationship in the long-term. The legitimacy of costs alone did not characterise how these relationships were understood to be enacted.

Clearly, practitioners are highly knowledgeable and reflexive in how they make sense of relationships. Based on their interpretations and reflections on context, practitioners clearly understand the logic behind using a variety of relational forms with various clients and suppliers. They make a distinction between non-repeat and repeat clients regarding their ability to provide workload continuity. They also make a distinction between service and product/commodity suppliers based on an ability to support certainty regarding costs, quality and delivery. Practitioners are therefore not irrational (Sturdy and Grey, 2003) and demonstrate knowledge of and reflection upon logic in determining the legitimacy of particular relationships.

Client and industry concerns

Perhaps one of the most important findings from the research is the recognition that whilst arms-length contractual relationships may be characterised as a problem for some stakeholders in the construction sector, for others it is a legitimate strategy given the context within which they operate and compete. Few stakeholders however would give voice to this latter view of arms-length contractual relationships since to do so would run the risk of being ostracised by their own clients (repeat or not). Yet, clients' calls for change lack the power to institutionalise such change in the sector. These calls also demonstrate little understanding of the competitive context within which construction organisations operate and compete. They fail to engage with the context within which strategic relationships are legitimised and why. Whilst repeated calls for change make sense operationally to the clients of the sector, they make little sense to organisations competing within context of the construction industry. Repeated calls for change based on this operational argument therefore fail to penetrate the construction sector in any meaningful and sustainable way. As a result, familiar concerns are reiterated as Murray and Langford's (2003) review of industry reviews suggests.

The findings confirm the argument that research and analysis of managerial practice in the construction sector would benefit from the application of contextual approaches such as that proposed by Pettigrew (2001), Bloodgood and Morrow (2003) and Sturdy and Grey (2003). These approaches also recognise that practitioners are knowledgeable and reflexive and present an opportunity to understand the legitimacy of current practice as the basis of developing an agenda for change in the future.

Conclusions and recommendations

It does not make sense for organisations in the construction sector to adopt, implement and sustain supply chain management. Supply chain management fails to resonate (Hodder, 1998) with their contextually rooted concerns and interests. Disparate Interpretations of supply chain management, relevant issues, opportunities and concerns of knowledgeable and reflexive practitioners did challenge universalistic assumptions regarding its relevance. This also largely acts to prove Purcell (1999) Harrison (1998) Cox and Ireland (2002) and Mouritsen et al.(2003) to be right in suggesting the limitations of best practice. Indeed, it is concluded in this paper that best practice is a myth. Practitioners within organisations largely interpreted supply chain management as an initiative focused on addressing and improving dyadic relationships with external organisations. This fails to achieve any conceptual distance or distinction between supply chain management and partnering. Indeed, supply chain management is considered to be synonymous with partnering.

Practitioners reflected upon past experience of partnering in how they interpreted the relevance of supply chain management. Reflection on partnering (or indeed any previous initiatives) however forms no aspect of the contemporary calls for change. Calls for change in the sector are therefore unreflective of past experiences with previous initiatives. The paper concurs with Woudhuysen and Abley (2004) in calling for greater intellectual rigour and reflection on how organisations concerned with developing an agenda for change in the construction sector, the technocratic elite as Green (2002) and Green and May (2003) puts it, reflect upon and engage with the construction sector. Adopting a contextual approach in this paper as a way to explore how practitioners made sense of supply chain management provided significant insight into arms-length contractual relationships and collaborative long-term relationships. Under particular circumstances, each made sense and achieved legitimacy. This concurs with Cox (1996), Spekman et al. (2002) and Stuart and McCutcheon's (2000) proposition that no one specific relational form is suitable for all circumstances (contexts). Undoubtedly, practitioners are highly knowledgeable and reflexive regarding how they legitimise a variety of practices in disparate contexts. Practitioners in the construction sector are therefore not dilettantes, irrational or backwards. Understanding, framing and implementing change requires policy makers, clients and industry bodies to reflect upon and engage with these highly knowledgeable and reflexive practitioners. Calls for change need to understand the legitimacy of current practice and thus the scope for sustainable productivity improvement in the sector. Past reviews, and the concerns of the clients, fail to engage with and recognise the legitimacy of arms-length contractual relationships in the construction sector. These relationships and opportunistic behaviour are legitimate organisational strategies in the construction sector despite dichotomised thinking placing these as “bad” and, collaborative and long-term relationships as “good”.

Calls for change are arguably based upon simplistic, utopian and acontextual assumptions. Change in how policy is developed may be the real key to developing a robust, relevant and resonant agenda for change in the construction sector. But until then, supply chain management, partnering or tomorrows reworded and reframed equivalent will continue to confound attempts at wide scale implementation in the construction sector. Rethinking construction therefore necessitates a need to rethink how an agenda for change is developed and who is involved in that process.

Figure 1Multiple case study design

References

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