System design for effective construction inventory management

Abstract

Construction industry is the most crucial industry for any nation with respect to its economic growth and development. This industry is complex and hence susceptible to disputes, delays and cost overruns. As a thumb rule, in developing countries, it is estimated that construction materials alone account for more than 60 percent of the total expenditure of a project. Therefore, effective and efficient material management is paramount for successful completion of a construction project within the estimated budget and time. This study in the initial phase compares various available techniques of material/inventory management, such as ABC Analysis, Economic Ordering Quantity (EOQ), Material Requirements Planning (MRP), Just-In-Time (JIT) concept, etc., and their feasibility in the construction industry. Even after having a number of techniques developed for material/inventory management that are efficiently applied to other types of industries, it is observed that most of these techniques seem to have limitations in case of construction industry due to its complex and highly uncertain nature. The methods are applied to construction industry to some extent, but straightforward and holistic application is not feasible, i.e., impractical and perhaps impossible. This can be owed to the fact that each construction project is unique and construction processes are often demand driven. Work stoppages and sometimes crippled schedules due to overlapping of activities is a common phenomenon observed in construction. Therefore, a need is felt that a reliable system, flexible enough to take into account the changing inventory requirement pattern be devised, so that material wastage is avoided, as well as associated under-stocking and over-stocking costs are eliminated.

Keywords: inventory; material management; ABC; EOQ; MRP; JIT; flexibility; programming; htm