Managing Logistics Cost – a Missing Piece in Total Cost Management
Ying, F; Tookey, J
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Purpose of this paper Construction logistics is an essential part of Construction Supply Chain Management (CSCM), in both project management and costs aspects. The quantum of money that is embodied in the transportation of materials to site, which could be 39 to 58% of total logistics costs and up to 4 to 10% of the product selling price for many firms. However, limited attention has been paid to this issue in the New Zealand construction industry. The purpose of this paper is to bring logistics costs, which is under the radar of Total Cost Management (TCM), to what it deserves. The intention is to contribute to the knowledge about managing logistics costs by setting KPI using the number of vehicle movements to the construction site. Design/methodology/approach A case study approach was adopted with on-site observations and interviews. Observations were performed during constructions on-site from the start of construction to “hand-over” to the building owner. A selection of construction suppliers and subcontractors involved in the studied project were interviewed. Findings and value Data analysis of vehicle movements suggest that construction logistics costs can be estimated and managed. The total number of vehicle movements can be served as KPI measuring logistics performance in both improvement and monitoring measures Originality/value of paper Further analysis indicate that intrinsic and extrinsic interventions, such as implementing appropriate logistics tools that suits individual site and introducing traffic management costs, offer plausible explanations regarding how to achieve company profitability and environmental sustainability.