10 June 2024

Retail and construction logistics: Discover the similarities in supply chain management

Retail and construction supply chains… two very different sectors, but they have quite a few similarities. Especially when it comes to supply chain management and logistics.

Retail and construction are two sectors that are under severe pressure and where profit margins are shrinking. And both sectors are currently in an important transition phase in terms of digitalisation and sustainability goals. Both retail replenishment and construction logistics are about managing inventory efficiently. In retail, this means making sure products are on the shelves (on time) to meet customer demand. In construction, it is about managing building materials to ensure they are available on site when needed.

Supply chain coordination

Both sectors require coordination between different stakeholders in supply chains. In retail, this involves suppliers, distribution centres and shops. In construction, it involves suppliers, service providers, (sub)contractors and construction workers. Transport is a crucial aspect of both retail supply and construction logistics. Whether it is delivering goods from warehouses and DCs to shops or transporting materials to construction sites; efficient transport, with as few surprises as possible during execution, is essential to ensure timely delivery and minimise costs. Both shop supply and construction logistics have to deal with managing risks such as supply chain disruptions, delays and cost overruns.

Inner-city logistics

Shops and construction sites also have in common that they are generally located in urban areas. For instance, research in The Netherlands by Top Sector Logistics found that one in four (!) trucks in urban areas, transports construction materials. Both sectors face the same challenges in terms of zero-emission zones, safety and limiting nuisance to the neighbourhood (space, parking, noise). All carriers in inner-city areas are forced to reduce polluting movements.

In both sectors logistics, it often happens that the physical location where you need to be does not match the address on the order. For example, consider a shop, where the address indicates the front with the (customer) entrance to the shop, but the loading dock is at the back. In a city, such a dock could possibly even be on a completely different street, with therefore a different address. On construction sites, the situation is similar; the entrance to the construction site is rarely the same as the address of the construction itself, especially since construction sites can often include multiple addresses.

Use of transport execution management software

For shop/retail supply, transport execution management software has long been used. But to a lesser extent for construction logistics. Because of the many similarities, you would think that construction logistics would also benefit from streamlining logistics activities, improving logistics efficiency, ETA calculation, exception management, proper and safe last mile routes, possibility of collaboration within the chain, the move towards paperless processes, etc. It requires little adaptation to transform transport execution management software that is used for retail to use for construction logistics processes.

In short, while there are certainly differences between retail and construction supply chains, which is mainly in the nature of the products involved and project timelines, they share many common challenges. The same principles of efficiently managing supply chains and logistics operations, getting the right real-time insights and minimising costs apply to both sectors.

What are your transportation challenges?

If you encounter similar challenges for your organisation, we cordially invite you to contact us. We are ready to discuss your questions, and explore what fits your specific needs and goals. Contact us at info@simacan.com or call us on +31 (0)33 887 4000.

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Tagged construction logistics, retail, similarities, supply chain management