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Executive Summary Report Construction Logistics Consolidation Centres ‘The BAA Construction Logistics Consolidation Centre operated by Wilson James and Mace is one of the most progressive demonstrations of how lessons learnt from other industries can improve the performance of the construction industry... I feel that the lessons learnt are of great importance to the UK construction sector... This is something that you can do and this operation can be transferred to other project types.’ Nigel Griffiths MP Minister for Construction This report is the culmination of a one-year Department of Trade & Industry (DTI) sponsored research project under the ‘Partners in Innovation’ scheme. The report provides an examination of how Construction Logistics Consolidation Centres operate, the benefits they bring, difficulties encountered and how they can be adapted to suit a variety of construction projects. A copy of the full report is available on request by emailing info@consolidationcentre.com. Project website: www.consolidationcentre.com “There should be greater focus on supply chain management and logistics to facilitate the elimination of waste”. Why Research this Subject? Logistics Consolidation Centres are a new innovation to the construction industry. Traditionally, supply chain management and logistics skills in the construction industry fall some way behind other industries, such as manufacturing and retail, and there is opportunity to learn from their success. In these industries improvements, in supply chain management and logistics techniques have been adopted over a number of years to improve efficiency and profitability. In order to enhance the performance of the construction industry it was recognised in “Accelerating Change” that… “There should be greater focus on supply chain management and logistics to facilitate the elimination of waste”.
So why is this important? Overall, the construction industry contributes up to 10% of the UK’s annual GDP (Source: “The Social and Economic Value of Construction”, Pearce, 2003). Previous research has shown that up to 20% of all construction costs are transport-related (Source: “Construction Transport – The Next Big Thing”, Building Research Establishment, 2003). If just a small improvement were made in reducing the amount the industry spends on transportation and distribution this would yield massive cost savings. In addition, the UK’s national and local road networks are becoming more congested every year. This further decreases the efficiency of all types of urban freight distribution. Whilst the introduction of congestion charging in major cities addresses part of the congestion problem, it will no doubt add to the cost of construction in these locations. An ever-increasing emphasis on environmental considerations, (congestion, pollution, noise) not least from a legislative point of view, means that the construction industry must address this challenge. Construction goods, (excluding steel frames, ready-mix concrete, etc.) are delivered into the Centre during the daytime in relative bulk – prior to being ‘called off’ by trade contractors in the quantities required for use in the immediate future in workpacks, following a ‘just-in-time’ approach. Goods are checked on arrival at the Centre for quantity and condition, ensuring any problems are highlighted at an early stage. The Centre does not store goods in the conventional sense (no more than 7 days is the ideal). It distributes ‘just-in-time’ to meet the daily needs of construction sites - demand pull - the ‘Holy Grail’ of supply chain management. Goods are consolidated, which means that multiple part-loads are combined into single shipments. This process maximises the efficiency of distribution vehicles and leads to a substantial reduction in overall vehicle numbers delivering into a congested environment. Radical solutions and innovative working practices are needed to overcome these problems. This research focuses primarily on the Heathrow Construction Consolidation Centre, which supports the delivery of major capital construction projects at Heathrow Airport, London. In addition, the research is supported by an examination of the Stockholm Logistiks Consolidation Centre, which serves the largest urban regeneration scheme in Sweden and shares remarkable similarities with Heathrow. The aim of this research was to show how the benefits and lessons learned could be applied to the wider construction industry. What is the Heathrow Construction Consolidation Centre and How Does it Work? The Heathrow Construction Consolidation Centre operates as a distribution centre for construction materials, plant and equipment that are used on construction projects at Heathrow Airport (Terminals 1 – 4). Aside from Terminal 5, BAA typically spends £300 million per annum at Heathrow alone on a wide variety of projects to update and improve the existing terminals and infrastructure. This is a huge undertaking, given that the airport typically handles 65 million passengers per annum and airport operations and passenger service must continue unhindered by construction activity. The main purpose of the Consolidation Centre is to promote the efficient flow of construction goods from supply chains to actual points of use on projects. It is neither a ‘warehouse’ or ‘builder’s merchant’. The key feature of the Centre is that goods are delivered not just to the site entrance – but to specified locations as close as is practicable to the workface, by material handling operatives. They are specialists in their field and use an extensive range of vehicles and mechanical handling equipment necessary to complete distributions safely, efficiently and without damage.
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