Inventory Management of Concrete Components on Construction Sites

The construction industry in Thailand has proliferated over the past 20 years, leading to high competition. Reducing avoidable costs is one solution for staying competitive in the market. In a construction project, material costs comprise over half of the total cost. Concrete is a key onsite material with high annual consumption and inventory cost. Therefore, appropriate concrete management is essential for construction project economic efficiency. This study develops a system dynamics (SD) model to examine concrete component inventory management on site to minimize long term total inventory costs. Key criteria affecting total inventory cost include order quantity, demand, lead time, safety stock, reorder point, storage area, transportation, holding, ordering, and material. Simulation results show that with appropriate inventory management, specifically in order quantity, cement price, storage space, and rework percentage, construction companies may reduce total inventory cost and achieve effective long-term inventory planning. The SD model developed is validated by sensitivity analysis. However, study results should be implemented on sites to further validate the developed model and adjust parameters to suit current practices.