Failures in combined knowledge and material supply chains

Construction is frequently described as consisting of two independent supply chains, a material and an immaterial, knowledge producing, a simplification also used here. The paper argues however that in a knowledge economy, those are increasingly intertwined and moreover characterised by configuration by project. In such a setting creating value for the customers and the enterprises becomes dependent of the ability to organise and coordinate in the supply chains. That the configuration is not always successful can be demonstrated by studying the emergence of failures occurring in the supply chain. The paper presents case study work done in Danish construction. The method was to observe work at the construction site and interviewing actors following backwards upstream the supply chain to the origin of the failure. The building project followed generated 160 failures over a three-month observation period. These were compiled and analysed. The economic consequences are calculated to be 8% of the production costs. The analysis of relations in the supply chain both shows relations to materials and knowledge chains and their interaction. Most of the failures were generated in the knowledge stream and then occasionally transfer into the material stream. The paper proposes initiatives to strengthen partnerships in supply chains and especially at engineer to order production. The contradiction between the permanent enterprise organisation potentially capable of handling purchasing and the role of the project manager is discussed as a contradiction to overcome.