Supply chain management in an uncertain economic climate: a UK perspective

Abstract

Purpose The purpose of the paper is to consider whether the benefits that construction organisations achieve by adopting a supply chain management approach to their specialist partners outweigh those that are derived from a market‐driven approach. Design/methodology/approach This editorial adopts a transaction economics perspective to evaluate the external environment facing contracting organisations within the UK, especially as a result of the recent economic downturn. One of the consequences of the reduced demand for construction work is that clients now prefer a market‐based approach to the procurement of their contractors; this assertion is supported by analysis of recently published survey data on client procurement approaches and price and cost data. Findings The transactional economic implications of these changes to the supplier/contractor relationship are presented for discussion. The research implications of this indicate that further empirical data is required on: the economic benefits of supply chain management, how the benefits are derived from the different sub markets that exist in construction, and the influence the external economic environment has upon the contractor/subcontractor transaction interface. Originality/value This work seeks to encourage researchers to empiricise the theoretical constructs of new institutional economics in line with the dynamics of the subcontracting/supplier market. In doing so, a better understanding of the economic factors that can influence the bilateral dependencies that exist between large and small organisations may result.