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Transforming the supply chain

24 Sep 19 Blockchain is a major disruptor in the finance sector, underpinning cryptocurrencies such as Bitcoin. So what could it do for construction supply chains? A new research project aims to find out. Emma Crates reports

Project over-runs, escalating budgets and contract disputes are generally accepted as part of normal life in construction. But what if there were a new system where components were accurately tracked, suppliers were paid on delivery, and all parties could monitor progress in real time?

This is the tantalising potential of blockchain. The technology has been causing major disruption in the finance sector, underpinning cryptocurrencies such as Bitcoin. Lately its potential has been explored in entirely new experiments from combating voter fraud in the US midterm elections, to safeguarding sourcing and safety of food and medical supply chains.

And now construction is getting in on the act. Innovate UK, the government’s innovation agency, is funding PLASMA, a two-year project for the development of a digital system that, its proponents claim, could deliver cost and time savings of up to 25% and 28% respectively. PLASMA’s aim is to improve construction productivity through better project planning, improved supply chain collaboration and improved supply chain analytics.

Vinci is leading the PLASMA project. Other partners making up the consortium are Skanska, project planning specialist nPlan, blockchain specialist Assentian and BRE.

The PLASMA team has been meeting regularly since March to swap ideas and scope out activities. Scott Bennison, digital operations manager at Vinci, describes the potential as “massively exciting”. 

“The more we talk, more possibilities emerge that are above and beyond what we originally planned to do. But we’ve got to make sure we don’t get too carried away and continue to focus on delivering something of value,” he adds. 

From BRE’s perspective, senior consultant Ranjit Bassi says that a particularly interesting aspect of the project is having two contractors working together, comparing how their supply chains are operating at a more granular level.

Dr Ilesh Dattani, co-founder of blockchain specialist Assentian, has been presenting “the art of the possible” on blockchain to construction players for the past few months. He says that this project appealed because it was the chance to put some of these ideas to the test.

“We came to the conclusion that if we built some small demonstrators that contractors can interact with, it would give them a flavour of what’s possible, and hopefully spur more ideas. We want them to come to us and say what they want to do, as opposed to us suggesting things to them.” 

PLASMA’s initial focus will be tracking the delivery of components to site, using a tag and track system such as radio frequency identification (RFID) tags, QR codes or barcodes. Skanska and BRE have already trialled a tag and track system on a separate Innovate UK funded project. This project goes one step further, because it adds blockchain to the mix, creating a definitive audit trail. 

With blockchain, information is stored on a shared, decentralised network of computers. It is immediately visible to all parties, and is difficult to tamper with.

“It can’t be altered without everyone knowing about it,” Bennison says.

Dattani explains that blockchain technology will sit above the companies’ existing systems, and won’t replace them.

“From a business point of view, an organisation that has already invested in infrastructure, software and databases won’t want to throw away its old systems. Blockchain provides a layer on top that allows you to provide a secure environment, with multiple copies of the same record,” he adds.

Bennison gives the example of doors being delivered. With projects often working to tight schedules, minor delays can have serious repercussions. 

If the manufacturer is late sending out the doors, or there is traffic congestion, the delivery may miss its slot. But the door fitter may still turn up on site as booked, only to find that there is no work.

“He still charges for turning up,” Bennison says. “So not only have we incurred cost, we’re also getting into an argument with the supplier about when and where the door should have been delivered.”

And if the doors arrive early this could lead to other problems. If there is no safe place to store them, they could become damaged. Then there is the problem of lack of accountability, or poor record-keeping.

“Traditionally someone would have the order on a bit of paper, effectively ticking boxes saying that they’d checked the delivery. That piece of paper could get lost or damaged. Or someone could just say ‘that’s all good mate’ and they haven’t really checked it,” Bennison says.

By contrast, using blockchain with a tag and track system makes all parties accountable: the doors would be fitted with RFID tags or QR codes, and scanned in at the factory. Information would automatically be uploaded to a digital “block” of information containing information such as the name of the person scanning it in, date and time. Photos could be attached. This information would be distributed across all the computers within the blockchain network in real time, and accessible to all parties.

The logistics provider would then scan the doors as they were loaded onto the van, creating a new file of information. The doors would be scanned on arrival, with the person checking them identified in the records.

As Bennison suggests, this could not only take the temperature out of disputes (who checked the doors, were they all there? Was there any damage? Were they delivered on time?), it is also useful for sequencing of work, as the follow-on trades could plan their site visits more accurately.

Furthermore, by cementing trust between parties (information uploaded to the blockchain cannot be altered, without all parties seeing the change), Bennison believes blockchain could help to revolutionise payment in the cash-strapped sector.

“We’re looking at smart contracts. This is where the real potential lies,” he adds.

He envisages a time when safe and timely delivery of goods to site could trigger payment to the supplier. This could evolve into a reward system where reliable suppliers win extra points, earning more preferable contract terms for future projects.

“We want to work with the best suppliers, and this is a two-way relationship,” he says. “We want to give confidence to our supply chain that they should be working with us, because we are good payers and we pay on time. Hopefully that then incentivises them to provide a quality service, which they earn rewards for.”

Over the longer term, he also sees the potential for syncing up blockchain tools with a project BIM model, with elements of the structure colour-coded and automatically updated on a kind of traffic-light system, depending on whether the components have arrived and been installed and checked. 

“It could be a fantastic visual tool. A site manager could look at the BIM model and prioritise the work for the following day. It would also be a very accurate, data-rich model to hand over to clients.”

Bennison is hoping that trials will start on selected sites by the end of this year. 

“We’ve discussed doing the same thing, to see the differences in how two different companies operate. Or we could choose entirely different types of projects, in infrastructure and building sectors and spread our bets. We haven’t finalised the decision yet,” Bennison says.

PLASMA also offers the opportunity to monitor how all elements of the project come together in real time. BRE is developing a system of recording exactly what is going wrong, and why.

“We’re saying, if the doors are delivered late, or damaged, wouldn’t it be good to have an IoT [internet-of-things] system that records the main cause of this?” Bassi says.

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BRE will be creating a drop-down menu that can be accessed from a phone or scanner, which could list potential causes of problems such as traffic congestion or goods not being properly packed for transport. 

“When you do the same activity 20 or 30 times, trends start to emerge. You could then use data analytics to improve your whole process,” he adds.

NPlan’s specialism is predicting the outcome of projects using machine learning from massed historical data of previous projects. The company has 19 major clients, including Network Rail, Deutsche Bahn, Shell, Exxon Mobil ,Vinci and Skanska and has processed “just north of half a trillion US$ of capital projects,” according to CEO and co-founder Dev Amratia.

But Amratia emphasises that nPlan’s service will not put out alerts when deliveries are already late. Instead, it will predict the likelihood of the goods arriving on a certain day, allowing managers to become more proactive in managing risk.

Until now, nPlan has only worked with data from contractors or clients. With PLASMA it will also be taking data from tier-one suppliers.

 “This is not meant to be a stick to beat suppliers with, but it’s going to be a big step for the supply chain to actually say ‘this is good for us as well’,” Amratia says.

He believes that the blockchain tool will see accuracy improving “to an extent”, although it will not entirely eliminate human error.

Dattani adds that the conversations that construction is having about optimising supply chains, using data to manage maintenance and just-in-time delivery were being aired in the aerospace industry 25 years ago. 

“We’re starting at a different level,” he says, “but there’s definitely interest in blockchain. It’s just a case of pinning down where people think it could add most value.”

What is blockchain?

Blockchain is a decentralised form of record keeping in which pieces of digital information (blocks) are added to each other to form chains with each piece permanently linked to the others cryptographically. The whole chain is visible to all parties in real time across a network of computers.

Blocks store information such as: 

• Date & time of a transaction (and, in some cases, the value)

• Who is participating in the transaction

When a new block is added to a blockchain, it becomes visible to all the computers in the blockchain network. Each computer holds its own copy of the transaction. 

It is very difficult for anyone to retrospectively alter the contents of a blockchain. This is because each block contains its own identifying code, or hash, as well as the hash of the block that went before it.

All data within a blockchain is encrypted for security reasons, and can only be read by authorised parties.

Who’s who in plasma

The two-year PLASMA project, which started in March 2019, aims to develop a “digital planning and supply chain management toolbox for productive project delivery”. Innovate UK has contributed £573,223 to the £840,000 research fund.

After developing proof of concept, the plan is to develop a tool that will be made commercially available to wider industry.

The contractors

Vinci and Skanska expect to be trialling blockchain applications on selected sites towards the end of 2019.

The planning specialist

NPlan, is supplying a predictive planning tool, using algorithms to analyse the projects at tender stage to highlight upcoming risks. NPlan’s product will sit above the blockchain offering, predicting the outcomes of delays and how they could impact the schedule. 

Predictions cover anything from concrete pours to the most likely timeline for receiving planning approval. For PLASMA, nPlan will be adding historic data of tier-one suppliers into its analysis.

The research body

BRE is helping contractors develop ways of capturing more finely-detailed data on the manufacturing, delivery and installation cycle. Site workers will be recording reasons for problems or delays on their handheld devices or scanners.

The blockchain specialist

Assentian has already done projects in forestry, healthcare and with the car industry. PLASMA is Assentian’s first foray into the construction sector and co-founder Dr Ilesh Dattani believes that the blockchain application developed for contractors could be similar to a ‘proof of concept’ project that he is close to completing in the automotive sector with Nissan. This tracks 20 components from car factory to showroom.

“Theoretically, if there was a product recall because of a fault in the component, we would be able to know which specific car, instead of batches of car, would be affected, down to the individual customer,” he says.  

This article was first published in the September 2019 issue of The Construction Index magazine (magazine published online, 25th of each month.) 

UK readers can have their own copy of the magazine, in real paper, posted through their letterbox each month by taking out an annual subscription for just £50 a year. Click for details.

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