Digital business model for large site building logistics: A generic approach to project-configured building logistics

Report, 2021

This project, funded by Smart Built Environment (SBE), aimed at investigating the way a site-specific solution for construction supply chains and logistics – where the information, material and economic flows are integrated and getting transparent through a blockchain-enabled solution – can be conceptualized, developed, tested and incorporated into a new digital business model for an independent building logistic consultant.

In a collaboration with such a consultant firm, Prolog, the insights, opportunities and shortcomings of blockchain as found in the current literature, were used to conceptualize a sociomaterial solution for construction logistics featuring blockchain for integrated flows, and embed this solution in the value proposition of a digital business model for independent logistics consultants. This, first, resulted in a generic digital business model for building logistics consultants as a business type, and then, in a Prolog-specific business model featuring a value proposition which focuses on facilitating logistics planning and flow integration. The Prolog-specific digital business model emphasizes consultancy over digitalization in its value proposition, focuses on the customer segment of public clients, and opts for an information flow integration system. Moreover, Prolog awaits further development of cryptocurrencies, before entering such economic flow-oriented solutions.

The conceptual sociomaterial solution emerged into a blockchain-supported flow integration from the issuing of purchasing orders until the completion of on-site deliveries. The development, tests, and evaluation of the solution prototype – named Building Logistics BlockCHAIN (BLogCHAIN) – involved the collaboration with a building site, the initial mapping of the prospective users’ (and testers’) experiences, and on-site testing (in two iterations) to inform both the first and the second version of the prototype.

The created value for the users and companies involved demonstrated the utility of blockchain in increasing integration and transparency, and prospectively reducing the number of transactions and facilitating value creation. The integration and transparency occurred among site managers supporting coordination. Reducing transactions and facilitating value creation remained as future options, since the system was tested as a stand-alone prototype. As such, the test context needed a system integration between planning, purchasing, and accounting, and a revision of existing purchasing contracts with regard to payment conditions. BLogCHAIN also highlighted the possibility of a more active and digitally supported role of the client, through enabling online monitoring of economic flows.

Recommendations for future work include preparing actual business cases via the conduct of larger-scale field tests, as well as innovation projects expanding on the potential of blockchain and digital systems’ integration for building logistics. Blockchain, when further developed, can become a driver of digitalization in construction supply chains, but also other application fields in construction. It can complement well-established previous generation technologies such as BIM, but also cutting-edge technologies, such as IoT and machine learning. We hope that our study will push research and development in the direction of continued efforts of strong contextualization that will enable the competitiveness of the Swedish construction industry – and society.