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Residential Housing and Its Supply Chain Management

The COVID-19 pandemic has turned from an unknown threat that emerged in distant China to one of the most dangerous global crises in decades. In addition to numerous deaths and hospitalizations, the pandemic has caused multiple economic issues, such as disruptions of supply chains, material price escalations, and reduction of productivity. Residential housing has faced particularly severe challenges in supply chain management. However, the pandemic has also left an insight into mitigating the consequences of future global shocks. This paper provides a review of sources on raw material and labor resource issues in residential housing and covers the possible solutions to them.

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Raw Materials Issues

One of the best ways of obtaining information is getting it directly from the professionals of the industry. Alsharef et al. (2021) conducted telephone interviews with project managers, engineers, designers, and superintendents from different U.S. states. Most of the participants reported COVID-related delays in raw material supply, which in turn caused severe disruptions to the project schedule (Alsharef et al., 2021). These delays were especially relevant for overseas shipments; however, the operation of several trucking companies and manufacturing units within the U.S. supply chains has also been halted (Alsharef et al., 2021). As a result, the construction industry and residential housing, in particular, suffered from material shortages or disrupted delivery times.

Moreover, the shortages of raw materials often caused the rise of their prices. Troyer (2021) argued that supply chains of the construction industry could not keep up with increasing demand. The Federal Reserve’s Economic Data (FRED) helped reveal how the most common materials used in residential housing have grown in price during the pandemic (Troyer, 2021). Needless to say, that increased cost of building materials delays projects and affects the industry negatively.

Bricks

Today bricks are primarily used in residential housing as a decorative material. Troyer (2021) found a 3,5% increase in building brick prices during the COVID-19 pandemic. Brick price has risen due to required shutdowns of plants and troubles with transportation of products to distributors (Troyer, 2021). This spike would mostly affect urban architecture instead of residential housing. Overall, the brick prices have increased due to logistics rather than high demand.

Cement

Cement price has also increased, but the reason for that issue is different from the brick prices spike. According to Troyer (2021), limestone is abundant, so there is no shortage of cement and concrete. Instead, a 3,6% growth of concrete ingredients and 3,0% growth in cement price has been caused by the recently increased demand (Troyer, 2021). In addition, the new tariffs on concrete imports have added to the price growth.

Glass

Glass production was significantly affected by the COVID-19 pandemic, which explains the price increase. Troyer (2021) explained that virus containment measures had disrupted a continual glass-making process, which led to additional shortages and a subsequent 2,4% price increase. As a result, COVID-19 worsened the availability of glass and led to a significant increase in customer’s waiting time (Troyer, 2021). These issues indicate that the residential housing industry should use less glass in the near future.

Wood

Wood has become one of the essential raw materials for contemporary residential housing, and the pandemic affected it the most. Troyer (2021) fixed a 19,6% price increase for hardwood lumber and a large spike of 78,8% for softwood lumber. Likewise glass furnaces, many mills were closed due to stay-at-home orders. In addition, the demand for lumber only increased, contrary to predictions (Troyer, 2021). As a result, a crucial raw material for residential housing has become scarce and expensive.

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Labor Resource Issues

Additional workforce-related problems followed issues with availability, prices, and delivery time of raw materials. According to the report from the International Labour Organization (ILO, 2020), the virus containment measures resulted in unprecedented falls in employment and total hours worked. For example, from December 2019 to April 2020, the United States has recorded a 20% reduction of employed persons at work and more than 20 hours’ reduction of total weekly work time (ILO, 2020). The workers employed in construction became one of the most vulnerable groups.

As a result, the pandemic dealt a significant blow to the whole construction industry and residential housing in particular. According to Alsharef et al. (2021), the imposed safety measures led to a substantial decrease in productivity. Most importantly, many companies had to reduce the number of workers on construction sites due to the shortages of Personal Protective Equipment (PPE) and social distancing regulations (Alsharef et al., 2021). Consequently, the companies were unable to maintain the pace and meet the initial project schedules.

Possible Solutions

Given the pandemic-caused issues with raw materials availability and workforce condition, the residential housing industry must adopt special measures to combat them. In regard to raw materials, Alsharef et al. (2021) suggested proactively monitor the resource market to place orders before the emergence of shortages. In addition, businesses should constantly monitor the local vendors (Alsharef et al., 2021). While their prices could be higher than usual for the nearest time, the supplier’s proximity would at least allow meeting the project schedule.

Regarding the labor resource issue, the companies should encourage the vaccination of their workers. In addition, proven safety measures such as temperature checks, sanitizers, hand washing, tools disinfection, and proper social distancing would help avoid workforce health problems (Alsharef et al., 2021). The workers must be constantly reminded that no one is exempt from safety protocols, and everyone is responsible for the health and well-being of their colleagues.

References

Alsharef, A., Banerjee, S., Uddin, S. M., Albert, A., & Jaselskis, E. (2021). Early impacts of the COVID-19 pandemic on the United States construction industry. International Journal of Environmental Research and Public Health, 18(4), 1559. Web.

International Labour Organization. (2020). The impact of the COVID-19 pandemic on jobs and incomes in G20 economies. Web.

Troyer, M. (2021). How prices for homebuilding materials have changed during COVID-19. UpNest. Web.

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StudyCorgi. (2023, January 14). Residential Housing and Its Supply Chain Management. Retrieved from https://studycorgi.com/residential-housing-and-its-supply-chain-management/

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