6 minutes read
Supply chain management in construction is about more than adding products to a cart and unloading them from the truck. It’s also about investing in the right materials, tools, and partners.
Inflation is causing ever-higher pricing for goods and packaging. These construction supply chain issues probably aren’t new to you, and will probably never fully disappear. That said, there are some relatively simple ways you can get the right products to your project site at the right time.
Time is of the essence with any project. Let’s get you moving from project to project faster with these construction supply tips:
6 Tips for Avoiding Issues in Construction Supply Chain Management
The mechanics of a building construction supply chain are unpredictable and fluid, especially post-COVID. (And no, sourcing will probably never go back to the pre-2020 ways.)
These six considerations for supply chain disruption in the construction industry can mean the difference between dollars and downtime:
- Make purchase orders early
- Have a plan B (or C)
- Find a true partner
- Communicate clearly
- Buy enough – but not too much
- Software helps … to a point
1. Make Purchase Orders Early
There may be a very logical reason why you often wait until crunch time to send purchase orders. You could be timing the cash flow just right, or maybe you’re concerned about warehousing timelines. Sometimes, last-minute surprises pop up and expand the original scope of work.
However, the next time you order, there’s no guarantee the “typical” time frame will hold true or your storage solution will be available. If it’s not, you’ll have to either wait or scramble for an alternative, which means a longer sales cycle and delays.
Benefits of early construction purchase orders include:
- Getting your PO into the queue (especially for high-demand or obscure materials)
- Pricing & shipping leverage
- More accurate planning & forecasts
- More likely to obtain the best-fitting product for the job
Yes, you may hit a snag if you’re told it’ll be 3 months until you receive an order, and suddenly it reaches your doorstep 2 weeks later. Yes, if you aren’t able to access the job site yet, that creates a challenge.
It’s still better to estimate on the conservative side.
2. Have a Plan B (or C)
While planning a project, write down contingency plans for critical materials. Stay current on market trends, price fluctuations, and materials with shortages or long lead times. Even trucking shortages are worth watching these days.
(A good distributor can be a resource for this forecasting. A better distributor provides this information before you ask.)
Even when the construction specifier requires use of an exact product, there’s usually an equal product or system readily available in urgent situations. A distributor with technical product expertise can help identify a next-best-thing replacement. This improves the odds that the specifying architect or engineer will approve your substitution.
3. Work with a True Partner
Intent is important when working with a distributor. If you work with someone who's just trying to be a vending-machine transaction, you won’t get the same responsiveness or understanding. However, working with a true business partner means a better chance of snappy supplier communication and reliable delivery.
Build strong relationships with all suppliers and vendors. These long-term relationships can lead to:
- Higher-quality service
- More favorable terms
- Priority treatment during shortages
A full-service distributor is already tracking the same projects as you are. Such a distributor can keep tabs on what project stage you're in, product lead times, and even opportunities for better-performing products. And any heads-up the product manufacturers provide to your partner on product availability will be immediately passed down to you.
4. Communicate Clearly
Clear communication isn’t just about relaying quotes and milestones. It’s also about ensuring project-wide alignment with goals, timelines, and changes.
Receiving shipments on time requires clear communication of the following:
- Full project specs
- Job site conditions
- Exactly what you want (if you know)
- Exactly how much
- Exactly when you want it
In the best-case scenario, your distributor is forthright about how realistic your demands are.
On a broader project scale, you can also try these best practices:
- Clarify who should be contacted for specific issues.
- Keep detailed records – purchase orders, contracts, & delivery schedules – and make them available to all stakeholders
- Set aside recurring times to share updates & issues
All of the above will cut down on miscommunication and delays.
5. Buy Enough – But Not Too Much
Construction inventory management is the balance between keeping enough stock to avoid delays and minimizing inventory to reduce costs.
Keeping the right amount of stock is a benefit to quality control. If you order too much of a material you end up hating, you’ll have to either use it to lackluster results or eat the expense. If you order too little with no contingency plan … you know what the result will be.
There are a few common inventory-control strategies that address this balance, each with pros and cons. Use them (or don’t) based on your project’s timeline, scale, and supplier reliability:
Just-In-Time Delivery
Just-in-time (JIT) delivery is a logistics strategy of receiving supplies right at the moment they are required for use.
👍 Minimizes holding costs and reduces material waste due to overstocking or obsolescence
👎 Heavily relies on the punctuality and reliability of manufacturers & distributors
Consignment Stock
Consignment stock refers to materials that are stored at or near the construction site, but belong to the supplier until the time of use.
👍 Ties up less of the contractor’s budget at once
👎 The supplier could change terms or client prioritization for the stock
6. Software Helps … to a Point
Project management and supply chain software can track orders, inventory, and deliveries in real-time. Well-integrated technology can offer insights into potential delays and streamline communication between all parties. From there, you can predict product snafus further ahead of time.
Subcontractor project management software is an intriguing tool in the belt, but bringing it in-house might not jive with your wallet or schedule. It’s pricey and time-intensive to onboard and maintain, plus the product-availability data can be inconsistent from week to week.
Building a relationship with a well-connected distributor may be the most balanced solution (even for larger subcontractors). Distributors have unmatched access to data on top of longstanding relationships with product makers. They know what’s available, what’s not, and when you should pivot.
Who’s Suited to Manage Your Construction Supply Chain?
It’s no longer enough to set project deadlines and bark at anyone holding you up. With the never-ending bustle in construction projects, the supply chain needs a backup plan – and people.
Get familiar with the broader market so you understand fair pricing and potential upcoming shortages. Communicate clearly, remembering to put the “early” in “clearly.” Talk with an outside sales rep regularly – someone looking out for your interests, not just a commission.
If you’re armed with the materials you need to build successfully, we all make more money!
(Ready for a Process Change?)
If you’re ready for a change in how you manage construction projects, start at the distributor level. The right partner can suggest the best next step for any scenario.
If you’d like examples of how we’ve guided major projects to smooth completion, visit our Portfolio:
