The construction industry has faced significant disruptions throughout the pandemic, with a rapidly shrinking workforce, increased demand for services, and operational challenges. Supply chain operations, in particular, have been severely impacted explains Tom Stemm, CEO of Ryvit
According to the U.S. Census Bureau, the construction industry was one of the sectors most affected by supply chain disruptions, with almost 60% of business leaders experiencing delays in the last year. These challenges have caused trade contractors to rethink the way they engage with supply chains.
Here are three of the most common supply chain challenges trade contractors must overcome to ensure they are prepared to mount a post-pandemic recovery.
Common supply chain challenges businesses must overcome
1. Siloed operations reduce communication and collaboration across the supply chain
Construction projects require significant collaboration between stakeholders, each of whom may use a separate operating model. Between contractors, subcontractors, supply chain executives, on-site staff, and project owners, the brief and requirements for an assignment can change at any point during the project, and these changes must be communicated to all stakeholders immediately.
Any delay in communicating project changes can lead to delays in completion or material procurement. Failure to do so can cause excessive or inappropriate material purchases, which can further strain an already overworked supply chain. To ensure efficiency across the supply chain, contractors must find a way to quickly and clearly communicate material requirements and changes in project scope.
2. Material delivery timelines are not adhered to during supply crunches
Effective planning is crucial for any construction project but unforeseen circumstances such as a global pandemic can throw a spanner in the works. From ideation to delivery, construction projects take significant time, usually measured in months instead of weeks or days. This is especially true for larger projects.
As such, it can be difficult to predict and plan for the availability of materials throughout a project. Supply crunches, regardless of their cause, can force managers to adjust project timelines—and often lead to projects running over budget due to the higher number of hours required for completion.
3. Commonly used materials become prohibitively expensive when demand outweighs supply
Construction leaders often oversee multiple projects at the same time and usually have standardized processes and systems they are comfortable with. The knowledge accrued over multiple projects is often used in future assignments. However, this can sometimes cause construction executives to limit their search during material procurement.
For example, steel and bar joists were in short supply due to COVID-19 related disruptions in the supply chain. As a result, procurement officers were forced to make a choice. They could either bite the bullet and incur higher costs to purchase the materials they were familiar with—or they could search for alternative materials that could be more expensive but would keep the project on schedule.
Automation can help offset higher material costs by optimizing operational overhead
The widespread adoption of modern technology in the construction industry has opened up new opportunities for business leaders to change the way they operate. Research from EY identified increased efficiency as a top goal for most construction executives over the next year. Business leaders’ ability to increase efficiency is directly proportional to how well they can offset unexpected cost increases due to supply chain disruptions.
With modern software, business leaders can automate inefficient processes, such as purchasing, and redirect resources to material procurement and project management. This can help construction companies keep projects under budget while still paying the premium required to attain important materials during supply crunches.
The rise of predictive analytics allows business leaders to plan material use ahead of future supply crunches
Construction projects can be derailed by supply chain disruptions. Despite this, construction teams often fail to put systems in place to protect themselves in the event of such disruptions. Team leaders often rely on past experiences or their deep understanding of construction supply chains to predict and plan material procurement timelines. However, human error and a rapidly evolving industry have made it difficult to identify short and long-term trends with the detail required to build an accurate prediction of potential supply chain challenges.
Interoperable software can improve communication and collaboration between supply chain stakeholders
One of the major causes of inefficiencies in the supply chain is poor communication between stakeholders. Outdated communication systems such as Whatsapp, text messages, or email can exacerbate this problem, with important and time-sensitive information buried in long text or email chains.
This is also an issue for businesses that have embraced modern software and choose to work within its confines while project partners or contractors use other systems they are familiar with instead.
This is why business leaders must ensure that communication technology and project management software are compatible with the systems used by each stakeholder. Ensuring that each member of the team can receive and respond to project information can make construction teams more nimble and improve their ability to respond to changes in the supply chain.
The construction supply chain has evolved significantly over the past couple of years. The disruptions caused by the pandemic have encouraged construction companies to increase their adoption of modern technologies. These technologies have completely changed the way many businesses operate and if used well, can enable construction companies to manage their supply chain operations with more control than ever before.
