The improving economy has significantly increased construction activity, which has put additional pressure on the availability of materials, equipment and skilled labor.
Most construction projects have a strict time line that must be met. When speed bumps occur and a supplier can’t deliver the right materials or equipment, an entire project can be thrown off schedule. Poor visibility that results in materials shortages means faster, more expensive delivery methods have to be used to get materials on site. The main impediment to major advancements in the construction industry is the lack of technology solutions that drive dynamic interactions between business partners.
End-to-end supply chain visibility is needed to uncover roadblocks in shipping deadlines, accommodate volatility in customer demand, and prepare to mitigate risks — such as supplier failure or driver shortages. According to McKinsey & Company, businesses in the Heavy Building Materials (HBM) space invest less than 1 percent of revenues annually on IT and less than 20 percent have trading-partner connectivity. In too many ways, key business practices in construction more closely resemble a Sears and Roebuck catalog experience than an Amazon one.
Today, construction is a $10tr global industry. Nearly 15 percent of the world’s GDP is used to fuel construction. And these figures are growing rapidly. Yet, the industry is stuck. Productivity across heavy civil or mega-projects has only increased by a mere 1% over the past 20 years. The extent to which a company can optimize their activities, processes, and services depends directly on the quality of connectivity and the level of visibility achieved. Insufficient knowledge transfer has caused gaps in the industry — but the opportunity for growth can be found with the help of next-gen, cloud enabled technology.
This technology transforms the supply chains of trading partners in the Heavy Building Materials ecosystem; from bulk materials suppliers, producers, and logistics providers through to heavy-civil contractors, DOTs and project owners. By automating manual processes, companies can streamline their inter-enterprise operations, which lowers costs and creates greater efficiencies. Enhanced supply chain visibility equips more informed decisions, and as the data from disparate systems is harmonized across the industry, insights gathered will be put to work to transform how businesses collaborate with one another to achieve superior outcomes. This is particularly important with critical path materials like aggregates and concrete.
An expanding and increasingly competitive marketplace means customers have more options today than in the past, and many of them face their own competitive pressures. If they do not already, your customers are going to expect shorter cycle times and will be less tolerant of late deliveries or mistakes. Having a transparent, more efficient supply chain and a better flow of information is imperative to meet these demands. A system that provides a single view of the supply chain will help develop more consistency in measuring units and enforcing timelines.
Without this kind of visibility, different points of your supplier network become silos. Communication breaks down, orders go unfilled and customers begin exploring other options. When businesses use supply chain visibility solutions, they gain a real-world view of what materials are needed to keep inventory at the right level, or what materials need to be ordered to fulfill a customer’s order.
The goal of implementing visibility systems is to gain insights that inform growth strategies and enable better, timelier decision-making. Supply chain visibility comes when companies connect with their suppliers, customers, logistics service providers, and other external trading partners to share data, documents, and order information. This analytical approach to collaboration and data will not only improve your supply chain performance today, it will help you anticipate the future
The construction industry will undergo a digital transformation because it’s the only way the industry will be able to meet — both cost-effectively and on time — the large need for infrastructure investments around the world. Not to mention, federal and state agencies and competitive pressures are also demanding it. With digital transformation, all paper-based processes will be replaced by electronic documentation and transactions, accelerating financial reconciliation and enhancing the customer experience.
Ed Rusch is vice president of marketing for Command Alkon.
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