Four Ways to Digitize Your Building Materials Supply Chain

Four Ways to Digitize Your Building Material Supply Chains

Four Ways to Digitize Your Building Materials Supply Chain

  • Gokce Ozcelik, Ph.D., Product Owner
  • March 31, 2022
Four Ways to Digitize Your Building Material Supply Chains

There are several reasons why the construction industry needs to focus on the building materials supply chain. First, materials are indispensable assets for any construction project, and they may constitute up to 50% of a project’s cost. Unfortunately, material supply chains in our industry are mostly analog with manual processes and limited automation¹, therefore hindering projects’ profitability. 

“In our industry, the competitor that’s best at managing the supply chain is probably going be the most successful competitor over time. It’s a condition of success.”²
- Jim Owens, the former chairman and CEO of Caterpillar

In a recent industry survey, most respondents mentioned that they have invested more in digital supply chain technologies than they planned in the past year. 75% of respondents plan to continue investing in digital supply chain technologies.³ With many benefits such as real-time supply chain coordination and visibility, informed planning and predictability, and action before issues materialize, digital supply chains can address these inefficiencies.

What are Digital Material Supply Chains?

Digital supply chains are real-time emulations of analog chains. The goals of digital supply chains are to increase the coordination synchronization and visibility across the entities, such as suppliers and field, while improving the process efficiencies to make them more predictable by leveraging digital intelligence, such as cognitive computing and Artificial Intelligence (AI).

Let’s take a look at how to digitize construction supply chains to make the industry more efficient and increase profit margins.

1. Break the Silos

Construction supply chains are complex with many moving pieces, such as relationships, contractors, suppliers, materials, services, cash, and information flows. This complexity is inherited from the nature of the construction projects wherein many participants, documents, drawings are involved. Therefore, information is siloed and usually lost in the handoff between project phases in the construction industry. By the time material procurement occurs, information created during design authoring is not handed off effectively. It is critical to streamline the information transfer efficiently and prevent information loss to make projects more profitable. Therefore, having connected supply chain information, ideally on a common platform, is critically important. 

2. Make Material Supply Chains Available Anywhere, Anytime

Cloud-based technology platforms create opportunities for seamless connectivity at scale on an internet-based platform. Having digital supply chains on the cloud will enable:

  • Easy access to material information and progress anywhere,
  • Seamlessly connect teams, materials, and workflows for real-time collaboration, 
  • Real-time information flow. 

Real-time data analytics, dashboards, and reports on the cloud allow timely data-driven decisions and unlock new levels of speed, innovation, and scalability.

3. Materials First

The majority of the construction industry focuses on making labor more efficient, especially given the emerging skilled labor shortage. Though, maybe one of the most critical factors that will improve labor and overall project productivity has been overlooked. It is simply impossible to build or install without materials. To reduce and eventually eliminate the field labor waste, material waste, purchase order mistakes, lack of inventory visibility, backorders, and all other processes hindering the supply chain efficiency, digitization efforts should target materials first. The entities in supply chains, from labor to supplier, will only function efficiently when the material is ordered, released, and delivered at the right time and place. Having accurate material takeoffs and comprehensive bills of materials (BOMs) are the key determinants of unlocking just-in-time (JIT) delivery and enabling the successful material flow in construction supply chains. A materials first approach is the crux of construction supply chain digitization.

4. What is Predictable is Profitable

One of the lessons learned the hard way from the COVID-19 pandemic is unpredictable circumstances can break supply chains even in high-tech industries. If the visibility to predict some of the challenges blamed on JIT existed, we would have leveraged leaner and more resilient supply chains. The best way to beat these circumstances is to make supply chains predictable. For this, real-time supply chain coordination is imperative, and digitization is a key enabler. This way, material order information could be available earlier in the project. Also, companies could also track building materials supply chain progress and forecast the upcoming deliveries and other supply chain milestones. 

Those polled in a recent engineering and construction supply chain digitization survey confirmed that companies find the following technologies critical for their supply chain strategies.¹

Digital supply chains equipped with but not limited to cloud computing, predictive analytics, AI/cognitive computing will grant high predictability to construction supply chains. Here is what it means for construction projects:

Predictable = Productive = Profitable

Supply chains can make or break a project’s success in the construction industry. It is impossible to stay on budget and deliver projects on time if your sites or off-site facilities do not receive the project materials at the right time and location.

AECInspire is a cloud-based procurement ecosystem that provides full visibility and access to your supply chain. A unified platform that connects teams, enhances workflows and tracks materials.