24 June 2021 | Business

4 Ways to Survive the Savage Construction Supply Chain

Construction companies must streamline internal operations to thrive in this fiercely competitive landscape.

Lately, the supply chain has been at the forefront of manufacturers and distributors’ minds. Whether it’s the Suez Canal blockage that affected 12% of global trade each day or a ransomware attack that halted gas production and drove panicked consumers to fill bins with fuel, it’s clear that companies need to build both visibility and resiliency into their supply chain.

General contractors’ needs for construction materials/supplies have also increased, creating a demand surge that’s straining the supply chain and increasing the costs of goods. 

This increasingly challenging combination of a turbulent supply chain, rising costs and intensifying competition means that construction companies absolutely must streamline their internal operations to survive—and thrive—in this dog-eat-dog landscape. 

 

1  Diversify, diversify, diversify

The first step to mitigating supply chain disruptions is to work with a wide range of suppliers. Sourcing goods from a wider range of suppliers means that if a single supplier has supply chain issues, there is much less operational impact and less chance of delays that affect the customer experience.

Logistics companies are rapidly diversifying their suppliers in an attempt to increase operational resilience, with almost 90% of shippers diversifying their supplier base or planning to diversify their suppliers.

One of the challenges of diversifying suppliers is that it can sacrifice pre-established relationships with suppliers and decrease access to competitive pricing options. For these companies, it’s most effective to take the approach of paying “backup” suppliers to maintain production capacity that the firm can then use in emergencies.

Maintaining relationships with existing suppliers and enlisting the support of backup ensures you benefit from competitive pricing while still providing more operational resilience against goods shortages so that you have a better chance of guaranteeing timely delivery to customers.  

Gartner® offers more information on choosing the right diversification strategy, including six factors that supply chain leaders must consider to determine their network’s level of resilience.

 

2  Automate processes to create resilient operations that scale… while cutting costs   

While diversifying suppliers is an integral part of managing your supply chain, construction companies also need to strive for operational excellence. 

Currently, 49% of warehouse and distribution centre managers say they still mostly use manual processes. But these inefficient manual approaches frequently lead to costly errors and cause delays that compromise your business.

To properly scale your business and gain more visibility into the supply chain, your operational capacity cannot rely on the size of your workforce. Intelligent document processing easily adds scalability by freeing existing resources, so you can protect revenue and do more with less. And furthermore, it’s a sure-fire way to cut operational costs when more dollars must be allocated to the increased costs of supplies.  

 

3  Leverage data to work smarter 

Delivering long-term continuous operational improvement is only possible if you have access to concrete, data-driven insights. Combining automation and data analytics together is essential if you want to consistently optimise your operations over time.

Automation provides the most efficient way to extract and process data from legacy systems and transform it into a format where a data analytics platform can process it. Once transformed, the data analytics solution can analyse it to generate new operational insights.  

Leveraging analytics in this way increases operational transparency, highlights current operational risks, predicts future risks, and predicts how long it will take to deliver goods to customers.  

These insights provide you with valuable guidance to make better decisions about optimising operations to cut costs.  

81% of supply chain professionals say analytics will be important in reducing landed costs. 

 

4  Break down silos  

Unfortunately, the complex and siloed network of manufacturers, suppliers, and distributors make it difficult to successfully adopt new digital initiatives. To overcome this hurdle, open communication channels between entities throughout the supply chain. That means encouraging regular communication between internal and external partners, briefing them on your digital strategy, and any new digital tools you’re going to deploy.

It’s important not to overlook improving communication, because if users don’t adopt new digital solutions throughout the supply chain, it will be nearly impossible to gain supply chain visibility, which will continue to strain customer and supplier relationships.  

 

Think ahead  

While no one can easily predict the next supply chain disruption, we know it’s coming. 

Taking preventative action like diversifying suppliers, adding visibility into your supply chain, and leveraging data analytics to identify inefficiencies will keep your operations functioning as efficiently as possible when the next breaking-news alert airs. 

The most important element: When transforming your operations, start by looking at what processes need to be optimised and how purpose-built technology solutions fit into your specific business goals.

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