Supply chains in the construction industry are often complex and difficult to manage. The bigger the project, the more players involved and the longer and more intricate the supply chain.
The COVID-19 pandemic and subsequent materials shortages have strained supply chains over the past year or so. More recently, a growing number of high-profile cyberattacks have threatened to disrupt supply chains (at least temporarily) in nearly every industry — including construction.
These heightened risks and uncertainties require high-level, real-time visibility into a company’s supply chain — from beginning to end. This is difficult to achieve with simple spreadsheets or certainly old-fashioned paper documentation. That’s why more and more construction businesses are digitizing their supply chains to improve oversight, increase efficiency and manage risk.
Handling the chain
Generally, construction companies are automating three key business areas:
- Accounts receivable, and
- Inventory management
To do so, they’re adopting the technological tools necessary to better communicate and coordinate with all parties along each project’s distinctive supply chain, from the project owner to the designers to the contractor and subs to the actual suppliers.
One such tool is supply chain management (SCM) software. Also known as logistics software, SCM solutions help manage how and when equipment, materials and services are procured. Although more prevalent in other industries, SCM software is making its way into construction, doing the hard work of tracking the many parts of a project’s supply chain and often providing a digital platform that all parties can use to view the same data.
Managing the risk
For more in-depth supply chain monitoring, another tool to consider is supply chain risk management (SCRM) software. You can use SCRM solutions to ensure you’re working with vetted suppliers and subcontractors who have the proper insurance, training and qualifications. Typical features include:
Contractor/supplier assessments. Create standardized assessments and customize question weights and thresholds based on relevance.
Risk management. Monitor suppliers and sites, configure risk scores, get critical failure points, and track risk-mitigation progress.
Mapping. Visualize your supply chain using maps, assess potential vulnerabilities and prioritize supplier workflows.
Event monitoring. Track events across the supply chain and create “what if” scenario modeling. Users can load sites and points of interest, and monitor local impacts via news outlets, social media and regulatory agencies.
On the human side of things, some construction companies are hiring supply chain managers with educational backgrounds and experience focused on the distinctive challenges of this area. Although investing in new employees and software is costly and should be done with great care, maintaining a strong supply chain is imperative in today’s business environment.
The content featured in this article originates from our bi-monthly Contractor Newsletter. Subscribe below and stay in the know.