Why construction industry needs supply chain management?

The process that any business organization follows from planning to providing the final product to the end user is called supply chain management (SCM). Supply chain management in construction refers to organizing supply flow over several chains. The supplies can be information, labor, or materials.

Digital Supply Chain Management

Technology has taken the construction industry by storm. It has made it easy for builders to meet clients’ expectations and effective delegation of work.

A digital supply chain in construction is the process of connecting all the parties involved in a construction project digitally to enable real-time collaboration and inventory management. This includes suppliers, contractors, and the parties involved in the project. By digitizing the construction process, all parties involved can have visibility into the project at all times, which helps to avoid delays and fragmentations.

Elements of supply chain management

Elements of SCM may vary from company to company, depending on various factors like the type and size of the company. But here are some common structures that construction companies usually follow.

  1. Designing and planning
  2. Sourcing
  3. Manufacturing
  4. Transportation
  5. Distribution
  6. Installation
  7. Maintenance and repairs

How Supply Chain Management Benefits Construction Industry

  • Better Forecasting & Planning: An hour of planning can save 10 hours of doing. Strategic planning is necessary for business growth. Supply chain planning eliminates errors and wastage of material by preparing the budget, resources, and timelines beforehand. Doing it all digitally is the cherry on the cake. Advanced-technology software reduces human error, delays, shortages, and over/under-stocking by giving you a single-view, accurate, and reliable information on your supply chain activities.


  • Cost-effective sourcing of raw materials: This includes the procurement process, from estimating to quoting and ordering both materials and resources needed for the project ahead. Since the budget and amount of raw material have already been decided in the planning phase, it becomes a little easier to acquire it. Build Formula has a great tool for budget management. It allows you to launch tenders and seal the most cost-effective deal.?


  • Documentation & file manager: Property-related documents can be easily managed using the SCM system. All projects can have associated documents for title or lease deeds, associated tenants, and ownership or investor data on the system. It reduces the time for generating agreements and managing leases, especially for large properties.?


  • Managing Client Expectations: In the real estate industry, it is essential to manage client expectations by providing accurate and timely information about delays, contract changes, tenant concerns, supply chain disruptions, etc. This helps to avoid potential problems that could impact the lease or sale of a property. Keeping clients informed makes them more likely to be satisfied with the outcome. Thanks to digitization. It has become easy for builders to keep clients up-to-date. Digitization has made communication between clients and builders easy.


  • Increased Efficiency: Good supply chain management helps you predict the contingent shortcomings and take steps accordingly. That is because the construction industry is full of uncertainties. You have to stay prepared for the labor shortage, increased production costs, and other emergencies. Applying SCM helps you improve your efficiency rate as it allows you to plan for unexpected costs and events. You can have a backup supplier ready to avoid construction delays in case of the delayed supply of raw materials by an existing supplier.


  • Smooth information flow: In a supply chain, information flow refers to the communication between different parties involved in the process. This includes suppliers, manufacturers, distributors, and retailers. All these parties need to be able to share information seamlessly in order to keep the supply chain running smoothly. There are various ways to ensure smooth information flow in a supply chain. One way is to invest in technology that can help automate communication and data sharing between different parties. Another way is to put in place standard operating procedures that everyone involved in the supply chain must follow. This will help to ensure that everyone is on the same page and knows exactly what needs to be done at every stage of the process.


  • Reduced wastage & errors: Another benefit of having everyone on board is that it helps with reducing waste. This is because the contractors and engineers are not implementing redundant processes or duplicating each other’s efforts. Having them under one chain reveals any areas of redundancy and waste.


  • Boosts Cooperation: A well-run construction project requires excellent communication between all parties involved. If contractors and suppliers are not kept in the loop, it can cause major problems for the project. Construction supply chain management ensures that everyone is on the same page. Technology allows people to communicate without being in the same space. Having an adequate communication flow on construction projects gives you access to the project status, forecasts, reports, and other plans in real-time.


  • Better Integration Of Teams: SCM helps in the better integration of teams. This is because supply chain management can help reduce silos between departments and functions, and promote better communication and collaboration between team members. In turn, this can lead to improved coordination of activities, more efficient use of resources, and better overall performance.


SCM(Supply Chain Management) Software Is The Future

The future of SCM in the construction industry looks very promising. With the help of SCM software, construction companies will be able to manage their sources more efficiently and effectively. This will lead to better coordination between different teams and departments, and ultimately, to better quality construction projects. Build Formula is one of the best available software, that streamlines the construction process and makes the day-to-day tasks smooth. It will also help construction companies to keep track of their progress and performance so that they can make necessary improvements in the future. Connect with Build Formula team for the free demo.

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