The demand for construction services has been on the rise. To cope with this increase in demand, construction businesses will be looking to leverage a global supply chain to procure materials efficiently and with as little risk as possible. However, supplier recovery is expected to be inconsistent and procurement leaders cannot always be assured of material supply levels or delivery timelines.
Deloitte’s 2021 Global Chief Procurement Officer Survey revealed that over a third of suppliers had failed to meet new requirements over the last year and 11% claimed that supplier issues had directly damaged their brand. Construction businesses, which are reliant on a consistent supply of quality materials, must learn from the challenges over the last year and develop a more transparent supply chain that can help business leaders predict and react to potential supply disruptions early. Here are three reasons why traditional methods of supply chain management struggle to accomplish this.
End-to-end transparency can often be difficult to achieve when individual stakeholders within the supply chain put their own interests ahead of the project. Material vendors can work with thousands of suppliers and have the expertise to navigate the saturated marketplace. However, it is not always advantageous for them to share this information with their clients since their highly specialized knowledge of supplier performance and reliability form a large part of their value proposition.
Ultimately, while supplier and supply chain data exists, it can only be fully utilized when that information is shared with different stakeholders who can use it to effectively evaluate the risks associated with potential material partners. This creates information silos that force business leaders to rely on external vendors for information relating to specific parts of the supply chain.
Modern data analytics tools have given business leaders the ability to make highly consequential business decisions based on actionable insight generated by large pools of data collected across the entire supply chain. However, the adoption of such technology has been, at best, inconsistent.
The Supply Chain Resilience Report prepared by The Business Continuity Institute showed that close to half of all businesses still rely on outdated tools such as spreadsheets to collect and store data relating to supply chain performance. This makes it extremely difficult to ensure that the data businesses use to make material procurement decisions is complete and updated in real time.
Construction projects almost always require a diverse group of suppliers and vendors to collaborate to ensure timely delivery of essential materials to the job site. The extent to which project managers can oversee this group of vendors and suppliers can directly impact their ability to predict potential bottlenecks, performance issues, or supply challenges.
This correlation is confirmed by recent research by Deloitte, which found that high-performing supply chains are 95% more likely to have high visibility into tier 1 suppliers and more than 50% more likely to have visibility into tier 2 suppliers and beyond. True end-to-end transparency is almost entirely dependent on project managers’ ability to view and react to changes across the entire supply chain. A tiered structure for material procurement only makes this more challenging.
In a recent interview with Supply Chain Digital, Duncan Brock, Group Director at CIPS, said that “24% of firms have stores of big data with a wealth of customer information at their fingertips, though many firms are still unclear how they can use this goldmine effectively, the data is a rich source of risk and opportunity.”
The data stores that exist within supply chains are often spread across the servers and computers or the various stakeholders involved in construction projects. This can make it extremely challenging to receive a true overview of the risks involved with specific material partnerships. With consolidated information databases, business leaders can access crucial information for risk assessment on a large scale while relying on the database operator’s ability to verify and corroborate this information.
While the requirements of each construction project are unique, there is significant overlap in material requirements over projects and across construction companies. This is why leveraging the power of crowdsourced feedback can be so important for project managers who wish to minimize the risk involved in engaging a new supplier or working with a new procurement partner. With increased access to a community of construction managers, suppliers, and vendors, business leaders can refer to past performance records of a potential partner to be assured of their partner’s ability to deliver on their promises.
As global supply chains become increasingly stretched as a result of inconsistent recovery from the pandemic, project managers have to go beyond simple vendor discovery and maintain clear and constant communication with higher risk material suppliers. This can be challenging when using outdated communications tools such as email and WhatsApp chats since these methods fail to provide stakeholders the contextual information needed to create a holistic overview of the supply chain in real time. Integrated communication tools paired with effective vendor discovery software helps business leaders take a chance on high-risk vendors to develop long-lasting relationships that can be used across a variety of projects.
Ultimately, the data that business leaders need to achieve supply chain transparency already exists in silos. Construction businesses must move beyond their limited view of the supply chain by using technology that can help improve discovery, reduce the risk associated with engaging new vendors, and improve communications between stakeholders throughout the partnership.
Tom Stemm is the CEO/Founder of Ryvit. He was inspired to build Ryvit when several of his clients in the construction industry had asked for some custom integration development work. At the time, Tom was part of the founding team at GadellNet (a fast-growing IT consulting firm in St. Louis, MO), and they realized that there was a significant gap in the construction tech industry – namely that, while tech purchases were high, the adoption rate of those solutions throughout all stakeholders was still lagging. After a very diligent launch process, Ryvit was born to address the rampant problem of a disintegrated tech stack in the construction technology space. Tom continues to lead a team of integration developers, application enthusiasts, customer heroes, and sales superstars on a mission to eliminate duplicate data entry and rampant data errors from the construction technology world.