11th April 2016

Five Ways to Improve Construction Supply Chain Management

Supply chain management causing you a headache? Here we explore 5 ways construction companies can make supply chain management more effective.

With 81 per cent of businesses experiencing at least one supply chain disruption last year, it is important to gain a deep understanding of your supply chain to mitigate risks. Effective supply chain management helps to secure existing and future contracts, reduce business risks and drive out unnecessary costs. To achieve this, it is essential to improve the utilisation of people, assets and materials resulting in improved profitability, efficiency and reputation.

Ways to improve your supply chain:

Track and manage inventory in real time. Cloud computing has significantly transformed the supply chain providing real-time access to data from any location. A cloud solution, such as an ERP system (Enterprise Resource Planning) will allow you to track inventory and demand changes in real-time, helping you balance your stock levels and meet demands.  Added to this, you can automatically order equipment and materials needed to complete a project, which would reduce waste and minimise errors, keeping you both on budget and on schedule.

Gain data insight. With information usually held in silos, businesses face a challenge of maintaining an effective collaboration between supply chain elements. An intelligent supply chain software can solve this by facilitating forecasting and planning. By using historical data you can make accurate projections and account for resource fluctuations and labour shortages. Consequently, with accurate inventory, purchasing and production planning, you can avoid delays and waste which results in what matters most in any business—revenue.

Automate processes. “Smart systems are gradually infiltrating the supply chain and performing tasks previously carried out by humans,” says Chris Mills, Chief Technology Officer, Europe, Middle East and Africa, at Pivotal. For example, an ERP system can remove the need for laborious administration tasks, streamlining order processes and automating your purchasing. Through automation, you can free up time to focus on core business activities resulting in increased profits and efficiency, while reducing costs and waste.

Improve cash flow. Late payments and the general lack of working capital have always been an issue in the construction industry, impacting on the ability to deliver. According to Suzanne Nichol MBE, Chief Executive of Build UK, lack of cash flow “…influences behaviour and compromises performance all the way along.” With ERP system such as NAVcontracts you can accurately monitor committed, accrued and actual costs against budgets to identify possible slip-ups and ultimately improve cash flow.

Establish long-term relationships with all the members of your supply chain. Good relationships with suppliers, contractors and sub-contractors are critical to the project success and client satisfaction. A lack of mutual trust and the subsequent lack of information sharing can jeopardise a project and ultimately affect revenue and growth. Consequently, it is important to profile the potential risks involved in supply chain activities. This will allow you to prepare for different scenarios and build resiliency, minimising impact on customers.

Research shows that organisations that employ an effective supply chain strategy can achieve stronger business performance resulting in an average of 20 per cent higher profitability. If you have not yet discovered the full potential of supply chain management tools, it is time to consider a solution to maximise resource efficiency, cost savings and reduce delays. See what we can offer here >>>

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