How the Construction Industry Can Sidestep Supply Chain Disruptions and Rising Builder Supply Costs
How long will we remember the “Ever Given”? While history may relegate the Suez Canal-blocking ship’s name to fodder for future pub trivia, world economies and supply chains will be feeling the impact for months ahead. After all, the Ever Given blocked 350 vessels. Lloyd’s List estimated more than $9 billion worth of goods daily pass through that 120-mile waterway. When you multiply that $9 billion by the 6 days and 7 hours of canal obstruction, that’s a lot of balboas (Panama’s currency) for downstream companies – and their customers – to absorb.
In 2021 alone, we’ve seen February’s Texas ice storm disrupt the Texan railway traffic that most supply chains rely upon. The power outages shut down manufacturing production. Eighteen of 30 Texas refineries went offline, impacting crude oil processing, which, in turn, impacted building materials like paint, drain pipes, roof shingles and flooring. And then there’s lumber at its historic, all-time high, realizing a 75% cost increase.
In this era of J-I-T manufacturing, with construction materials production volumes being driven by predictive analytics based on more “normal” times and weather patterns…
- How do you mitigate rising building materials costs?
- How do you minimize waste and maximize efficiencies?
- How do you create a more reliable supply chain?
- How do you boost profitability?
We Have Your 5 Strategies Here:
- Automate (BIM, AI, Drones, Wearables): From augmented reality measuring buildings and simulating architectural or structural changes and rendering rich, 3D project visualizations to heightening efficiencies, to capturing overhead data via drones, to identifying optimal opportunities for prefabricated parts, to wearables alerting your team of worker injuries, automation could be your competitive advantage.
- Recalibrate (Your Lean Construction): An offshoot of the lean manufacturing movement, lean construction is revered for reducing material waste by approximately 64%, and production hours by 31%, according to the American Society of Civil Engineers’ 2012 study, cited by everyone and anyone writing about construction today. However, one of the key tenants of lean construction is reducing inventory and warehousing materials. Those who didn’t follow this inventory advisory to the letter are being less impacted by the rising cost of building supplies vs. those who did.
- Eliminate (Your “Department of Redundancy Department”): Efficiency is key to profitability in every area of construction. Tightening every wasted effort -- from unnecessary fleet mileage to job site walking pathways, to eliminating duplicative data entry and redundant daily reports – these workflow and productivity efficiencies will create killer margins, instead of margin killers.
- Migrate (Your Supply Chain): If this past year’s disruptions have taught us anything, it’s that now is the time to shift from global building materials sources to regional solutions. Join the 72% of industrial buyers who “always or generally” prefer to source locally because of reduced costs ($1 billion spent yearly by North American companies on logistics alone) and maximizing your control over your vendors. This can also boost your sustainability street cred, since the minimized range of travel miles is a greener – often certifiably so -- solution.
- Innovate (Your Entire Workflow and Business Strategy): If you’re not already exploring smart contracts built upon blockchain technology, it’s time to take that deep dive down the rabbit hole and understand it. Smart contracts streamline time-consuming paper processes like payment applications. Smart contracts will save time by increasing your productivity and speeding up your project and payment timelines, resulting in overall project cost reductions. Additionally, you will realize greater security, since the encryption codes are virtually impossible to break (the non-hackable Bitcoin is just one example of the blockchain technology system’s decentralized consensus mechanism integrity). Smart contracts are your all-in-one system to automate your supply chain and reduce your costs.
The construction industry is moving at a break-neck pace and it’s not easy staying informed on builder life hacks, so our bonus tip is #6: “Educate (Your Management Team).” Reading blogs like this one will help you stay briefed on the building industry’s new technologies and best practices to save you time and money. In the end, we’re all working towards heightened ROI.
5 Pillars of Construction Project Health
- AUTOMATE: Deploy BIM, AI, Drones & Wearables Initiatives.
- RECALIBRATE: Know when to be lean, but not TOO LEAN.
- ELIMINATE: End redundancies in every area.
- MIGRATE: Add regional building materials providers to your supply chain.
- INNOVATE: Use blockchain smart contracts for efficiency and security.
- BONUS TIP:
EDUCATE your management team on all of the above.