How to Overcome Supply Chain Bottlenecks in Construction

By now, we all know there are supply chain issues. We also know the factors that have contributed to these supply chain issues, including the pandemic, trade disputes, labor shortages, consumer demand, a container ship grounding, natural disasters, cyberattacks, a global chip shortage and a cargo ship backlog at Los Angeles and Long Beach ports.

Every industry has been—and still is—affected. The construction industry is no exception. Builders, manufacturers, architects and contractors are particularly feeling the bite in skyrocketing costs. Shipping costs have risen over 500% and lumber prices jumped from $354/1000 board feet in May 2020 to $1,683 in May 2021. In addition, a U.S. News & World Report article reports a 1.6% decline in U.S. home construction in September 2021.

Price increases (which cannot be passed on in full to customers) and a decrease in building activity present huge challenges to the construction industry. How can construction companies cope? With cloud construction management software and a Cloud ERP solution.

Cloud Construction Management Software: An Incredible Coping Mechanism

Construction companies have traditionally relied on disconnected systems and manual processes. Where previously they could muddle through projects with limited visibility, costly delays and lack of communication, the pandemic, with its supply chain issues, labor shortages and mass remote work requirements, has forced them to rethink their business management strategy. Many have turned to modern cloud construction management software and Cloud ERP.

Cloud construction ERP software is one centralized solution, gathering separated business applications under one umbrella. Data from accounting, project management, inventory, payroll and more is available in a single database and accessible 24/7 by every team member.

Coping with the challenges is no longer impossible because now construction companies can:

1.     Plan Ahead

Because construction companies have contract deadlines, delays in inventory are costly. It’s imperative project managers plan ahead, ensuring they have the resources and materials they need on hand before a project starts. Obviously, the current supply chain issues have exacerbated the delays, but cloud-based construction and ERP software aids in the tracking of inventory, making it possible to see what’s available when as well as what’s been delayed and for how long.

Visibility into operations makes forecasting accurately attainable, especially when construction companies can monitor leading KPIs, such as supplier delivery time, customer demand forecast and maintenance forecast. These KPIs, which are possible because of shared data within the construction ERP software, help companies pay attention to price increases, know if they should increase stock levels and provide insight into whether they should switch suppliers or not.

2.     Ensure Accuracy

Construction estimates are the vital first step before commencing a project. An estimate answers the questions, “Will it be profitable for the construction company, and will it fit in the client’s budget?”

Many factors are considered when compiling an estimate, including labor, duration, equipment and materials. With prices for construction material soaring, creating accurate estimates is a challenge, as is honoring those estimates. Construction management ERP software streamlines and simplifies the estimating process.

For example, preparing change orders is made easier when access to accurate information is available on any web-enabled device and approvals can be made in near real-time. Likewise, the information housed in the ERP solution assists in the creation of more competitive bids in shorter amounts of time. It provides the tools necessary to complete the project on time and on budget.

3.     Explore Different Options

Resiliency in the face of mounting supply chain challenges will help construction companies weather the storm. Assessing supply chain risks and acting on the risks before they mature requires software that provides updated data, reporting functionality and dashboards to view and disseminate the information.

As the supply chain woes continue, construction companies can look towards diversifying their vendors, finding varied distribution locations and tapping into different labor teams. Construction companies also have access to inventory and suppliers that work best for their jobsite and project timelines.

Successfully Competing in Construction (Even When Facing Challenges)

Successfully competing in construction, even with the challenges posed by unexpected crises and painful supply chain disruptions, requires cloud construction management software within a comprehensive Cloud ERP solution. Separated business applications are gathered under the same umbrella. Team members, whether in the office or out in the field, can access real-time, synchronized and updated data. Working with the same accurate information results in increased visibility across the organization and sets the business up for better, more informed decision making.

NexTec Group, a national consulting firm that advises customers on the best industry-specific technology for their needs, understands the pressures the construction organizations are under to compete and succeed in a volatile environment. Our free guide, How to Compete in Construction with Modern Software, provides valuable insights on how modern construction and ERP software can help construction professionals overcome challenges and stay ahead of the competition.

The guide also recommends construction professionals consider Acumatica Cloud ERP and its construction-specific software as they research their options. With Acumatica construction, companies in the construction industry will have a flexible, robust system that provides insight and control over finances, projects, supplier relationships and operations.

Contact our team today for more details. We’d love to chat.

About the Author

Chris Milan

Chris Milan is the VP of Sales at NexTec Group and has worked in the construction industry for over 20 years. His deep industry knowledge and expertise in technology has allowed him to successfully deliver dozens of software solutions to general contractors, home builders, land developers and subcontractors.

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