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Solving Supply Management Issues in Construction


Posted on October 24th, 2022

stack of lumber on construction site.

In 2022, global research firm BSI released a supply chain risk insights report describing how new export and import laws, inflation, climate change, the continuing effects of COVID-19, and other factors are negatively impacting world trade. The report stresses that in order to maintain profitability, modern businesses “need to adapt to evolving regulations quickly and understand their supply chain in ways they haven’t done previously.”

As material costs rise and availability becomes more unpredictable, construction companies must critically assess their supply management processes, identify any inefficiencies, and work to resolve them in order to make the most of their resources.

Talent meets technology

In today’s world, many essential business functions can be automated, including supply management. However, how well technology works often depends on the user, and it’s important to remember the human element.

Supply chain managers, operations managers, project managers, and other professionals responsible for managing supplies and materials should develop diverse skill sets that include both analytic and interpersonal skills. They can use supply management software to help monitor inventory and improve the quality of data they collect, but they also need the professional expertise to apply that data to make informed decisions and navigate supplier relationships.

Most common administrative errors in a supply chain setting

There are several types of common supply management errors. While they vary in severity, any error can significantly affect a business’s bottom line, especially if it goes unnoticed.

Inventory miscounts

Sometimes there is a discrepancy in the amount of inventory recorded and the amount of inventory that’s actually available. This can lead to major problems for construction companies, because the availability of resources directly influences project budgets and schedules.

Miscounts are often the result of human error and vary depending on the inventory tracking system a company uses. For example, the person tracking inventory may accidentally input the wrong number into a data entry system, or they may miss scanning inventory if it’s not stored in its proper place.

Chargeback errors

Chargeback errors are billing mistakes. A supplier may accidentally charge a construction company twice for the same shipment, schedule an unauthorized payment, or submit invoices that are higher than the agreed upon value.

These errors can typically be resolved fairly easily when caught early, although even then they cost valuable work time. Supply managers need to identify the error, organize the information, and contact the supplier to rectify their mistake. Sometimes the funds involved are tied up as a refund is processed.

When chargeback errors aren’t discovered, the money is lost. This is especially impactful if the error involves a recurring payment. Frequent audits of any automated payment processes are essential.

Spreadsheet errors

Spreadsheets seem error-proof. Enter information into specific cells and a formula will correctly calculate the data automatically.

Unfortunately, not all spreadsheets are created equal. User error when designing and implementing spreadsheets can lead to miscalculations and faulty information. Formulas are exact and will not work when there is a data entry mistake or missing value. Or, if the spreadsheet was working properly, someone entering information may accidentally alter a formula without realizing it.

It’s not always easy to tell when a spreadsheet contains errors. Supply managers should manually review data calculated by spreadsheets on a regular basis.

Customer & distributor rebate errors

Suppliers commonly offer rebate programs. When customers meet certain purchasing criteria, they’ll receive money back. This is meant to encourage repeat business.

Construction companies account for rebates in project budgets and may depend on them to remain profitable. But it’s not easy to fully understand and calculate actual rebate values because their complex requirements are often misinterpreted.

As the rebate consultants at e-bate explain, “Rebate management is a notoriously time-consuming and complex process – and time-consuming, complex processes are by nature error-prone and expensive.”

Both suppliers and customers make mistakes involving date limitations, product exclusions, and other disclaimers. If they are depending on rebates, construction companies must invest time into closely vetting and managing them.

Solving supply issues with automated tech

Construction companies can prevent and resolve the issues described above with the help of technology. The following solutions help workers more accurately track material and supply usage, and they help supply managers monitor those processes closely to catch discrepancies early.

Automated production tracking

Accurately logging material usage as a part of production tracking helps construction companies prevent inventory miscounts. With construction material tracking software, field crews easily track material use on their mobile devices, so supply managers can view the data instantly and better understand how much of a certain supply or material is used during each phase of a project.

They can use this data to both avoid delays caused by misallocated resources and make better purchasing decisions for future projects.

Digital production tracking software is faster and more accurate than pen and paper or individual spreadsheets. Digital tools are designed for ease of use and allow data to be shared between the field, warehouse, and office in real-time thanks to cloud storage. They standardize the production tracking process and leave little room for human error.

Warehouse automation

Warehouse automation systems utilize software and hardware to reduce human error in inventory management.

Using digital tools, employees can scan barcodes to track inventory instead of physically counting and manually entering data into a system. Inventory management software automatically analyzes submitted data and alerts managers when there are discrepancies.

Sometime warehouse automation involves robotics, and machines take over storage and retrieval tasks. This minimizes the need for employees to perform physical labor and keeps warehouse floors safer and more productive.

Real-time enterprise resource planning (ERP)

Enterprise resource planning (ERP) systems help supply managers keep track of invoices and rebates. Supply managers and accounting teams use ERP software to monitor inventory and costs at a company-wide level.

ERP systems help organize data and highlight any discrepancies without the need for hours of manual review.

Theft prevention

Automated theft prevention systems can also help construction companies protect their investment in resources. Jobsite theft is a significant threat, especially because common construction materials like lumber and copper are often left unattended and are easy to resell for a significant profit.

Webcam monitoring is a cost-effective solution to protect building materials, while GPS tracking and geo-fencing can be used to prevent the theft of machinery and heavy equipment.

Need better material management?

Raken’s production tracking software help your field crews log material use, equipment, and daily productivity efficiently. Then, when the day is done, they can share that data with the office with the click of a button.

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