• Kseniya Lukyanova

Poor supply chain management in the construction business

The construction supply chain plays an important role in the competition in the construction market. Construction supply chain management helps businesses improve competitiveness, increase profits, and gain greater control over various factors and variables within a project.

The construction sector is one of the oldest industries in the world and is recognized as traditional and underdeveloped in many areas such as information technology and innovation.

Serious attention should be paid to the role of innovation as the primary way for companies to achieve profitability, continuous service, and continuous improvement.

Construction supply chains can be very complex, especially on large projects.

This complexity, one of the main characteristics, can be related to the variety of materials and sides on the construction site (suppliers and subcontractors) required for the construction project. As more people are involved, the project can become more complex, and there is also a correlation between the increase in project volume and the complexity of the supply chain as more workforce, parties, and project materials are required to complete. This requires careful planning, organization, and collaboration between supply chain partners, which can be challenging. A large construction company may interact with hundreds or thousands of suppliers and subcontractors per year to complete a project.

Despite the fact that any construction company has a management of these processes in one capacity or another, and large ones have mostly implemented information technologies, many small construction companies are still very far from optimizing and automating these processes, as well as competent management.

In a construction company, you have to deal with endless streams of documents, delivery orders, invoices, job estimates, invoices. All of this leads to very time-consuming accounting and requires a thorough review and approval process. In addition, there are often delays on the part of clients in agreeing to changes, resulting in delays in the conclusion of contracts. The result of all this is increased costs due to rescheduling, reduced availability of resources, and changes in timelines, which creates new problems. Without very painstaking processes, it’s all too easy to eat up profitability due to planned and unplanned changes and manual processes become more time-consuming and costly.

Most of the processes, such as the management of purchase orders and invoices, are still manual, time-consuming, and error-prone. Finance and procurement teams are not tuned to leverage available technology and improve the productivity and efficiency of supply chain management processes.

Information technology can play a pivotal role in optimizing supply chain management processes, solutions and workflows to achieve competitiveness, reduce inventory, optimize supply chain financial flows, and reduce risks for your company.

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