Supply chains are an essential part of the construction industry. Without robust product supply chains, procurement supply chains and even contractor supply chains, it’s virtually impossible for the construction industry to maintain its rate of output.
In May 2023, the average cost of materials rose by 1.5% across the construction sector, compared to May 2022, caused by inflation and a decline in availability. With rising costs and lower forecasted output, supply chain management and streamlining have never been more important.
The Difficulties of Managing Supply Chains
Supply chains are not an easy feat to manage. With moving parts, changing regulations and a mix of software, it takes a lot of conjoined effort to create a successful and stable supply chain.
It’s not just about managing costs, but ensuring all moving parts are where they need to be at the right time. This can be hard to manage with supply chain product shortages caused by environmental and geopolitical factors. The truth is that there is no simple answer when managing supply chains affected by extraneous variables. Both COVID-19 and the war in Ukraine have seen a massive impact on the delivery of goods and have stalled many operations worldwide.
Geopolitical and environmental factors aren’t the only hindrances to supply chains. Access to skilled workers is too. Indeed, new reports show that whilst the materials shortage is starting to ease, the supply of skilled workers to the construction industry could add as much as £900m to the cost of the UK’s infrastructure in 2023 alone. Again, this is another example of a variable that construction firms will struggle to manage and account for in the planning stages.
Managing the multiple variables on a construction site, from people to products, can be a headache if not consolidated. That’s why firms need the right software to see them through.
How ERP Software Benefits Supply Chain Management
ERP (Enterprise Resource Planning) software provides huge benefits in supply chain management. It can help to provide transparency, allow for project completion, and provide clear-cut communication. Here are some things it can achieve for construction businesses:
1. Demand Planning
Demand planning can be the cause of many supply chain issues. If the right people and materials aren’t in place at the right time, it can quickly create costly delays for the company. With ERP software, any demand planning can be done swiftly to ensure all and any supply chains needed are coordinated proactively. This reduces the need for reactive changes, which are often more costly, and instead allows for work to be organised and processes to be more efficient.
2. Simplified Purchasing
Navigating complex supply chains often requires an intense amount of manual input and administrative work to create success in the purchasing stages. With the right ERP software, purchasing can be made simpler with convenient tools that allow you to track the status of a purchase.
Tools like a Goods Received Note (GRN) register can help to finalise the accounts payable process, enabling construction firms to keep a live record of purchase orders and goods received notices. An invoice register can be hugely beneficial in keeping on top of all products ordered, and store reports and invoices all in one central location.
However, the real help comes from procurement management, an integral part of construction ERP software. Procurement management software helps you to keep track of stock management and movement, ensuring that purchase orders can be automated, and cost management can be simplified.
3. Document Management
In this new digital age of construction, keeping on top of documents has never been more important. As the Building Safety Act comes into force, having documents that are managed transparently and clearly is becoming increasingly important. You’ll also need to demonstrate compliance when handling data. Similarly, ensuring that documentation is stored in a way that complies with potential laws, such as revised versions of the Building Safety Act, is incredibly important.
Good document management should include version history, the ability to make documents view only to avoid incorrect edits added, as well as templates, all come together to create a successful and efficient business. High-priority or business-critical documents can also be filtered into a sign-off workflow.
4. Customer Service
When speaking to customers who may have a query or need to understand the next stages, customer service teams can often struggle without the right access to information. Construction updates, if given in person or on-site, aren’t able to be easily shared with the customer if not available centrally.
That’s where ERP software can come in. By logging tickets, change orders and requests for information in one central software, customer service managers can easily appease fraught customers, and access the information they need. This allows them to deal with customer communications without needing to visit a building site each time, creating a faster process for all involved.
ERP Software in Action
The John F Hunt company became a RedSky customer in May 2017 and haven’t looked back since. Before the John F Hunt company came on board, they had numerous Excel files with duplicate data across the company. This system was disordered, making reporting and document access difficult for all users. Now, thanks to RedSky’s ERP solution, the company has one centralised database with permissions set up, enabling clear communication throughout the entire company.
Their data is now of better quality, and they are saving money on fuel costs and administrative work on a daily basis thanks to this integration.
RedSky’s ERP Can Help You
Our ERP software helps construction companies of all sizes, across the UK, Europe and the Middle East with their supply chain management. See how we could revolutionise your supply chain management by requesting a demonstration today.