How Technology Can Solve Common Problems for Procurement Managers
Material procurement in the construction industry is crucial to the success of a project as it can cause significant delays to a construction schedule and significant costs if not executed correctly. Therefore procurement managers and companies, focus on procuring materials in a timely manner and at the best price, relative to the quality. However, due to supplier related issues, delay in deliveries and logistical inefficiencies, it’s hard to achieve these objectives. Below we highlight in detail the most common problems and how technology can help overcome these problems.
Acquisition of Materials
One of the biggest challenges in acquiring materials is selecting the right supplier for your project. As a procurement manager, you’re reliant on your chosen supplier providing materials as agreed and in accordance with a contract. So when you have no working relationship and/or limited to no visibility on the progress of your materials, problems often occur. When there is a miscommunication, delay or issue during manufacture, often you have no visibility of this, and therefore you have limited time to mitigate the impact; resulting in delays and additional project costs.
In addition to the above, supply chains are becoming increasingly global, as materials are being sourced more and more from overseas and in particular from China. From this, comes a lot of problems with language barriers.
A local supplier requested some materials to be sent to site, however there was a miscommunication between the installer and the manufacturer. The manufacturer sent the wrong materials to site, which resulted in the supplier having to pay warehousing costs and additional costs for re-ordering the correct materials as well as expedited fees to get the correct materials on site asap.
A local builder, who found out that their materials were sitting in the corner of the manufacturers factory overseas instead of being shipped. The manufacturer was waiting for all the materials to be complete before shipping, however the builder had sequenced the manufacturing in accordance with the installation on site. The builder had to fly a staff member overseas to the factory to find out where his materials were. It cost the builder tens of thousands, between the flight cost and time travelling, express shipping and over-time to have the site workers make up the lost time.
To solve these problems, you need a collaborative working relationship with your suppliers, as well as visibility during manufacture. You can achieve these objectives by using an effective and innovative supply chain software. This type of software provides:
• Real-time communication with your suppliers
• Audit trail of everything that’s been ordered, prioritised and manufactured
• Analytical data on supplier performance
• Software in multiple languages
Real-time communication between you and your supplier, means that you know immediately when there is an issue or delay on the supplier’s side. This allows you to be proactive and to minimise any negative impacts to your projects. By communicating through a supply chain software, you mitigate the risk of miscommunication. In addition, an audit trail is automatically created, such as when a material is requested to be manufactured or prioritised. This can help with dispute resolution.
Having the ability to collect and review data on supplier performance, minimises future risks and can reduce costs, as it assists you in making an informed decision when choosing your next supplier. Performing your material procurement through a supply chain software, means you reduce risks and gain better control of the manufacturing process through a clear communication channel and visibility of your material progress and any potential delays.
Tip: Concerned about whether your overseas manufacturers will keep the supply chain software up to date? You can stipulate use of the software in your contract, including making progress payments based on what’s complete in the system. This ensures everyone’s always on the same page, and your CA’s don’t need to go through dozens of spreadsheets to track what work is complete.
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