Introduction
In a world where buildings are being built taller and cities are growing as if they are in a video game, the construction industry is facing a problem: the construction material shortage. Are you a builder, contractor, or developer? Then you must have faced the challenges of acquiring materials on time. Whether due to global supply chain constraints or rising material prices, such problems can stall your project at the worst time.
But fear not! In this article, we’ve covered some practical advice and information to make your shortages more manageable. And yes, we’ll even give you some ideas on how BLDON can help you improve your construction business and make it less of a headache. Let’s dive in!
Reasons Behind the Construction Material Shortage
Let’s be practical – what is really wrong with the construction industry and why is it suffering from a material shortage?
1. Increased Demand:
With the global population rising year by year, cities are rapidly developing and occupy the most territory. Companies are in need of new housing and office complexes, as well as new infrastructure projects. This has led to a sharp rise in the demand for materials like steel, wood, and cement among others. Meanwhile, governments around the globe are investing in new infrastructure, and this implies that there is intense competition for construction materials. It is like when there are only a few pieces of cake left and everybody wants it and there is no one left to give it to you.
2. Global Supply Chain Disruptions:
The COVID-19 outbreak disrupted the global supply chain in the most terrible way possible. Production halts, delayed deliveries, and other losses made the construction industry one of the worst affected. Goods that used to take a week to deliver are now taking months to be delivered. To make matters worse, there are shortages of shipping containers and port congestion and rising transport costs have only made the issue worse.
3. Rising Material Costs:
It is as basic as supply and demand; when demand rises beyond supply, then the prices rise. Lumber, steel, and other essentials are as costly as they have ever been, and construction businesses are struggling with reduced profit margins and costly projects.
4. Labor Shortages:
To make things worse, construction companies are also struggling with a lack of workforce. Less workforce will lead to reduced production of materials and hence longer times taken to complete a project and hence delays. This is like trying to create a Lego set but you are missing half of the pieces needed.
How to Prevent Construction Material Shortages
Construction companies know how disastrous it can be if there is a shortage of construction materials on the market.
Now that we know what causes materials to be scarce, how do you prevent this from affecting your projects? Here are a few proactive strategies:
1. Plan Purchases Early
It may seem rather basic, but in the current volatile environment, it is more important than ever to start planning early. In order to avoid this circumstance, it is advised to try to predict one’s needs for material in advance and order for them as soon as possible​. High-demand items such as windows, siding, or roofing can take much longer to be delivered. This way you will control the time delays in the project and avoid downtime to the extent possible.
2. Diversify Suppliers
If you are using only one or two suppliers currently, it is high time you change your strategy. A wider range of suppliers also leads to lower reliance on one particular firm, which is always helpful when some materials become difficult to source. There are always many suppliers around, whether local or even international, so do not rely on one company.
3. Leverage Technology
The use of procurement software and supply chain management tools will help you to get information on material availability, the time it takes to get the material, and other possible sources of supply. This helps you to know the next course of action to take as you manage your suppliers and potential issues. At BLDON, we understand the challenges that are associated with managing projects and procurement and that’s why we provide you with the best project management solutions. Our solutions will enable you to manage your procurement process to the best extent possible.
5 Effective Ways to Manage a Construction Material Shortage
1. Place Orders Promptly
Manufacturers sometimes struggle with backlogs. This delays the production cycle due to which there is a sudden price increase. Backlogs in the construction supply chain may result in material shortages for weeks or even months. In this situation, it is very important to order the required materials well in advance. This decreases the fear of sudden price hikes and material unavailability.
2. Double-check your Data
With long lead times, the last thing you want to do is redo an estimate or reorder materials because you didn’t have the most current pricing information or measured incorrectly. BLDON customers can check the latest pricing and review order details for accuracy. Also, be sure to double-check your measurement!
Remember to order extra to allow for cutting to size, breakage, and other inevitable waste. The amount will vary by material. But you never want to order exact quantities, as material shortage will result in even longer lead times.
3. Count on your Suppliers for Support
Realize the importance of being in constant conversation with your building material suppliers. These suppliers will keep you informed about what products are selling like hot cake from their counters and if the products that you need will be in stock by them by the time you place a demand. These suppliers also provide price invoices from manufacturers that verify price hikes. Such documents can help explain the increase in price to your customers.
4. Keep your Customers Informed
Most of the time your customers are unaware of the hindrance to the construction supply chain. It is important in these times to inform them about it. Having a transparent communication system that explains the issues you are facing with the manufacturers will help you avoid their wrath. Tell your customers that due to backlogs and high demand for materials, there have been price hikes. Share important facts related to material shortage. It is better you disclose the reality than overpromise and underdeliver to your clients.
5. Unlock the potential of an ERP system
You’ve invested millions in your ERP system… now what? There is a wealth of knowledge locked up in that system. And today’s business culture of mergers and acquisitions often results in a single manufacturer running dozens of ERP systems. But navigating a desktop with multiple ERP windows and Excel spreadsheets open is less than ideal when it comes to making impactful decisions.
Today’s data manipulation capabilities, including big data and cloud computing, show how clunky yesterday’s Excel-based systems really are. We’ve all struggled with the limitations of Excel. It’s static, and files need to be emailed from desktop to desktop. Management teams can only hope that each version houses the most updated figures.
The solution for this is to keep all your data in a centralized location where everyone can access it. A cloud-based program like Google Drive or Dropbox for all your supply chain data is the easiest way.
We know how important it is for you to run your construction business smoothly. There are however many challenges to this apart from supply chain issues.
How to Build Resilience Against Future Material Shortages
Shortages are a reality of the current market, but there are ways to build resilience into your operations:
1. Improve Supply Chain Visibility:
With the increasing speed of our lives today, it is crucial to have a good visual of your supply chain. Real-time data and tracking systems are helpful in identifying potential disturbances and help you take necessary actions before the delay happens. Use the software that ties in with your suppliers to track the stock levels and lead time efficiently.
2. Enhance Supplier Relationships:
Suppliers usually give special consideration to buyers who regularly buy from them. It is easier to negotiate better terms and conditions with your suppliers when you have a long-term business relationship with them and also when you require goods and services to be supplied to you urgently. Your favorite suppliers will always pull through for you when things get tough.
3. Plan for Flexibility:
Perhaps the most effective way of avoiding future shortages is by providing flexibility to your project structures. Whether that entails creating contingency plans for the backup materials, or developing flexible systems that allow for the integration of various products, flexibility remains a key driving force to the success of a project.
Conclusion:
It’s not always easy to find your way through construction material shortages, but there are ways to thrive in this environment. This means that it is always possible to prepare for disruptions by for example sourcing supplies earlier expanding your list of suppliers or even sourcing materials from other places.
At BLDON, we offer end-to-end construction management services to assist you in overcoming such hurdles. When you choose to work with us you can be confident that even when material constraints threaten the progression of your projects, we will be there for you. So, let’s build a better future and be prepared for challenges–together!
Frequently Asked Questions
1. What is the reason behind construction material scarcity?
Some of the causes include; more demand, supply chain disruptions, lack of workforce, and higher prices.
2. Which materials are being most impacted by shortages?
Lumber, windows, siding, framing, and roofing are some of the products experiencing high demand and thus the most impacted.
3. What measures can be taken to minimize costs during shortages?
Make the orders in bulk, try using other materials, and enhance efficiency through the use of technology in order to reduce costs during material scarcity.
