Preparing for Supply Chain Disruptions in the Construction Sector
Like most industries, the construction industry’s supply chain has become increasingly more global. Measures from the COVID-19 pandemic have severely disrupted the flow of materials and other resources, affecting the construction industry significantly. If you want to learn how the construction industry can build resilience measures into a plan, read this guide by the team at Surf City Cranes.
Buy Building Materials Widely
The key to building supply chain resilience is to source products and services widely. When it comes to planning the supply chains for your building materials, tools, machinery and other necessities for construction work, have alternative options at as many points as possible. Redundancies and contingencies should be built into the supply chain plan.
Who could have known that a single ship running aground in the Suez Canal would hold up so much of global freight? Ideally, many of the alternative options in your supply chain plan would be domestic sources, such as factories and cranes in Brisbane, to mitigate the risk of shipping routes becoming congested. In fact, shipping congestion had been an issue for supply chains since before the pandemic brought them into public consciousness.
Buy Building Materials Early
Buying building materials earlier will incur higher costs, in terms of upfront cashflow as well as the ongoing storage costs. However, it’s worth paying this cost to reduce the risk of not being able to source critical inputs later. After all, which has a greater impact on your bottom line – higher overheads, or not being able to deliver on project completion at all?
Construction companies can take steps to keep their costs down. These include negotiating favourable wholesale prices, as well as incorporating the costs of off-site storage into building contracts, so that the cost can be passed on to owners rather than borne by the builders.
Pay with Up-Front Payments
There was a common story during the early supply chain disruptions of the COVID-19 pandemic: Last-minute diversions of stock. Suppliers of critical equipment, such as Personal Protective Equipment (PPE) for healthcare workers, had agreements in place to provide these. However, if a competitor buyer showed up, offering to pay a higher price in immediate cash payment for the PPE, the earlier contracts were set aside in favour of the new ones.
In the end, money talks. To secure a deal with a supplier, pay upfront so that the payment is received, and the supplier is obliged to provide the goods that have been paid for.
Build Relationships with Suppliers
The work of your construction company is reliant on their services, and now you’re dealing with the stocking up of supplies and upfront payments in cash. In other words, your business is even more deeply reliant on your suppliers than before.
Take this opportunity to develop stronger ties with your suppliers. As well as simply taking the time to develop closer relationships, this could rely on technology to open up lines of communication and bring your business processes together. For example, standardise your tools for easier business transactions or data reports.
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