Building materials suppliers understand the challenges of working with the needs of construction projects. In this article we look at what critical features you should look for in your building materials software.
Project Planning and Scheduling
As with any major project, upfront planning and scheduling can be a particularly important determinant of success. Creating and maintaining a quote or summary of all the resources, items, costs will ensure that you bid on the project correctly. Also identifying all milestones, dependencies, and coordinating all these with the construction schedule is critical to being able to perform, if you successfully win the contract. Your building materials software should allow you to import from quotes for prior similar projects and help you refine your bid price based on multiple different parameters. Also, once a complete quote containing all resources and items is created, your software should help you convert this into a roadmap of all the orders and special orders that have to be created by stage by shipping release date.
Powerful Inventory Management
Building materials suppliers often deal with a wide range of building materials. To manage inventory efficiently, your building materials software has to provide real-time visibility into inventory levels across multiple projects and multiple warehouses. It also has to help automate reordering processes. Building materials are often heavy and bulky and so not easily or cost-effectively ordered at short notice. Your building materials software inventory management should help you reduce the risk of stockouts or overstocking and minimize carrying costs.
Just In Time Delivery
Construction projects by their nature are lengthy undertakings and involve many orders for tools, equipment, construction materials, rough-in items, fixtures, finishes, etc. Moreover, because construction jobsites do not typically have the space to store building materials and supplies in advance of their use in the project, these orders must be delivered “just in time.” If building materials and supplies are delivered too early, they will have to be stored at the distributor’s warehouse or at the jobsite, and either way there is cost and risk of damage or breakage. If they are delivered too late, they can hold up the construction project or require workers to go back and install items later adding to cost and possibly damage to other things. Your building materials software has to be able to manage orders by shipping release date so that they arrive on site just in time.
Beyond standard, undifferentiated, building materials, most distributors don’t carry stock of finished items like windows, doors, cabinets, plumbing fixtures, lighting fixtures, etc., that are needed for any construction project. These types of items are typically special-ordered based on the project’s architectural specifications. This means that building materials suppliers have to be able to source these items from a manufacturer, then purchase them and arrange delivery to the jobsite in time to match the construction schedule. Your building materials software has to be able to manage special orders that can be linked to purchase orders that can either be drop-shipped directly to the jobsite or allow the items to be sent to you to be staged then sent to the jobsite.
Even with care on how special orders are placed, it is possible that some items on an order may be back ordered or even just arrive late. In these cases, it is important that your building materials software allows you to split and partially ship orders. The goods that arrived need to be shipped to the jobsite and the remaining order left open awaiting the missing items. This will minimize the impact on the construction schedule and cut the costs of slippage, which could otherwise be considerable.
No construction project can get to completion without change orders – sometimes many change orders. These change orders need to be able to be easily identified and tracked together with the rest of the project. Your building materials software should be able to manage many change orders on each project and provide full visibility for tie-out and auditing purposes.
A typical construction project will include a very large number of orders with multiple shipping release dates, and some will be special orders while some might be supplied from inventory. All of these orders need to be delivered to the jobsite to meet the construction schedule. Managing all these orders, special orders and linked purchase orders requires project management capabilities. Powerful building materials software will allow you to link all the related orders under a single project. Then on one screen all orders for the project should be displayed with all the dates corresponding to when the special order-linked POs have to be placed, when the POs are expected to be received, when they are actually received, when items need to be picked, and when the items need to be shipped to the jobsite. Without this kind of project management capability in your building materials software keeping everything on track will become very challenging, very quickly.
With multiple special orders for each project, your building materials software should allow you to manage multiple supplier relationships. Effective communication and collaboration with suppliers is essential for timely deliveries from suppliers, and your building materials software should be able to track their performance in terms of filling POs and meeting agreed-to delivery times. This is particularly important in light of the supply chain crises of the last few years. In addition, your building materials software should allow you to send Requests for Quotations (“RFQs”) for groups of items to multiple suppliers/manufacturers to get the best prices and terms. This will also allow you to diversify your supply chain and respond better to supply chain problems if, and when, they occur.
Supply Chain Visibility
With multiple special orders from multiple suppliers and the time sensitivity of the construction schedule, your building materials software should provide transparency into the state of your supply chain. Without this, you will not be able to respond to unexpected backlogs or supply chain blockages. Ideally your building materials software should include or be integrated with a full Transportation Management System (“TMS”) to give you full visibility into all inbound and outbound shipments by carrier, intermodal or steamship line.
Percent of Completion Accounting
Most construction projects are awarded on a fixed price basis and are billed based on the achievement of certain pre-determined milestones, usually when the project meets certain, percent of completion thresholds. Your building materials software must be able to accommodate this type of revenue recognition schedule. It must also keep track of cumulative costs incurred and cumulative project billings as well as tracking and reporting on progress.
Data Analytics and BI
The complexities of large construction projects with many moving parts and the challenges of just in time delivery lend themselves to data analytics. Being able to collect and analyze data to identify trends, optimize processes, and make informed decisions can be very important. In particular, managing just in time processes relies on data-driven insights to continually improve efficiency and cut down on slippages. Your building materials software should include data analytics capabilities and business intelligence to conduct unstructured data exploration to uncover insights into your data. Often, exploiting these previously-unknown data insights can lead to significant opportunities.
In summary, the right building materials software that includes special orders, change order management and project management capabilities, can help building materials suppliers to improve resource management, control costs, enhance communication, and provide better customer service. These kinds of tools are essential for staying competitive and achieving long-term success in the construction and building materials industry. If your software isn’t delivering, contact us to learn what Cloud-based Accolent ERP can do for your building materials distribution business.