Construction materials business: Challenges, Trends and Technology Solution
The building materials industry is always changing and evolving. Every year new trends emerge within the industry, from latest customer demands and technological advancements to a stronger focus on sustainability. Over the past few years, the sector has seen considerable growth because of several interrelated factors, such as growing population, rise in urbanization, expanding industry and the upswing in the global economy.
The pressure is on the building materials industry not just to help make up for the short supply of workers, but also to improve onsite efficiencies. Increasing the load on the supply and fabrication side, be it through prefabrication or offsite or modular construction, can help absorb a significant portion of a project’s time, labor requirements and overall costs.
Businesses in the industry require state-of-the-art ERP software suites that can help them grow and thrive.
The Industry Challenges
Lack of consistency in demand
The industry is significantly affected by seasonality and product life cycles. Fluctuations in the global and national economy also affect the demand for building materials. It is a domino effect: interest rates impact the cost of loans and mortgages, which impact consumers’ buying decisions.
The construction industry is known for its issues regarding worker shortage and retention. A career in the construction business is not a popular option for those entering the job market.
Labor management can be challenging because the materials industry needs experience for more than just a few months.
Cash flow management
Material suppliers can also experience cash flow issues. It is a huge challenge for them when they spend over the budget and end up not having enough money to fund the next project.
Smaller companies often struggle with cash shortage. A supplier may secure multiple projects only to realize the project deadlines are too close to each other. This means they need to find ways to have sufficient financial resources.
Rising material costs can significantly affect the material suppliers, especially because some construction projects have fixed budgets for supplies. Costs may increase in the middle of an ongoing project.
Trends and opportunities
The building materials industry has experienced many interesting trends and innovations that have revolutionized lifestyles across the globe.
The rise in work from home and a stagnant housing market has led many homeowners to invest in do-it-yourself (DIY) home improvement projects. As homeowners purchase DIY supplies such as flooring products, plumbing fixtures, paint, and hardware from their local Home Depot or similar businesses, wholesalers are experiencing a boost in their sales revenue.
Builders and engineers are using 4D and 5D simulations to replan projects and re-optimize schedules. Company owners are using online channels to monitor their employees’ well-being through apps, ordering construction materials, managing scarce resources more accurately, and maintaining cash flow.
Building Information Modeling (BIM)
Building information technology is helping the industry achieve improved efficiencies. BIM allows users to generate computer renderings of buildings and utilities. The ease of managing these models and sharing data enable superior prefabrication of parts, leading to on-time and accurate completion.
Green construction has become the expected standard for home buyers, renters, and commercial tenants. Unfortunately, many sustainable and eco-friendly features remain a luxury, despite their long-term savings — though this is likely to change over the next decade as eco-tech and sustainable construction become more mainstream.
Green construction includes both the technology to lower a building’s carbon footprint and the use of resources and building models to reduce the use of resources.
Supply chain diversification
The disruption to supply chains has forced contractors to scramble to find alternative suppliers or to pay higher prices for materials. This trend will mean re-evaluating long term business relationships and brand loyalties, to take risks on new alliances. As usual, this risk will come at a cost, and it will take intense coordination from suppliers and other stakeholders to make timely, informed decisions on alternatives.
New contracts will likely put more emphasis on escalation clauses to cover unforeseen cost increases, and current contracts may need to be similarly revised. But it is also an opportunity for nimble suppliers and contractors to move into areas and clientele that might have previously been difficult to access.
How Orion™ ERP supports the industry
The Orion™ Building Materials Business Suite is specially tailored for the building materials distribution industry.
This integrated IT solution addresses the needs of
- Brand analysis
- Product listing
- Pricing strategies
- Customer loyalty
- Competitor analysis
- Online retailing
It focuses on building materials’ retailer, distributor and warehouse management, customer service, collaborative forecasting, procurement, distribution logistics, financial and business intelligence. The ability to link the customer to supplier contracts, to capture and analyze demand at the retail level, and to aggregate this information back to the regional and national level for production and replenishment, can improve national and regional sales performance. Additionally, closer alignment of global supply contracts tied to Forex contracts guarantees margins and ensures that currency cash flows are aligned with purchasing commitments.
The suite helps you maximize profits by focusing on:
- Increased customer awareness and personalized service
- Optimized warehouse utilization
- Reduced costs
- Improved productivity
- Optimized supply chain collaboration
- Automated decision support
The suite incorporates advanced customer-oriented functionality that focuses on performance and service. Designed in collaboration with world-leading construction commodities manufacturers and distributors, the solution meets critical requirements such as processing high order volumes. It supports rapid identification of products with supporting specifications and pricing, online availability checking, original manufactures’ recalls, and product sales restrictions – translating sales demands directly to suppliers’ products. The application supports multi-language, multi-currency, and multi-company operations.
The volatile building materials trading industry must deal with myriad challenges, numerous new trends, dynamic business needs and requirements and hence needs a robust technology with industry-oriented solutions. Orion™ has proved to be a comprehensive technology for the building materials industry by offering smart domain specific and in-demand features. An integrated ERP software for the building materials industry, Orion™ helps integrate multiple business sites across geographies into one digitized platform, streamlines processes, expedites operations, facilitates seamless communication, enhances performance and productivity. These, in turn, help businesses in the industry grow.