Building material supply chain is the operational process flow of materials starting with raw material suppliers and ending with a final consumer product.
The building material supply chain is heavily stressed by a boom of postponed projects, creating an unprecedented supply and demand imbalance of building materials. As a result, building materials have become unattainable in cost and availability for all parties involved in the supply chain—manufacturers, suppliers, distributors, retailers, customers (i.e., contractors). For building materials, the producer price index, which measures the change in prices that domestic producers receive for goods and services, increased from 0.1% in March 2021 to 9% in June 2021.1 On top of high material costs, the supply chain is overwhelmed by increased shipping delays and costs due to shortages of container ships, ports, dockworkers and truckers.
It may take a year or two for the building material supply chain to stabilize, but influencers know the industry is resilient and there is an optimistic outlook based on factors, such as:
- New economy boosting initiatives (i.e., infrastructure spending)
- Potential tariff exclusion on essential building materials
- Activity level increases for many construction markets
Anirban Basu, Associated Builders and Contractors chief economist, stated that the construction market will balance out as the productivity and capacity of suppliers increases to keep pace with high demand and prices of building materials. As a result, more created materials translate into cost reductions.2
“The cure for high prices is high prices,” Basu said. 2
Building material supply chain: Being prepared
Regardless of the building material supply chain condition, distributors and retailers need to be proactive for the current state of the supply chain and the future. Building material businesses can take-charge of their operations within the supply chain and increase productivity by transitioning to digital business management.
“We waste about fifty million work hours a year just keying in data from job site delivery tickets. A place to start transformation is to digitize this transfer of data. We have to move from a document-driven industry to a data-driven industry,” Steve Cox, Command Alkon VP of Business Development, said.3
It is possible for small to midsized building material businesses to seamlessly move from hindering, paper-based operations with the right inventory and business management software. For instance, Acctivate delivers advantages to distributors and retailers, as key building material supply chain collaborators, including:
- Real-time data that is easily comprehended through built-in and custom reports, customizable dashboard widgets, and at-a-glance lists of pertinent information. This is critical to see where adjustments can be made, especially when the building material supply chain is in a fragile state.
- Paperless, automated operations, including purchasing, receiving, inventory management, production, sales, customer service and fulfillment.
- Supplier evaluation and collaboration tools to stay connected and have vendor/sourcing options available, especially during product shortages.
- Live inventory statuses to keep apprised to actual supply demands.
- 360-degree view of customer activities from quote to fulfillment to make informed decisions (i.e., considering other construction markets and/or products) based on sales, usage, trends, and demographics.
- Tools to strategically price products and remain profitable.
- Import and export tools (i.e., landed cost and multi-currency support) to buy and sell globally with seamless tracking of goods.
- Credit and collections management that helps with on-time payments, cash flow optimization, and minimizing customer debt.
Building material supply chain disruption is evitable and small businesses can thrive among the competition with the right tools in place and as the supply chain status fluctuates, they can be prepared for anything.