How Manufacturers can help ease Construction Supply Chain challenges
The last couple of years have been challenging for everyone, but some industries — such as construction — have been hit harder than others. Between a global pandemic that caused construction projects to grind to a halt to keep workers safe and healthy, a looming labour shortage and growing supply chain issues, meeting deadlines and staying on schedule have been nearly impossible.
Some of these problems are beginning to ease. Widespread vaccination makes it easier to stay safe, though the pandemic isn’t over. Automation and robotics are working on offsetting the labor shortage. Unfortunately, even the most efficient construction site can’t function without supplies. How can manufacturers work to help ease construction supply chain challenges moving forward?
Supply Chain Issues in 2022
Supply chain issues were a hallmark of 2021 and have continued into 2022. The biggest challenge in 2021 and early in 2022 was the cost of lumber. It peaked at more than $1,733 per thousand board feet in May 2021 before finally dropping. April of 2022 saw the price of lumber falling back to $829 per thousand board feet, the lowest price we’ve seen since before the pandemic began.
Many basic materials, such as insulation, roofing supplies and PVC pipe, are becoming harder to find. Some construction companies report a 30-40 week wait time for the most basic materials. This delay drives up prices and makes it more challenging to meet deadlines. Companies are forced to search for alternate suppliers, which can be more expensive even with honest sellers. There is also a growing market for price gouging, sellers taking advantage of desperate buyers trying to find the materials they need to meet their looming deadlines.
Overcoming these supply chain challenges isn’t an easy task, but there are some things that manufacturers can do to help bolster supply chains for construction companies moving forward.
Planning for Increased Demand
Contractors have been expecting an increase in demand since the beginning of 2022 despite the continual supply chain challenges they’ve been facing. Nearly three-quarters of contractors surveyed by the Associated General Contractors of America (AGC) are expecting to add new employees to their crews to keep up with the growing demand. One of the easiest things for manufacturers is to start planning for this increased demand.
Demand planning is a skill beneficial for every business, regardless of its size or industry. Demand planning makes it easier for manufacturers in the construction industry to strike a balance between profit and customer needs, ensuring that your clients can get what they want or need without breaking the bank to achieve those goals. It also allows you to stock up on things in high demand in the future and shed any redundant inventory that may just be taking up space.
Focusing on demand planning might be more challenging if raw materials are harder to come by. Still, by planning out what you’re going to need moving forward, it’s easier to forecast precisely what you’ll need to meet those demands to get your orders in as early as possible.
Opting for Alternative Materials
Lumber and concrete might be the most common construction materials, but they aren’t the only options available anymore. Alternative construction materials are beginning to gain momentum, especially in circles where sustainability is a concern. Traditionally harvested lumber, for example, may be renewable. Still, it takes so many years to grow an oak or pine tree until it’s ready for harvest that it isn’t necessarily sustainable.
More sustainable options, such as recycled lumber, fast-growing alternatives like bamboo or composite materials made from construction or manufacturing waste can all help fill in some of the gaps in the construction supply chain. It will require a shift within your operating procedures and easing supply chain issues. Making this change will help you get ahead of a growing trend of sustainable construction.
The biggest challenge with these alternative materials isn’t always in sourcing them. It lies in finding contractors willing to switch to these more sustainable options. The construction industry might be on the cutting edge in some aspects, but in others, it tends to cling to old and established ways that can be difficult to shake.
Choosing Efficient Equipment
As with a construction site, a manufacturing facility is only as efficient as its slowest piece of equipment. Now, as you’re trying to come up with ways to overcome these supply chain challenges, it may be the best time to invest in new and more efficient equipment to streamline your processes.
Take a close look at the available options for your operations and see what might work best. Jumping on the newest bandwagon might not be the best choice for efficiency. Electric forklifts, for example, are growing in popularity because they’re better for the environment because they generate no emissions and can be used indoors without the need for additional ventilation. On the downside, these forklifts require multiple hours to charge, have a lower lift capacity than diesel options and may drain faster under heavy usage.
Build Relationships with Contractors
They say that the key to a healthy relationship is open and honest communication and that’s just as important for professional relationships as it is for personal ones. Building these professional relationships and keeping the lines of communication open is more critical than ever as everyone is navigating these supply line issues and material shortages.
Contractors are often known for making last-minute changes or even threatening to buy their supplies from a competitor. While these tactics may have been adequate before the pandemic and associated supply chain shortages, they aren’t practical. Those last-minute changes aren’t just challenging to accommodate — they’re impossible.
Building a relationship with your buyers helps to keep everyone on the same page. If they need to make a change, they understand that they need to provide more notice than they might have in the past. These changes aren’t one-sided. From material suppliers to manufacturers and contractors, everyone will need to work together to weather this storm.
Decide When To Pause Projects
Do you have any in-house projects that rely on supplies you might otherwise sell to contractors? Whether you’re working on a series of branded stores with your logo on them or some other project that you’ve had in the works for a long time, it is essential to understand when and where you should pause some of these projects.
One example follows a company that was working on producing its product brand. Still, when material shortages started cropping up and freight cost skyrocketed, it drove the price of the finished product up by more than 40%. The project was no longer financially feasible, so it got shelved for the foreseeable future.
As things start to even out and freight costs begin to drop back to normal levels, you can start moving these shelved projects back to the front burner, but for the moment, knowing when to hit that pause button can be invaluable.
The construction industry and its associated facets have faced many challenges over the past few years and it may take a few more before everything goes back to normal. In the meantime, everyone involved will need to make changes to help ease these supply chain challenges moving forward.
The changes don’t necessarily need to be massive — if everyone makes small broad changes, the effect will add up over time and help change the industry for the better.