What is Construction Supply Chain Management & How Do You Do it Right?

Australia’s construction industry is one of the world’s largest, comprising many stakeholders for each commercial and residential project, including contractors, architects, suppliers and a host of trades. In such a complex and dynamic environment, effective management over the entire supply chain ensures the timely delivery of materials and equipment, maintains cost control, and minimises disruptions.

Construction supply chain management involves coordinating and optimising all activities related to the flow of materials, information, and finances throughout the project lifecycle. In this article, we’ll explore what supply chain management is in construction, how the associated software works, the challenges companies face, and how ERP software can overcome them.


What is Construction Supply Chain Management?

From transforming raw materials into finished products, handling relationships between suppliers and contractors, ensuring delivery dates are met – there are a lot of moving parts that require an integrated solution for optimal efficiency. To ensure all milestones are on time and within budget, each stakeholder must have a comprehensive understanding of all resources, logistics and colleagues involved.

This process is known as supply chain management – a broad term encompassing the handling and refinement of the daily tasks related to procurement, transportation, and delivery of materials, equipment, and services.

As a core principle in both small and enterprise construction companies, it aims to:

  • • Improve communication and collaboration between stakeholders in the construction project
  • • Reduce project costs and streamline control measures
  • • Optimise the use of resources, including materials, equipment, and labour
  • • Minimise waste and environmental impact
  • • Enhance project delivery timelines and ensure timely completion

To make this process easier, specialised construction supply chain management software is available to help manage all aspects from the initial design right through to project completion from one platform. The software typically includes features like inventory management software, purchase order tracking, project management software, and collaboration tools that allow stakeholders to communicate and share information more easily. It also generates reports and analytics to provide insights into supply chain performance and identify areas for improvement.


How Does Construction Project Management & Associated Software Work in Australia?

There is no one way to conduct supply chain management. Instead, it covers any and all activities with a focus on the end-to-end scope of a construction project, including:

  • Procurement planning: Locating the materials and equipment needed for the project, developing specifications, and selecting suitable suppliers.
  • Sourcing: Finding potential suppliers, soliciting bids, and selecting the most suitable partners.
  • Purchasing: Placing orders with new and existing suppliers, while also overseeing the purchase process.
  • Inventory management: Managing the storage, tracking, and apportionment of materials and equipment across jobs.
  • Logistics management: Handling the transportation, delivery, and installation of materials and equipment across various sites.
  • Project management: Coordinating all activities related to the construction project and ensuring they are delivered on time, within budget, and to the required quality standards.

By applying supply chain management and building supplies software, teams can integrate these processes within one platform for complete visibility and real-time adjustments. This includes collaborative forecasting built on project management and progression, seasonality, and other contributing factors to further optimise the supply chain.


Challenges for Supply Chain Management in Construction?

Functional supply chain management is no easy feat, and the construction industry regularly faces a slew of challenges. For example, despite the common goal of each team member, there is often a significant lack of collaboration among stakeholders. Managers, architects, trade contractors, and suppliers all working in isolation and failing to share updates or insights can lead to communication issues, coordination problems, and a fragmented supply chain.

Some other common challenges include:

  • Seasonal demand: New builds and renovations are seasonal in nature, with a larger volume in the months with less extreme conditions, fluctuating material and equipment prices, availability, and lead times.
  • Improper training: When adopting new project management and building supply software, various team members must have adequate training & skills to perform their duties. If not, they cannot fully utilise construction supply chain management software to its full ability.
  • Complex logistics: Construction sites may be located in remote areas and hard-to-access spots, making logistics and transportation challenging.
  • Cost control: The construction industry is highly competitive, and cost control is critical to maintaining profitability, competitiveness, and longevity.
  • Quality control: Ensuring that materials and equipment meet the required quality standards can be challenging due to a large number of suppliers and the complexity of construction projects.


Benefits of ERP Software for Construction Supply Chain Management

Enterprise Resource Planning (ERP) software is a powerful tool that can help construction companies optimise their supply chain & project management tasks.
Some of the many benefits of integrating ERP software for construction supply chain management include:

  • Enhanced logistical operations: ERP software can automate and streamline many logistical processes, including procurement, transportation, and warehousing, creating better coordination, reduced lead times, and improved delivery speeds.
  • Management of business costs: Building supply software helps construction companies accurately estimate costs for material, labour, design, and project milestones. By determining the profitability of a project, stakeholders can better manage their time, costs, and resources across future projects.
  • Integration of business solutions: With fully integrated construction supply chain management software, companies can aggregate all their information into a single database, automate and manage business processes and procedures, and reduce the time needed to complete almost all business processes.
  • Project management and planning: Effective planning is critical to timely project completion. Construction project management software available across Australia can help companies plan their budgetary allocations, control expenses, and avoid downtime, construction delays, and possible contractual problems with their clients during project implementation.
  • Data security: ERP solutions have built-in access controls and security measures to ensure data integrity. With a unified database and single input system, these platforms make it much easier for administrators to improve the accuracy and security of their information.
  • Enhanced communication and collaboration: Construction project management software has intrinsic communication features to make collaboration simple. Teams can receive real-time bulletins, notices, and updates, which is especially important for those working remotely on project sites.
  • Streamlined procurement: ERP software can automate procurement processes, including the creation and approval of purchase orders, the management of supplier contracts, and the tracking of supplier performance. Doing so can increase efficiency, reduce costs, and improve supplier relationships.
  • Real-time inventory management: ERP software can provide real-time information about inventory levels and locations, allowing companies to optimise the stock on-hand, reduce inventory carrying costs, and improve order fulfilment rates.


Steps for Implementation of Construction Supply Chain & Project Management Software in Australia

Depending on your choice of system, implementing construction supply chain management software typically follows these steps:

  1. Identify business requirements: Understand what you want your ERP software to address, such as procurement, inventory management, logistics, and overall project management.
  2. Select your preferred construction supply chain software in Australia: Pick a project management & building supply software meeting your business requirements, budget, and implementation timeline. Consider an option with cloud software , as it allows all stakeholders to access information, update accounts, and regularly communicate on matters within the construction project management schedule & supply chain from wherever they are in Australia, whenever they need.
  3. Make an implementation plan: Develop a detailed plan with clear timelines, milestones, and the necessary resources.
  4. Complete data migration: Migrate any existing data from your files to the new ERP system, ensuring it is accurate and complete.
  5. Configure & customise: Configure the construction supply chain management software to meet the specific business requirements, customising as needed.
  6. Perform the necessary tests & training: Test the ERP system to ensure it meets your business requirements and functions as expected. You should also begin training new users on the new building supply software to prepare for their day-to-day business.
  7. Go live: Launch the construction project & supply chain management software as part of your standard operating procedure.


Learn More About the Benefits of Construction Supply Chain Management Software in Australia

Implementing ERP software for construction supply chain management can help companies across Australia optimise their project management, streamline procurement, introduce real-time inventory management, enhanced logistics management, and much more.

For more information, speak with our team at Frameworks today.
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