The construction industry has amazing opportunities albeit the high risks. But the pressure is even more intense for executives, given the tight profit margins and little room if any, for errors. In essence, project outcomes directly impact business outcomes.

Despite the steady growth experienced globally, alongside new, impressive technologies that are transforming the sector, today’s rapidly changing landscape insinuates that companies ought to operate at higher levels of efficiency and sophistication in order to keep with fresh client demands and fierce competition.

Not forgetting the industry-wide challenges that are becoming huge stumbling blocks for construction companies spanning all sizes. For instance, even with the current need to ensure high levels of productivity, the shortage in labour is taking a toll on the industry.

Today, about 80% of contractors are concerned about their ability to find and hire certified workers, according to a 2019 study carried out by the Associated General Contractors of America (AGC).

To mitigate this emerging risk, majority of construction companies are growing beyond digital infancy by making the most of the available selection of tools to effectively measure performance, automate processes and improve visibility.

Nonetheless, contractors still struggle to determine the kind of innovations that can propel their businesses forward. Given that a mere 25% of engineering and construction (E&C) firms report they are effective in managing risk, it’s obvious that there is a huge gap between the adopted technology and its impact.

According to suggestions provided in a new AGC report, forward thinking companies in this industry that yearn to stay ahead should consider implementing one-off technology solutions and, “prioritise technology strategies to create innovative corporate cultures.”

With this, construction executives will have to adopt the rightful technology that enables digital transformation by establishing a solid foundation from ground up; one that links up the entire project lifecycle.

Digital Transformation

Digital Transformation is a term commonly used to describe any digital initiative undertaken in a company. However, in most cases technology is usually applied on a one-off basis, taking on a role like that of a patch fix than a part of a real business strategy.

A single solution can significantly improve a given process or workflow, but in the absence of seamless integration with goals and other systems, inconsistent and disconnected processes render it impossible to minimise risk. Consequently, fragmented information and teams result in costly reworks, delays and resource waste.

For beginners, let’s first see the definition of digital transformation. The Enterprisers Project defines “Digital transformation as the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.”

That’s correct. Digital transformation isn’t just centered on fixing issues but building change cross businesses. Within the construction industry, new technology implementations supporting this transformation should deliver:

• Sustainable and foreseeable profit margins
• Superior resilience throughout the industry
• Agility in growing and transforming, so as to make the most of new markets, connections, and business opportunities
• Better collaboration and partnership between all stakeholders so as to deliver better outcomes to the construction environment

Digital transformation focuses on developing a new model for innovations within the business. When it comes to the construction industry and the challenges of linking huge volumes of data and users, the main aim of this change should be centered on connection—connecting users, data, processes and the various project phases. So far, no one is yet to deliver on this promise of connecting construction from the design phase through to operations and turnover.  

The Future of Building

According to one expert Jay Snyder, FMI, Technology Practice Lead, “While construction firms continue to invest in technology, the business-critical issues of communication and data management need more strategic attention than they currently receive.”

At kelpee, the focus is on creating a foundation to enable digital innovation to succeed, allowing project stakeholders to pool resources early in the project, delivering greater transparency in changes and guaranteeing data continuity. All these would support better decision-making and more predictability—the cornerstone to establishing scalability and business resilience.

Kelpee is founded on three key pillars of connected data and technology:

• Cloud Technology: Best-in-class technology designed for simplicity and power – uniting office, headquarters and field teams starting with sales and design through to construction and operations
• Industry Network: The sector’s main online network of builders, owners, designers, and trades
• Process Automation: Process automation means more resources can be allocated to professional services.

So, how exactly does the connected construction system enable executives to design, develop and effectively manage a technology strategy capable of supporting their business objectives? Let’s find out.

Build an Innovation Strategy

When it comes to creating a winning business strategy, any construction company must ask three important questions:

• How can we make money?
• How can we save money?
• How can we lead the competition?

At the centre of it all, kelpee empowers construction executives to strategically and effectively manage their most valuable business outcomes by improving quality, controlling costs, winning business and staying on schedule.

Improve Quality 

Well-established construction companies boast robust quality control and assurance plans. With a connected construction environment such as that which kelpee supports, facilitates and improves existing quality plans. 

• Improve Handover Experience: A seamless handover process enhances customer satisfaction and the contractor’s reputation.  There’s better experience during project turnover/handover thanks to reduced defects, improved digital documentation and enables the customer to seamlessly move from the construction phase to operations.
• Reduced Number of Variations Onsite: In most cases, variations or constructability challenges are discovered too late in the process. Managing potential problems using designs that ensure the ultimate build is successful demands collaboration between all project stakeholders and an effective review process to handle emerging issues before resulting in reworks on the site.
• Reduce Rework During Construction: Reworks are unplanned works and mostly happen in the process of changing orders, rectifying errors, poor scheduling or poor quality. With keen insight and visibility at all design problems and proper team communication, reworks and their cost implication on the project can be significantly minimised.
• Reduce Defects at Handover: Defects at handover do reduce a project’s profit margin, and arise as a result of problems not detected and resolved during the construction process. But with improved transparency and standardised workflows, departments can systematically identify, track, and resolve all issues as they arise.

Control Costs

Cost control is certainly imperative for business leaders focused on risk management and ensuring financial stability. Armed with innovative technology that links the entire construction lifecycle, construction firms can achieve more financial stability through:

• Improved Forecast Accuracy
• Improved Subcontractor Qualification
• Reduced Costs

Stay on Schedule

Stringent project schedules put increased pressure on construction executives to ensure teams stay on track. kelpee offers software for leaders to enhance productivity and detect issues in schedules before they occur. This is made possible through improved:

• Plan to Actual Ratio
• Resource Planning
• Schedule Control
• Lean Planning

Win Contracts

Staying ahead of the competition requires construction companies to own a comprehensive strategy that will see them win new and repeat business. With a well established builders’ network, you can connect to project owners, contractors and sub-contractors and take advantage of smart risk analysis to position each project well-up for success. With this, you are guaranteed:

• Increased Bid Efficiency
• Increased the Number of Successful Projects
• Improved Win Rate
• Improved Stakeholder Engagement
• Expanded Service

Digital Transformation Starts with Connected Construction

Risks within the construction industry will only continue to grow. Willing forward-looking companies in the sector ready to embrace a new construction model will be able to manage risk and push their businesses to greater heights. It’s time for leaders to invest in digital transformation well integrated with connected construction.

The post A Smart Guide to Connected Construction appeared first on Darryn Van Hout.

No business requires convincing that in today’s scale-driven and tech-intensive global economy, great supplier relationship is the supply chain’s lifeblood. Businesses, particularly the well-established ones, are buying services and components from suppliers more than ever before.

Companies are increasingly relying on suppliers to improve quality, cut costs and develop new products and processes faster than their competition. As a matter of fact, experts agree that businesses looking to succeed in today and tomorrow’s marketplace must consider turning their arms-length relationships with their suppliers into close, well managed partnerships featuring close-knit networks that enable them to continuously learn, improve and prosper.

So, how can you achieve this? Truth be told, it’s tougher to build seamless relationships with suppliers than most businesses imagine. Yes, but not anymore.

As it is, majority of manufacturers work with a myriad of suppliers, rendering the supply chain complex. With stiff competition necessitating a need to reduce prices for the end-user, most small and medium enterprises are compelled to squeeze margins to their detriment.  

In order to maintain profitability, forward-looking start-up’s must adapt a systematic approach to their supply/sourcing strategy. This is when efficient supplier relationship management comes in handy.

Supplier relationship management (SRM) refers to a systematic, enterprise-wide assessment of suppliers’ assets and capabilities with regards to overall business strategy. An effective SRM strategy will not only help you build strong partnerships of mutual collaboration but also help reduce risks of errors.

Hence adopting a strategic approach to supplier management is a crucial step towards boosting the profitability of your business.

Why supplier relationship management is important

A small business without a reliable supplier relationship will eventually feel like veering off the road in your family car—wobble and risky. To ensure a steady flow of new and better products to your inventory, strategic supplier management is the magic you need.

3 key factors driving supplier relationship management

Reduce cost: Most business transactions and expenses relate to supplies. Hence, when you build a mutually-enriching relationship with your suppliers, you can enjoy discounts, incentives, special deals and more. Additionally, having a good relationship with suppliers reduces the extra cost that may be due to errors and delays in procurement.

Encourage supplier-led innovation: Establishing a great relationship with your suppliers ensures efficient communication. This encourages suppliers to share ideas about product improvement, service innovation, supply chain process efficiency and more.

Supplier evaluation: It’s vital to assess your suppliers and make sure they meet all qualifications needed by your company. With an effective supplier management system, you can detect areas that need improvement as you do business with the suppliers.

How to manage supplier relationships better

Effective supplier management is a no-walk-in-the-park, however, it isn’t impossible. Below are some ideas you can consider when thinking of rolling out a supplier relationship management.

1. Segmenting suppliers for SRM

Start by segmenting purchased items or raw material into two main categories—Profit Impact and Supply Risk. Here’s why.

Note that your profit impact is basically the impact that the supplied items have on your bottom line. Profit impact is usually higher for raw materials or items that make the biggest portion of the final product like Colorbond steel for the construction of a roof or processed fabric for a dress manufacturer.

Supply risk happens when the supply chain is disrupted due to unavailability of a given item. Supply risk is considered high for those raw materials that are scarce, rare or whose supply is impacted by government policies, delivery logistics or when suppliers are fewer. For example, the unique material or fabrics like silk which are required by a saree manufacturer.

Once all the commodities have been classified, with products and components according to their profit impact and supply risk, the products can then be segmented into the product-purchasing categorisation matrix as follows:

• High-Profit Impact and High-Supply Risk: Strategic suppliers
• High- profit and Low-Supply risk: Leverage supplier
• Low-Profit Impact, High-Supply Risk: Bottleneck suppliers 
• Low-Profit Impact, Low-Supply Risk: Non-critical supplies

Segmenting your suppliers enables you to Plan for Purchase. Using supplier segmentation, you are able to ascertain reliable suppliers and group them in one category based on their price, quality and product importance, enabling you to make better and more efficient decisions concerning purchases. Furthermore, you can employ cloud technology like Xero Projects to enable you keep track of your payments and purchases with real-time data, allowing you to manage your supplier relationship more effectively.

2. Shift from competitive to collaborative relationships

After segmenting your suppliers, take time to approach each supplier and discuss the relevance of their product on your business. For leverage and non-critical suppliers, look for alternative suppliers in the market so as to establish a competitive relationship with them and optimise your profit margins and product abundance.

Be sure to build collaborative relationships with both your bottleneck and strategic suppliers whom you can’t substitute and are crucial to your supply chain. This demands that you establish a strong partnership and or alliance-based relationship approaches.

SRM is undergoing great transition, with strategies varying from one company to another.

Gone are the days when just managing expenditure and securing the best business deals from your suppliers was enough. You have to continuously keep an eye on the yield delivered by your supplier.

With an effective SRM strategy coupled with the right application, you can establish long-term and trustworthy relationships with your major suppliers. In addition, you can also come up with an exit strategy well in advance for your troublesome suppliers.

A Technology-Driven Approach to Supplier Relationship Management:

Looking at the above supplier segmentation matrix, there’s no doubt that all the suppliers that fall in the Strategic supplier segment are your most esteemed suppliers.

This explains why today most organisations rely on technology to better manage these relationships in a bit to reward their businesses with a superior edge over competition.

Small and medium-sized enterprises are yet to define what a strategic supplier really is for their business before determining how technology can come in handy in helping them build those relationships.

While understanding the art of segmenting your suppliers is the first step towards ensuring better supplier relationships, knowing the most suitable technology to enhance that relationship is quite important. 

A survey on Procurement 2025 carried out by Efficio in conjunction with Strategic Suppliers cooperation Cranfield University revealed that technology is simply making more data-driven decisions in procurement.

As a small or medium-sized business owner, you may have to consider investing in the latest technology to improve or transform your SRM efforts. If you plan to integrate technology into your business so as to maximise and fast-track value from supplier relationships, an ERP is the platform for you.

Enterprise Resource Planning (ERP) enables you to access all your tally data on whenever, wherever. If you use an ERP to manage your inventory, then having full insight of the data will enable you to ascertain and categorise your Strategic Suppliers and improve your relationship with them.

As it is, SRM is all about integrating the right resources, practices and technologies required to align your small or medium-sized business with your suppliers in order to build stronger and lasting relationships.

Armed with the right tools to foster supplier relationship management, you will then focus on what is more important to your business.

When you take time to identify and classify top suppliers and create better relationships, this leads to efficient operations.

ERP’s are designed to provide complete visibility of your stock details including stock items and stock groups which include relevant information about sales, purchases, closing stock, top sellers, top customers, stock value for the group, go-down wise breakage as well as the items in the group.

This information can be used to segment your suppliers in 4 different categories as mentioned above and better manage your relationships with them.

The post Supplier Relationship Management in Small Business appeared first on Darryn Van Hout.