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How Data Drives Supplier Collaboration In Heavy Construction

July 20, 2020 at 01:00PM

Paper and manual processes continue to plague businesses of all shapes, sizes and industries, although some more than others.

The heavy construction arena is particularly wrought with paper that hampers visibility into the supply chain, movement of materials, and supplier collaboration efforts, according to Command Alkon Business Development Manager Justin Mannina.

“Day after day,” he told PYMNTS, “the lack of visibility into where the project stands on expenses is whittling away at the ability to make needed decisions that mitigate the risk of blowing the budget.”

Continued reliance on Excel spreadsheets and paperwork tickets is slowing down projects and hampering cash flow. And while automation technology is a critical component at overcoming these challenges, Mannina noted that supplier collaboration is vital — and should guide the adoption of technology for firms in this sector.

Paper Friction

When it comes to buyer-supplier collaboration in the heavy construction space, Mannina said invoices that flow into a company come into manual workflows of matching invoices to paper tickets to Payable On Delivery (POD) forms, all reconciled against Excel spreadsheets.

For the estimated 300 million work tickets generated in this industry in North America alone, said Mannina, that accounts for a high volume of time and manpower spent on pushing paper and manually checking and rekeying data into systems.

“Working from stacks of paper tickets can cause a conundrum when it comes to daily decision making,” he said. “Slicing-and-dicing through multiple spreadsheets is the only way to receive an inkling of an idea to determine how the project is moving along in terms of the budget. Usually, these numbers are already out-of-date by the time they are compiled.”

Historically, industry players have been hesitant to make the leap to adopt digital solutions thanks to perceived cost burdens.

Yet the silos that exist between order confirmations, inventory data, schedules, orders in-transit, proof-of-delivery, invoices, payments, and everything in between, lead to a lack of real-time visibility into a project’s status and current needs — and can ultimately prove more costly than the automation technology that can address those silos, Mannina explained.

Focusing On The Supplier

The digital technologies that can streamline management of construction projects, material procurement and vendor collaboration are particularly valuable thanks to the ability to provide real-time data into current workflows.

But perhaps even more valuable is the opportunity for integrated solutions to not only boost transparency in the back office, but to also ensure a company’s entire vendor base is on the same page.

“Having that visibility piece can cultivate trusting, collaborative partnerships,” said Mannina. “Connecting with suppliers in real time enables the capture of costs and delivers a true understanding of what operations are truly costing on a day-to-day basis.

“When everyone is working together, operational transparency and efficiencies can drive results to new levels,” he added.

This combination of data integration and real-time visibility enables a vendor to ensure ahead of time that it has the necessarily materials in stock in anticipation of a client needing an item, for example, while buyers who have real-time visibility into order status can ensure they don’t pay for items they don’t actually receive.

Digitization of payments is another vital component of connecting buyers and suppliers through data in the heavy construction arena, according to Mannina, who highlighted the benefits in accelerated payments and reconciliation as a result of obtaining data from electronic transactions.

Today, market pressures are adding even further pressure to budgetary constraints. It’s a fact that could cause some in this industry to hold even further back from investing in automation technology.

But the long-term view of such investments can ultimately prove valuable to this market.

“Just 2 [percent] to 3 percent of productivity gains translate into multibillion-dollar savings within an $11 trillion global industry,” noted Mannina.

Technology to generate and streamline data plays a key role in not only promoting efficiency, but fostering deeper buyer-supplier ties. In an industry like heavy construction, supply chain collaboration is essential.

“Supply chains are complex networks of many-to-many independent enterprises that need to correspond digitally and effortlessly, sharing information that can be acted on,” he said. “Each stakeholder in a project must work together to meet each other’s needs, becoming almost like an extension of each other to achieve the same goals.”

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