Logistics is sometimes oversimplified in the business world as the process of moving materials from Point A to Point B, often referred to simply as the supply chain. In the construction industry, logistics are a bit more complex than just transporting materials. Construction logistics is the process of planning, procuring, transporting, managing, and deploying resources for a construction site. It is a challenging process for a construction business, even when everything is going well.
However, new and complex logistic problems continue to arise in 2021, creating an environment ripe for inefficiency and profit loss for poorly planned construction projects. A spike in construction theft, skyrocketing transportation costs, increased demand for elite customer service, and a poor infrastructure for processing data are a few of the challenges confronting construction businesses in 2021.
The following breakdown takes an in-depth look at the various logistic problems in the contemporary construction industry and provides some logical solutions for how to solve each one.
1. Construction Theft
It is estimated that construction businesses typically lose approximately $400 million worth of materials each year due to construction theft. With the cost of lumber skyrocketing during the COVID-19 pandemic and the demand for housing at an all-time high, this figure appears to be on the conservative side of what can be expected in 2021 and beyond, creating a logistical hurdle for builders, home remodelers, and construction firms looking to keep costs under control.
Solution: Many construction sites invest in locked storage units, video surveillance, and insurance plans to help them protect their construction tools and building materials. While these are definitely worthwhile investments, a better solution may be to lower the amount of inventory on hand, altogether. Innovative, on-demand material delivery services can significantly reduce the amount of inventory at a construction site, allowing for just-in-time construction and reducing the costs and risks associated with carrying too much material.
2. Soaring Transportation Costs
Fuel prices currently sit near all-time highs in many parts of the country. In addition, there is currently an acute shortage of truck drivers, forcing many companies to pay top dollar for qualified drivers. Finally, the last mile delivery problem, which accounts for some 53% of all transportation costs, significantly impacts the construction industry, as delays frequently occur when delivering to areas that do not yet have defined addresses.
Solution: Some construction businesses are trying to increase their warehouse infrastructure to centralize distribution and reduce transportation costs. Others are looking to independent couriers to get them materials before any construction delays occur. However, the best solution may be to partner with specialized last mile firms that have an established technological infrastructure in place to analyze data and optimize delivery routes to hard-to-reach construction sites.
3. Demand for Premier Customer Service
In the retail sector, customers expect fast, affordable, and easy-to-track shipment. While contractors and construction professionals expect the same from their material delivery services, the end customer is becoming an equally pertinent consideration at the construction site. Contemporary construction managers are met with a daily barrage of emails, calls, and messages for construction updates—all of which can be impossible to provide without knowing the location of materials.
Solution: Construction businesses must partner with providers that have the most advanced technological infrastructure in place for placing and tracking orders. It is not good enough to be able to call in orders and track them via a complex tracking number. Contractors must be able to place and follow orders via an easily navigable mobile app to be able to provide the end customer with the latest, up-to-the-minute updates.
4. Data Limitations
The logistics ecosystem within the construction industry can be exceedingly complex. In order to get the right materials to the right place at the right time, the project must coordinate communication between contractors and subcontractors, material providers, delivery services, and state and local governments. Managing this approval chain can be nearly impossible without a centralized repository for data and information.
Solution: Construction businesses need to invest in the latest construction software to coordinate communication at all levels of a project. Contemporary software makes it easy to upload, store, and share all pertinent documents, approvals, and lien waivers. It also helps construction businesses streamline payment, eliminating any delivery delays by automatically disbursing funds to all links of the supply chain as required.
Simple Solutions to Solve Logistic Problems in Construction
Construction logistics—the process of moving resources from their source all the way through their deployment at the construction site—is a complex process in the best of times. However, new and complex logistic problems continue to evolve in 2021, creating unique challenges for construction businesses. By considering any of the solutions to modern logistics problems listed above, construction businesses can confidently operate with maximum logistical efficiency, locking in profits along the way.