Procurement Industries

Procurement Software in your Construction Business

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5 minute

Written by

Sarah Wilson

Procurement Software in your Construction Business

Like many industries, the construction industry faces competitive pressures across the supply chain. It is more important than ever to establish processes within your procurement that gives you visibility into your project spend. A procurement software solution will help you manage your business in several ways.

Before we do, a quick snapshot of what we will be covering and how a procurement solution can help:

1. Managing Price Fluctuations in Your Procurement Process

2. Data Accuracy & Insights

3. Communication with Suppliers

4. Visibility

5. Easy-to-use

Using procurement software for your construction business means that you would use a software platform for all of your buying activities. Generating purchase orders, managing purchase requests, and tracking the receipt and payment of products are all things that would go through a system.

1. Managing Price Fluctuations in Your Procurement Process

Managing Pricing is one of the most challenging things to manage in the construction business. Over 80% of contractors say that fluctuating pricing is impacting how they procure supplies for their business. As commodities continue to rise and pressures on the supply chain continue, it can be easy to lose track of accurate costing.

A procurement software lets you track pricing with relative ease. A cloud procurement platform will track all your costs and highlight scenarios where a price has changed more than a certain percentage. Keeping a handle on your expenses is the most important thing to consider when trying to keep a project budget under control. You'll also find it useful for business spend management because the software helps you negotiate the best prices.

Tracking your supplier pricing using a digital supplier management platform it also important for transparency sake. While customers will probably understand that costs tend to go up over time, it may make sense to show them practically some examples of how expenses have changed. A platform makes that easy, showing customers real examples of cost increases in your business can help you build client trust and eliminate doubts when you send them your invoice.

2. Procurement Data Accuracy & Insights

The agelong act of paper documentation is still very much in use by many construction companies for their procurement and purchasing process. But paper records can be limited in a lot of ways. Paper documents can get lost or mixed up easily.  They also don’t give you a high-level view of your business procurement operations and there's no room for procurement automation.  

There's also the issues of limited access since paper-based systems can only be in one place at a time, This means all records of your procurement process is only accessible from one place. In contrast, an e-procurement software is accessible wherever you log in. You may also integrate the digital system with an analytics tool or export your requisition data for more detailed analytics on an advanced analytics system.

Data accuracy of your costs, purchase order quantities, and purchasing frequency are essential to have the right insights into your business.

Costs – with costs in a digital system, you can see your cost changes over time. When prices increase over time, you may go to tender on those items and possibly select another vendor. As you monitor costs and see them decrease over time, this may be an opportunity to consolidate suppliers

Order Quantities - insight into your order quantities over time can help you manage accurate inventory of your construction supplies. Reviewing order quantities also enables you to understand if you are ordering to supplier minimums. Ordering below a supplier minimum can generate unnecessary fees, and managing your amounts can expose this.

Purchase Frequency – analyzing purchase frequency is one of the perks of a e-procurement system. It provides an excellent opportunity to review your overall costs and see if you have a chance to consolidate your purchasing into more significant buys. Doing this opens up the possibility of negotiating bulk buys and possible costs savings on freights and shipping.

Access to more data also means more informed decision-making. You'll make better procurement decisions and general business decisions when you have access to all the data you need to improve your procurement process. Your procurement software also doubles as a proactive spend management tool. By keeping track of spending data for each procurement cycle, you get a better overview of your overall spending and can put measure in place to keep to cut cost and keep it under control.

3. Real-time Communication with Suppliers

Establishing a reliable communication workflow is an important part of running a business and even more for a construction business. A system that helps communicate with your construction suppliers is a game changer for you and most online procurement software have communication capabilities. Talking on the phone will never be as effective as doing so via a system that allows real-time communication while also documenting everything. Tracking the back and forth communication within a digital system allows you and your vendor to remain clear on expectations. Simplifying and clarifying communication will also ensure smooth negotiations. Easing up communication and negotiation this way sets up as a preferred customer in the eyes of your suppliers and may help you as you navigate other issues as well.

4. Visibility and Control for your Purchasing Process

A cloud-based procurement solution helps you centralize procurement operations for your construction business. Instead of disparate systems, using a single software for everything related to your procurement process gives you full control and visibility. You can use the software to streamline your purchasing process, connect purchasing with your accounting systems, manage ERP systems and so on. 

As the owner of your business, you know you ought to know business inside and out. You need to know all the supplies you need for all of your projects. Using a procurement solution to get an overview of the items you purchase can benefit your business in several ways:

Þ Quickly look for ways to consolidate suppliers by always having a handle on what you buy from whom

Þ Track supplier performance and give your business to higher performers

Þ Select vendors that are the best fit for you based on your unique business requirements

Þ Having an area to make notes about items gives you space to document the quality and usefulness of a given item

Maintaining a list of items from each supplier should be manageable within a procurement tool with vendor management features. The procurement management software can also serve as a contract management tool for managing the legal details of your relationship with suppliers. Setting up new things or moving existing items from one supplier to the other is also easier when you use one software to manage everything.

Construction Procurement Software

5. Easy-to-Use

The best procurement software for managing the procure-to-pay process is often designed to be easy-to-use. This should be the top priority of anyone running a business. You need to establish a system that gives you visibility and control for your organization and an easy-to-use procurement tool is the way to go.

An e-procurement platform is typically easy to install and easy to open. Users can navigate it seamlessly and this can easily teach someone else when there's a need for it. Most people would agree that you save time and boost productivity when you eliminate manual processes and replace them with an efficient digital system. Of course, there'll always be a learning curve, but with a procurement management is always easier with a digital tool than without it.  You also get to automate several steps in your procurement system such as your approval workflows.

Most purchasing software applications are also mobile-enabled, either through a downloadable mobile app or easy to use from your phone’s browser. As you are on the go constantly with your construction business, you can’t afford to manage your procurement from your desk. A software that lets you manage things on the go is an easier way to transform procurement for your organization.

Support for the platform is essential, and whatever system you choose should provide a good level of support. Most of the best procurement software vendors prioritize support for users. Some systems will have a number to call, whereas others will provide support over chat or email. Consider your comfort with technology and what level of support you believe you will need as you review the support options available from a platform.


Final Thoughts

A modern construction business can take advantage of the technology improvements in the procurement space and implement a digital procurement software solution in their business. While this is a shift from the standard paper-based business management, the transition is essential and it's the more proactive route to go if you want to give your business a fighting chance. Getting your business details out of your head and into a system will free you up to make critical decisions about managing your business.

Beyond excellent decision-making and business management, streamlining your procurement activity allows you to shift your attention to the relationship management part of your business. Staff and customers alike will benefit from your focus, helping your business thrive. Tradogram is a cloud-based procurement platform with a wealth of features that helps optimize procurement.

Procurement Software

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