Procurement Industries

Procurement Software in your Construction Business

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5 minute read

Posted by

Sarah Wilson

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 system can help:

1.      Managing Price Fluctuations

2.      Data Accuracy & Insights

3.      Communication with Suppliers

4.      Managing Supplier Lists

5.      Ease of 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

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 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 digital procurement system can 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.

Tracking your supplier pricing in a digital platform can also give transparency to your customers if you choose. While it’s understood that costs go up generally, it may make sense to show your customer some examples of the expenses over time, and a platform makes that easy. Showing customers real examples of cost increases in your business helps build client trust.

2.      Data Accuracy & Insights

Paper records can easily get lost and don’t give you a high-level view of your business overall. Paper-based systems are only accessible from one place, whereas a digital procurement solution is accessible wherever you log in.

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 supplier. 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 an excellent opportunity to review your overall costs and see if you have a chance to consolidate your purchasing into more significant buys, opening the ability to negotiate bulk buys and save on freight costs

3.      Communication with Suppliers

A system that helps communicate with your construction suppliers is a game changer for your business. Talking on the phone will never be as effective as documenting your communication with your supplier. Tracking the back and forth communication within a digital system allows you and your supplier to remain clear on expectations. Simplifying and clarifying communication will also ensure smooth negotiations.

Becoming easy to communicate and negotiate with positions you as a preferred customer in the eyes of your suppliers and may help you as you navigate issues.

4.      Managing Supplier Lists

As the owner of your business, you know your business inside and out. You likely know all the supplies you need for all of your projects. Using a digital 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    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 system. Setting up new things or moving existing items from one supplier to the following must be simple enough to maintain.

Construction Procurement Software

5.      Ease of Use

A system to manage your construction business must be easy to use. A platform needs to be easy to install, easy to open, and easy to navigate. It should be simple enough for you to learn and easy enough for you to teach someone else. Remember, while there will always be a learning curve, your frustration should remain relatively low while learning a new system.

A platform should also be mobile-enabled, either through a downloadable 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.

Support for the platform is essential, and whatever system you choose should provide a good level of support. 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. 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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