4 Ways to Boost Profitability Through Better Construction Materials Management
4 Ways to Boost Profitability Through Better Construction Materials Management

4 Ways to Boost Profitability Through Better Construction Materials Management

pcs-logo-N-whiteBG-caption-01.png

Be part of our exclusive Construction Professional list and get exclusive discounts and monthly executive summary

* indicates required
() - (###) ###-####
Subscription to Newsletter *

Subscribe

* indicates required
Subscription to Newsletter *
* indicates required
Subscription to Newletter *

Managing construction involves overseeing a wide array of aspects, from the workforce, cost, schedule, and inventory. However, construction inventory, such as materials, is not highlighted as much as the other factors when it takes a huge part in completing a successful project.

Material management is a complicated and essential part of every project, no matter how big or small. While many professionals generally associate it with the purchasing, procurement, and delivery stage, material management extends across a broader range of activities, from planning and operations to the handover and turnover phase.

Properly executed material management can improve project efficiency and generate significant cost savings. A poorly executed one can lead to safety concerns, major delays, and decreased profitability.

What are the Points to Consider in Creating an Effective Materials Management Plan?

 

Reliable, on-time delivery of construction materials is key to boosting profitability on any construction project. Delays in ordering supplies, failing to source on time, and other related issues with on-site material storage lead to costly setbacks, and, as we all know, setbacks cost money.

Here are some of the points you can consider:

  • When the materials are required
  • Procurement periods and process
  • Supplier’s minimum order quantities
  • Physical space on-site or warehouse location for storage
  • Price variations in delivery costs for varying size quantities. 
  • Storage or warehouse requirements – standard containers or just stacked outside?
  • Material handling – fork-lift, hand-ball, or a crane?
  • Availability of space when the materials will be used on the actual location.
  • Time of day or night when the materials will be stacked where they are required.
  • Hours in which delivery equipment and vehicles are allowed at the site.

The Importance of Safety in Construction Materials Management

 

When it comes to delivering and handling heavy materials like concrete, lumber, or steel, it’s the worker’s safety that always comes first.

According to insurers, construction vehicle and equipment operators are already one of the high-risk demographics on the road, so they don’t need more factors that will further complicate their job. Additionally, the Bureau of Labor Statistics emphasized that even though driving is only a part of a construction job, the industry still faces a significant deal of risk on the road.

A high level of professional expertise is thus required to get building materials onto trucks and off to the construction site with attention to safety and security. Improper interlocking, stacking, or racking create the possibility of materials sliding around or coming free of the truck during transit. Materials damaged, destroyed, or lost during transit not only cost the project owner money but, more critically, can pose physical risks to drivers, handlers, pedestrians, and public property.

Here’s a standard checklist every contractor should consider when loading and off-loading on the job site: 

  • Equipping vehicle operators with the proper knowledge of best safety practices in material handling and delivery
  • Ensure personal protective equipment (PPE) is worn during delivery (hard hats, gloves, boots, high-visibility clothing, etc.)
  • Finding a safe parking location that won’t interfere with jobsite operations or those within the surrounding areas – may involve site layout planning and temporary traffic management.
  • Making sure that delivery vehicles can enter and exit the jobsite with ease and paying attention to speed and reversing limits
  • Confirming the loading and unloading zone with on-site personnel

However, the delivery checklist doesn’t stop there. Delivery means more than just picking up, dropping the materials, and driving off. These materials must be securely stored and stacked on-site in a way that eliminates, or at least reduces, the risk to everyone who works on-site.

Related: 10 Practices of Effective Construction Traffic Management

4 Strategies to Boost Profitability through Improved Materials Management

 

Construction profit margins may be tight, but it is possible to cut the costs of traditional materials management practices, such as on-demand ordering processes and supply chain management techniques with adequate time and effort.

Below are strategies you can use to improve efficiency, reduce downtime, and boost profitability through better material control and overall inventory management in construction:

Problem 1: Eliminate Irregular Ordering Schedules

Typically, contractors often prefer to order materials on an irregular basis, so they don’t have to worry about storage on-site or in the warehouse, even though the on-demand method has consequences. Yes, picking up your coffee order daily makes good sense, but the logic isn’t quite as good when it comes to building materials.

Solution: Pre-Plan Ordering and Delivery Schedules

Not only does irregular ordering leave you susceptible to supply chain issues, but it can also create serious workflow problems if your must-have items don’t arrive on-site as scheduled. After all, small things can erode your profit margin faster than paying your subcontractors to wait around for their materials before they can begin their work for the day.

Build a comprehensive material management strategy in conjunction with your subcontractors and suppliers to pre-plan orders and deliveries in accordance with your project timeline. Not only will this reduce work stoppages due to low material supply, but it can also give access to volume discounts based on the total quantity of your orders, rather than in smaller amounts you buy on an irregular ordering basis.

Problem 2: Prevent Material Loss

Loss of materials is a significant problem at every jobsite within the construction industry, and that’s particularly true when you’re dealing with abnormal circumstances such as remotely managing construction worksite.

Such damage to your inventory can result in workers leaving materials unprotected and other site security issues. These losses may seem insignificant daily, but when accumulated over time, they can drastically erode your profit margins.

Solution: Improve On-Site Material Management

Not only can bad on-site material management result in additional costs, but simply not locating where materials are means your workers will spend more time looking for your lost supplies and less time doing the intended work they’ve been hired for. Worse yet, it’s all common for construction managers to re-order materials that they can’t locate, and that practice can lead to some major cost overruns.

Focus on optimizing your construction inventory management system to reduce material loss, increase productivity and increase your profit margins. 

Problem 3: Eliminate On-site Material Sorting

As a contractor, you get the materials you need from suppliers when you need them. Ask your distributors to bundle your requested materials into customized bundles sorted for each part of your construction project. 

This process is generally known as ‘kitting .’ It can significantly help minimize excessive handling and long hours sorting of delivered materials at your construction sites.

Solution: Request Distributors to ‘Kit’ Materials

Having supplies packed directly by your supplier gets rid of the need for on-site sorting, and that can considerably add up to some cost savings for your project. Kitting can also help increase the overall efficiency of your construction crew management since you can delegate more essential tasks your crew can spend their time on. Moreover, this can also give you more time in creating and securing new contracts and less time tracking, sorting, and moving materials.

Problem 4: Avoid Bulk Shipment of Materials

Suppliers love to suggest bulk shipments to contractors for one reason— it makes their lives easier.

While ordering materials intermittently isn’t ideal, neither is ordering extra to what you need; bulk buying is neither profitable nor practical on the construction job site.

Solution: Only Order What You Actually Need

Any cost savings you might think ordering bulk shipments offers are usually lost to more labor it takes to handle all that excess material. Suppliers can offer a great deal on bulk shipments since they’re essentially passing on a significant fraction of their costs to you. 

Consider the amount of labor, fuel, and equipment it takes to deliver tens or hundreds of loads of material rather than to deliver that same volume of materials in just a few runs. Additionally, these bulk materials that would be delivered on your jobsite that will not be used require a good part of your storage space and have an excellent chance to get damaged and lost even before they are utilized.

When you compute all the costs involved with the delivery of materials, it’s easy to know why suppliers often push contractors to accept large shipments — and it’s easy to see how the lower costs incurred through bulk buys don’t add up for you in the long run.

Instead of accepting large-volume drops, coordinate with your suppliers to optimize your delivery schedules in a way that fits your needs. This way, paying a bit more for materials for a safer, more efficient worksite is worth it.

Related: 12 Cost-Effective Ways to Improve Your Warehouse Efficiency

Start Investing in an Inventory Management Software

 

A reliable material management system involves many moving parts and handling numerous project stakeholders. The dependence on traditional pen and paper methods of organization can often lead to miscommunications and errors, which contributes to most of the problems and delays discussed above. Many contractors are starting to transition to digital solutions to address these problems.

Switching your construction team to a paperless inventory management system can bring many advantages such as:

  • Increased order accuracy 
  • Digital monitoring of high-demand materials
  • Better organization and accessibility to information through digital storage of all documentation
  • Improved scheduling of material delivery to maximize opportunities and minimize delays

Want to take advantage of these benefits and more? Pro Crew Schedule is a construction management software with a built-in inventory management feature. Let us help you make your businesses more profitable.

Start with the free 30-day trial today.

 

Leave a Comment

Your email address will not be published.

Scroll to Top